The legalization of marijuana has created an explosion of new industry across the country that thousands of entrepreneurs are clamoring to be a part of. For many advocates of marijuana use, opening a dispensary can be the ultimate dream. However, heavy federal and local regulations can make the process a quite the challenge.
But hey, if it was easy, everyone would do it. If this entrepreneurial endeavor is part of a goal you are willing to strive for, you likely already have most of what it takes: passion, persistence, an appreciation for the product, and business sense. The rest relies on quite a bit of paperwork and buoyancy.
I spoke with Charles Anderson, CEO and Founder of Currency Capital, a leading equipment financing company. Anderson has made it his mission to make sure that every business can fulfill its potential, and get the equipment they need, when they need it.
“While any newly legalized industry is going to be challenging to work in at first, by being an early adopter, you’ll also beat others to market,” explains Anderson. “The marijuana industry is bound to behave similarly to the alcohol industry - which means customers will tend to return to the same place, be lazy about price matching and shopping around, and make decisions about where they want to shop primarily based on the convenience and interior ambiance of each store.”
If you’re an enterpriser eager to open a marijuana dispensary, Anderson’s guide will help you through the necessary steps.
Write A Business Plan
Much more so than others, the marijuana industry requires potential business owners to start the process with a solid business plan. The industry is a booming, but also heavily legislated. There are significant startup costs, and it’s filled with quite a bit of people with heads stuck in the clouds hoping to pull off a quick get rich scheme, or just get a discount on the product. A comprehensive business plan will act as a roadmap through every hurdle - without one, it’s easy to get lost.
Start out by accessing capital. The federal illegality of marijuana presents entrepreneurs looking for a loan with quite problem: getting a bank loan is essentially impossible. This means to start your dispensary you’ll want to see if you can find an angel investor or small business equipment loan financer.
Next, draft up a detailed budget. Have an understanding of the costs required to get your business up and running. Typical expenses for opening a dispensary cover licenses, location, products, and salaries, but keep in mind that a large percentage will go to equipment and taxes. Most dispensary owners will overlook the complicated circumstances of the U.S. Code 280E— a tax code that can hurt your business if it is not accounted for in your budget.
Hire a Lawyer
This is one business whose laws you do not want to play around with. The varying rules of each state coupled with new - and possibly changing - regulations can make things tricky for business owners. Save yourself court fees and invest in a good legal counsel before it’s an emergency. Not only can your store be shut down, but you may even run the risk of being sent to prison.
Pick Out A Location
Your next step is to find a location that can fit into your budget and is in compliance with local restrictions. That’s right, you can’t just set up shop in any old place—or state. For those who have their hearts set on running a dispensary, know this might require a big move.
Get yourself off onto the right food by abiding by the local and federal restrictions of your state as well. Typically that can include anything from not running your business within a certain amount of feet of a residential area, zoo, school or church. Because of the ever-changing laws of the marijuana industry the circumstances of your situation could change. A compliant placed today can have your dispensary shuttered tomorrow.
The locational key to your business’s success is considering if it’s within reach of potential customers. Just as most people go to the liquor store nearest to their house, even if there’s a much better one a few miles away, you’ll want to make sure your spot is convenient and near residences or regular errand locations, such as grocery stores and laundromats. You’ll also want to assess different neighborhoods and locations and make sure your neighbors will be welcoming. No customer wants to walk into an establishment surrounded by hostile protesters. Looking into the voting ballots of your region will help you get a general sense of community opinion.
Obtain Your Product
Central to starting your business will be obtaining the product, including a number of varieties and accessories to make your store appealing to your customers. Start by understanding its current trends as well as the preferences of your clientele. It’s also a good idea to offer as many options as possible, including edibles, flowers, and oils, as well as concentrates and vape products.
Get To Marketing
Restrictions on the marijuana industry apply in the marketing world as well, but yet again, are almost identical to liquor and tobacco marketing in most states (though it’s always wise to check). Sites like Facebook, which are typically considered marketing gold restrict ads promoting marijuana businesses. Consider pursuing organic social media tactics by engaging your audience with content on these channels, and watch what the most successful liquor and tobacco stores in your neighborhood do to get the crowds.
Another point of optimism for your marketing efforts is the number of 420-friendly sites and apps that are on the rise. Sites like WeedMaps and Leafly allow businesses to add lists of their services. Lastly, don’t forget about medical marijuana users! Their need, while much more niche, is both urgent and regular. Consider building a relationship with them to obtain word-of-mouth referrals.
Opening a dispensary is no easy task, but it’s becoming a more approachable market every day. If you’re interested, now’s the time to open your business!