Monarch Dispensary

Monarch Dispensary

Friday, July 21, 2017

How to Start a Medical Marijuana Dispensary


Starting a medical marijuana dispensary can be easy with the right information. Learn what’s involved in opening a medical marijuana dispensary, from startup costs and business licensing requirements to marketing tips and insider advice.

Medical marijuana dispensaries legally purchase marijuana from vendors and sell it to physician-approved patients. Dispensaries have a physician on the board of directors to ensure that patient treatment adheres to standard accepted practices. They also have highly trained staff who are continually educated about the many different strains and forms of cannabis and their medicinal purposes. Those forms include vapor, tinctures, balms, oils, juices, and edibles. A medical marijuana dispensary provides patients with an alternative to pain-killers and other drugs that can have harmful side effects when used long-term.
Who is this business right for?

This business is ideal for people who are passionate about alternative medicine and have a strong desire to help others. Those who have worked in the medical field are often drawn to this business, since the goal is to alleviate the severity of symptoms associated with many medical conditions that adversely affect quality of life. People interested in learning more about the practical application of the latest scientific discoveries in the fields of medical science, biology, and horticulture are ideal candidates for this business.
What are some of the day-to-day activities of a medical marijuana dispensary owner?


Keeping abreast of federal and state laws and new legislation affecting the industry
Learning about the medicinal properties of existing strains of cannabis as well as those of new strains currently under development
Negotiating prices with growers and ordering products
Educating and training staff members
Communicating with patients about their needs and the effectiveness of your products in meeting them

Who are the preferred customer types?

Clients and customers are all patients who have been referred by a physician who has prescribed cannabis as a medical treatment for an existing condition.
How does a medical marijuana dispensary make money?

A medical marijuana dispensary makes money by selling cannabis products for medicinal purposes. Some dispensaries grow their own product to increase profits while others purchase the product from professional licensed growers and resell it at a higher price. Many also make money through the retail sale of pipes and vaporizers purchased in bulk at wholesale prices.
What is the growth potential for a medical marijuana dispensary?

A new report by a research firm revealed that legal cannabis sales rose 17% in 2015 to $5.4 billion and predicted that it would grow another 25% in 2016. Profits for individual dispensaries vary greatly. According to a recent industry survey, almost 60% of owners earn less than $500,000 annually. 27% of respondents reported sales between $100,000 and $250,000, and 15% reported earning less than $100,000. A little over 25% reported revenues of over $1 million, and 15% reported between $500,000 and $1 million.
Getting Started
Getting A Medical Marijuana Dispensary Business Started
What are some skills that will help you build a successful medical marijuana dispensary?
Knowledge of the medicinal properties of cannabis
Negotiation skills for contracting the best prices from growers
Interpersonal skills for communicating with patients about their needs and experiences with your products
Managerial skills for training and supervising staff
Accounting skills
Advertising and promotional skills for competing successfully within the industry

What are the costs involved in opening a medical marijuana dispensary?

Obtaining a business license is one of the most substantial startup costs of opening a medical marijuana dispensary. In most states where medical cannabis businesses are legal, the cost for an application for a license is $5,000. However, the cost varies from state to state, as does the minimum requirement for startup capital, which can be as high as $250,000. If you plan to grow your own product, additional grower’s license fees are required. Other common startup costs include:

Monthly rent, including a security deposit (for those who don’t own commercially zoned property)
Initial inventory (some growers are willing to accept a percentage of sales in lieu of a complete initial payment)
Display cases, bottles and jars
Office supplies
Security system
Signs that display your company name and logo to create brand recognition





Check out our detailed guide to learn specific steps on how to start a business.
Growing Your Business
Growing Your Medical Marijuana Dispensary Business
How to promote & market a medical marijuana dispensary

There are more restrictions on advertising within the cannabis industry than other types of businesses. Creating a blog on your business website is a great way to educate existing and potential customers about your products, their uses and their effectiveness. Social media can also be very helpful in building a regular clientele as well as offering sales promotions. Experts suggest featuring your best products and offering deals, loyalty rewards, and referral incentives.

 How to attract and retain customers

It’s important to introduce yourself and your highly trained staff members to the community. Your customers will be referred by prescribing physicians. Planning or attending community education events and giving presentations to patient support groups and at medical facilities are also good strategies.


How and when to build a team

It’s important to have a team in place before opening your business. At a minimum, the team should include a physician, growers, a knowledgeable and well-trained sales staff, and adequate security personnel. Other team members may include investors, accountants, and additional personnel for tracking inventory, website maintenance and secretarial duties.
Legal Considerations
Legal Considerations for A Medical Marijuana Dispensary Business
State & Local Business Licensing Requirements

Each state has different licensing procedures for growing and selling medical marijuana. This site has a list of state-by-state regulations , and also offers legal consultation for persons interested in starting their own medical marijuana dispensary.

Most states also require businesses to obtain a generic seller’s permit or resale certificate. Additionally, some states require both. A seller’s permit allows states to record and collect taxes from goods (and sometimes service) sales.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, check out our informative guide, Sales Tax for Small Businesses.
In addition, certain local licensing or regulatory requirements may apply. Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
In some states, such as California, it is required that medical marijuana dispensaries be opened up as non-profit organizations. Attached is a resource concerning state-specific non-profit requirements: Cornell University Law School - Non-profit organizations .
Certificate of Occupancy
A medical marijuana dispensary is generally run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
If you plan to lease a location:
It is generally the landlord’s responsibility to obtain a CO.
Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a medical marijuana dispensary.
After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
If you plan to purchase or build a location:
You will be responsible for obtaining a valid CO from a local government authority.
Review all building codes and zoning requirements for your business’ location to ensure your medical marijuana business will be in compliance and able to obtain a CO.


Reduce Personal Liability
Structuring your business as a limited liability company (LLC) ensures your personal assets are protected in the event your business is sued.
What is an LLC?
Form an LLC in 5 easy steps
Earning Potential
How to Start a Medical Marijuana Dispensary Business Earning Potential
How much can you charge customers?
Customers are charged according to the quality and quantity of the product. The average cost of an ounce of medical marijuana is $200. However, high-grade organic medical marijuana can cost as much as $60 per gram. That does not include any state tax. Edibles such as cookies or brownies can sell from between $2 and $5 per single dose. Tinctures are priced from $15 to $50, depending on the strength.
What are the ongoing expenses for a medical marijuana dispensary?
Ongoing expenses to maintain a medical marijuana dispensary may include:
The cost of purchasing the product from growers
Rent and utilities
Staff salaries
Advertising and sales promotions
How much profit can a medical marijuana dispensary make?
According to Forbes, established businesses can earn up to 50% profits, while new ones commonly earn about 20%. Annual sales figures are not yet available since the medical marijuana dispensary industry is new and still illegal in some states. It is still considered high-risk due to the discrepancies between state and federal laws.
How can you make your business more profitable?
Many medical marijuana dispensaries offer a variety of foods containing medicinal marijuana. Brownies, cookies, and other edibles have become extremely popular, and customers are willing to pay more for the extra time, effort and ingredients needed to make them. Some dispensary owners also grow their own product, which results in fewer expenditures and higher profits. Many dispensaries also sell accessory products, such as pipes and vaporizers, which sell for prices ranging from $20 to $700.

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