Cannabis Dispensary Business Plans

Step-by-step guides to starting your own dispensary business

Starting a Dispensary in 2022

Once exclusive to small-businesses the growth of the legal marijuana sector has led to a boom in the total numbers as well as the variety of dispensaries across America. 

Complete Guide to Starting a Dispensary

If you are not scared of hard work or afraid of red tape, and have cash, starting a medical marijuana dispensary business is an excellent idea.

Today, the cannabis dispensary is a business opportunity not to be missed.

According to Marijuana Business Daily, in 2019, cannabis dispensaries and retail outlets generated revenue in the region of $6.5 to $8 billion.

Potential entrants into the industry naturally have numerous questions, including:

  • What does it cost to launch a dispensary?
  • What are the legal obligations on a cannabis dispensary?
  • Is the marijuana industry profitable?
  • Which states allow cannabis dispensaries?


To answer these questions and other vital issues surrounding the medical cannabis dispensary industry, we have produced this essential 9 step cannabis dispensary guide.

  1. Research the risk and eligibility
  2. Research regulations, the law, licensing, costs and location
  3. Get cannabis training
  4. Draft a business plan
  5. Obtain funding
  6. Pick your team
  7. Acquire premises
  8. Brand and market your cannabis dispensary
  9. Go live!

So let’s see what you need to do and know to get the ball rolling.

Research the Risk and Eligibility

Understand the law:

First up, you need to understand the legalities. An increasing number of states have legalized medical marijuana as well as its recreational use. But there are still risks involved as marijuana remains illegal in the eyes of the federal law.

Under federal law, medical cannabis retains its designation as a Schedule One drug in the Controlled Substances Act. The upshot of this classification is that medical marijuana cannot be prescribed as it is still listed as an illegal drug. It can, however, be suggested as a remedy.

This legal gray area is not helped by the lack of existing case law on the matter. The legality of medicinal cannabis, therefore, remains somewhat opaque for now. This legal uncertainty makes it challenging for a cannabis dispensary to ensure it operates within the law, which poses a significant threat to your business.

Received wisdom, then, is to always include on your team a lawyer who is well-schooled in the legal minutiae of the cannabis business.

The Financial Risk

Launching any new business requires a substantial financial commitment. In the case of the cannabis industry, there are extra difficulties in securing the necessary finances required.

Traditional funding avenues have proven very hesitant and risk-averse when it comes to the cannabis industry. So much so, that most banks prohibit cannabis businesses from transacting business with them, far less providing capital. Often, this can lead to cannabis businesses operating on a cash-only basis with all the inherent security risks involved.

In most cases, setting up a cannabis business requires a great deal of creativity, and maybe even your life savings to get it off the ground. Typically, you would be looking somewhere north of $250,000 to open a medicinal marijuana dispensary.


Licenses are not granted to everyone with the money to do so. Local government has criteria to make an applicant eligible, in addition to red flags that mean instant disqualification.

NORML (The National Organization for the Reform of Marijuana Laws) has excellent resources on state by state licensing and marijuana laws. Their website is an excellent place to check out your eligibility.

Typically, you will need to meet the following standard requirements, which include:

All owners, investors, and license holders must not have felony convictions.

  • The dispensary’s location must be at least 500 to 1000 feet away from schools, churches, and other restricted venues. The rules vary by state.
  • There must be a comprehensive business plan outlining property ownership, costings, business licenses, etc.
  • Proof of safety regulation compliance.

Research regulations, the law, licensing, costs and location

So far, so good, but there are still questions to be answered. Such as these here:

What state laws apply to dispense and marijuana use?

Does state law protect my business?

Which licenses and permits are required?

State Law

Cannabis use and dispensing laws vary by state. As of last summer (June 24, 2019), there were 34 states and several territories with the legislation in place governing medical marijuana. Among the territories were the US Virgin Islands, Guam, Puerto Rico, and the District of Columbia.

Twelve states also allow CBD products for medical reasons or as a legal defense so long as they are low in THC and high in CBD.

States operating low THC criteria are not regarded as having comprehensive marijuana programs. There is broad agreement over determining whether a marijuana program is comprehensive.

These criteria used by the National Conference of State Legislatures and others tracking the issue include:

Imposing no criminal penalties on those ingesting marijuana for medical purposes.

Allowing marijuana access via home cultivation, dispensaries, or other systems.

Allowing an assortment of strains and products, including those with higher THC levels.

Permitting the smoking or vaping of marijuana products, plant biomass, or extract.

And is not a limited pilot program.

Licensing, Insurance, and Taxation


Probably the most tedious part of kicking off a new business, but usually the most important. Nobody particularly enjoys paperwork, but with a cannabis dispensary, you want the paper trail protection.

What is required depends on where you plan to operate.

For instance, in California, you will need:

A seller’s permit: In common with other businesses selling goods, a startup wishing to sell cannabis or CBD products needs to hold a seller’s license. This is one of the prerequisites for applying for your cannabis dispensary license.

Cannabis license: There are two kinds; temporary for up to 120 days, and an annual non-temporary license which must be renewed yearly.

Cannabis dispensary license: This is non-refundable and generally costs between $1,000 to $5,000. On top of this, the registration and year fees are usually around a further $5,000 to $20,000.

Meanwhile, in Florida, you need the following to be to get a dispensary license:

  • Business Plan
  • Cultivation Plan
  • Marijuana Processing and Manufacturing Plan
  • Employee Manual
  • Environmental Plan
  • Financial Plan
  • Fire Safety Plan
  • Inventory Control Plan
  • Recordkeeping Plan
  • Patient Education Plan
  • Product Safety Plan
  • Security Plan
  • Staffing Plan
  • Suitability of Proposal Plan
  • Transportation Plan

And be aware, too, that tax and licensing fees vary dramatically by state.

For instance, New Jersey businesses are asked to fork up a hefty $20,000 for a license, while in Louisiana, the same license costs $150.

Also, most states will require you to register your business if it varies from the trade name under which you operate.

Say your registered LLC company is called Four Cousins, LLC. You won’t be able to lawfully trade if you operate using the name Four Dolphins instead. That’s because the business name and the trade name are different.

Fortunately, this isn’t a biggie to sort out. All you need do is register the trade name with the state (and/or local government) by submitting a DBA (Doing Business As) certificate. You may have heard DBAs referred to alternatively as ‘assumed name,’ ‘trade name,’ or ‘fictitious business name.’

Cannabis-friendly Insurance

You are going to need insurance to cover your business against fire, theft, and damage.

You will require appropriate insurance to protect your business and your hard work against the following risks.

General liability: Landlords and the state regulators usually demand this insurance. It protects against the risk of general damages as well as injuries.

Product liability: This insurance will protect your inventory and equipment.

Medicinal: This coverage safeguards inventory against fire and theft within your premises as well while in transit from the manufacturer to your store.

Unsurprisingly, as the cannabis industry continues to grow, so does the number of insurance companies prepared to take on the risks to your business.


Because the Food and Drug Administration (FDA) only allows cannabis to be suggested, and not prescribed, there are no tax exemptions. As a result, your CBD products will have state tax levied upon them.

Get Cannabis Training

You will only make a success of your CBD business by possessing all the necessary knowledge about cannabis.

You may understand the risks and requirements of opening a dispensary, but that needs to be complemented by a proper understanding of the product and the raw material.

Educating oneself on the various forms of cannabis is essential for your customers, your products, and the overall success of your business.

As soon as customers arrive, they will want to be assured your business is both knowledgeable and professional. Customers may be nervous and anxious about using medicinal marijuana, especially if they are new to cannabis use.

They want to be reassured and shown the best products to meet their particular needs. Customers must be able to trust you and your staff’s knowledge. They will only gain this trust by buying the products that work for them. Therefore you need to be up to speed on cannabis and offer the correct advice and recommendations for each customer.

A wise move to get a firm grasp of the products you will sell is for you and your staff to undergo a dispensary training course. Doing so will give everyone a solid foundation on cannabinoids and which products to recommend to meet the customer’s health needs.

Oaksterdam University, founded in 2007, was the world’s first-ever cannabis college. However, its educational roots stretch back to 1995 and boast over 40,000 alumni around the globe.

Their courses aim to provide a 360-degree grounding in the cannabis industry from soil to shelf. Oaksterdam is the acknowledged leader in cannabis industry training and emphasizes that cannabis dispensaries are both transformational and transactional.

Draft a Professional Business Plan

Studies demonstrate that entrepreneurs who write a business plan are almost three times as likely to succeed in launching their business.

Traditionally business plans include the following sections:

Executive summary: This summary encapsulated the entire business plan, so typically it is the last thing to get written. Anyone reading your business plan will look at this first, so it’s important to summarize your business accurately.

Industry overview: This section is a brief industry sector overview of the space in which your business will operate. The overview will include information about the key industry players, industry trends, and an estimate of your sales revenue.

Market analysis: This section considers your target market for the product or service you will be offering. It is a breakdown of the market segments you will pursue, their geographic location, and their needs. In this part of the business plan, readers will see you have a comprehensive understanding of your target market.

Competitive analysis: This section outlines your direct and indirect competition. It will examine how they currently satisfy the needs of your target market and how your business plans to differentiate its products.

Sales and marketing plan: This section will discuss in detail your unique selling point. Likewise, this section talks in-depth about your business promotion plans and how you will win customers.

Management plan: This part of the business plan discusses your organizational plan for legal and management matters. It sets out your management lineup and what your staffing requirement will be. If you need to secure funding, your advisory board should be described in this section.

Operating plan: Among the issues required in this section are the location of your business premises, its facilities, and equipment, as well as staffing requirements. Include details of suppliers, your manufacturing process, and other operating details.

Financial plan: There are three vital finance documents to include in the financial plan: your income statement, balance sheet, and cash flow statement.

Appendices and Exhibit: This section is for miscellaneous information in support of your business proposal. This additional information could include market research, legal documents, product images, etc.

A good business will guide you and its readers through each step in planning and launching your business.

Obtain funding

Bankrolling any business can be tough, but none more so than when it comes to a cannabis business. Due to cannabis still being unlawful at the federal level, life is made especially difficult for medical cannabis dispensaries when it comes to securing working capital, loans, and merchant accounts, etc.

Costs, of course, vary by state due to the local requirements enacted by city, county government, and state lawmakers. Startup funding averages out around $250,000 to $750,000. This rough figure can include expenses associated with insurance, employee costs, and your premises.

If you have been able to find an investor willing to part with this kind of cash, well done! If not, don’t despair; there are alternative funding options.

Is mainstream banking an option?

Probably not, to be frank. Continuing uncertainty of the legality of marijuana at the federal level has made the majority of financial institutions too jumpy to get involved.

A marijuana dispensary is inevitably going to be construed as high risk. If you were able to find a bank willing to help, the exorbitant fees they would impose would quickly make your business unprofitable.

The reason for the high risk attached to marijuana dispensaries is because the Federal Deposit Insurance Corporation underwrites banks. Any bank that flouts federal law is therefore not covered by FDIC insurance.

Most banks simply prefer to take a pass on business with the cannabis industry to avoid this risk.

Also, in the background for banks are the potential legal issues they could face. In particular, a bank could get hit with accusations of money laundering if they accepted deposits from a cannabis dispensary. While the odds of enforcement are slim, banks and other lenders do not want to take the risk.

Alternative Funders

With mainstream banks and other financial institutions unwilling to get involved, you will need to look at alternative funding options. It is not impossible as hundreds of small business owners can confirm. Sure it is challenging; you just need to get a touch creative.

Equity Funding

As the cannabis market continues to thrive, equity funding is gaining traction. Equity funding is raising working capital by selling shares in the company.

Companies raise cash by selling a percentage of ownership in the company in exchange for money. A new business can acquire equity finance from several sources, including family members, friends, and other investors who believe in them.

In essence, there are three types of equity funding; venture capital, angel investors, and crowdfunding.

Venture Capital

A small number of venture capital companies specialize in funding cannabis startups, most notably Snoop Dogg’s company, Casa Verde Capital. These companies are worth sounding out if you have passed the seed funding phase. A quick internet search should turn up these venture capitalists.

Angel Investors

In tandem with venture capital companies are angel investors whose interest has been similarly piqued by medical marijuana. AngelList has a dedicated section aimed at matching startups with angel investors.

You can also use old fashioned offline networking to get pointed in the right direction. Cannabis industry exhibitions, conventions, and meetups are ideal places to get connected with an angel investor.


Crowdfunding is increasingly becoming the funding option of choice for startups. The two predominant crowdfunding platforms are Kickstarter and Indiegogo. The latter has approved several companies to seek funding on their platform.

A less well-known platform is StartEngine, which has also allowed marijuana startups to raise funds. Also, check out CannaFundr and Fundanna, which are dedicated marijuana-funding platforms.

Debt Funding

Funding a startup via debt is a big ask, be it business credit or a loan. But new lenders are more open to assisting companies in finding the funding they require.

Personal Loans

You may wish to obtain a personal loan to assist with set up costs. However, you will need a regular income and a decent credit score to access this kind of loan.

For many fledgling enterprises, personal loans are the funding source for which they opt. This option is because loan approval is not tied to the industry, usage of funding, or length of time in business. You will, however, be obliged to reveal how the loan will be spent.

Credit Cards

Business credit cards are useful for paying a recurring cost, to help with an emergency or meet startup expenses. However, they can become costly if you don’t pay off the monthly bill.

The Bottom Line

The medical cannabis business is very lucrative, but managing the financial side can be testing. The good news is that despite everything, it is eminently possible to get the funding you require. And as the industry grows exponentially, the number of investors willing to get on board will undoubtedly increase.

Building a Team/Workforce

It takes more than contemporary decor and a great product range to operate a prosperous marijuana dispensary.

To build the best possible team, you need to consider the type of person you want to hire – the professional team behind the scenes and your customer-facing staff. If both sets of workers are skilled and trustworthy, then you are set for success.

Professional Support

A dispensary inevitably entails a lot of moving parts that require help and support. As a business owner, your most critical role is to ensure everything is done by the book and the letter of the law. Your two most supporters in this regard are your lawyer and accountant.

Getting the details of opening a dispensary right is a formidable task as it invariably means dealing with mountains of red tape. In these circumstances, you want to be sure you are compliant, and a lawyer has your back.

Meanwhile, there are also specific tax codes a dispensary must adhere to, so a certified accountant should do the number crunching. Many dispensaries will also employ a compliance officer whose task it is to ensure the business follows all the regulations and keeps on the right side of the law.

Day-to-day Operations

While the back office is critical, so too is the front customer-facing end. To get the best out of the front end of the operation, you should employ the following people:

Budtenders: Only qualified budtenders can work in a dispensary and possess full knowledge of cannabis. To reassure customers and ensure a positive shopping experience, budtenders must be able to demonstrate their deep understanding of strains, CBD products, and their medical use.

Managers: It’s best to find managers with previous cannabis industry experience. They should possess a passion for the CBD industry and manage the team when you are elsewhere.

Administrative Assistant: This role should include account handling and bookkeeping. In house IT support is also handy.

Security: Some states require a security detail, but it is worth considering whatever the requirement. Security will not only protect your assets; it will safeguard staff and customers too.

Board of Directors/Influencers: A wise addition to any board is a physician who can oversee the whole patient care system.

Acquire Commercial Property/Retail Premises

The ‘perfect’ location for a marijuana dispensary is compliant with the regulations you need to meet. This criterion is the number one priority when searching for premises.

Again, regulation for dispensaries vary from state to state, so be sure to be fully au fait with all the requirements before you start your hunt for premises.

Renting vs. Buying

Because of the ever-shifting raft of regulations governing marijuana dispensaries, for the time being, renting is the most popular option amongst marijuana business people.

The rationale for renting is that it is far too risky to buy premises that may or may not be compliant in a couple of years.

A property that is compliant in one place may not be compliant elsewhere. It is also wise to be upfront with a potential landlord and tell them you intend to open a marijuana dispensary. It’s better to find out if they are supportive.


Once you have found a property that will be deemed compliant by the authorities, mull over whether it will be convenient for your customers. Compliance and being a handy location for customers are not necessarily the same thing.

How to Find a Suitable Canna-friendly Property

With the advent of the marijuana industry came a cohort of brokers and realtors who specialize in searching out cannabis-compliant properties for businesses.

The following sites should be able to help you find an ideal space for your marijuana dispensary.

If a purchase is more suitable than renting, take a look at 420 Property.

They specialize in the sale of marijuana-friendly real estate.

Weed Rentals, meanwhile, focus on commercial premises for rent that is suitable for the CBD industry.

A third website to check out for marijuana industry commercial property for sale is Cannabis Real Estate Consultants, who list property across the US.

Branding & Marketing your Cannabis Dispensary


There has been a lot written about brand identity. But it is fundamental to the CBD industry as it emerges from being a ‘black market’ to today’s legitimate market that addresses medical needs.

To rid marijuana of its outlaw image, it cannot be overestimated how important getting the branding spot on is to your customers. Branding needs to be professional and present medical marijuana in its new light.

It is, notwithstanding, just as critical to have a strong brand identity in place to get your CBD products noticed in an increasingly crowded marketplace.

Ultimately, your branding is the public face of your company and its products. Your branding should be consistent and embody what you, your company, and its products represent.

To help you, ponder your branding issues here are some questions to consider when creating your brand identity:

Which attributes do I wish my brand to highlight?

Who are my customers?

How do my CBD products differ from the rest of the marketplace?

What is unique about my brand?

What is the principal element in my customers’ experience?

How you answer these and other questions like them will inform the foundations of your brand. These foundations are the heart of your brand, and all future branding judgments should be rooted in these ideals.

Every visual element of your business should reflect the brand and grow from the conclusions you arrive at when creating your branding identity. This consistency ranges from your enterprise’s name to its logo, website, and the decor and frontage of your dispensary.

It is time well spent taking a long, hard think about branding as it is the public face and anchor of your business. Vitally, be consistent with branding and its quality. Branding and the quality of your products will ensure brand recognition and customer loyalty.

Website & E-commerce

Your greatest business ambassador is your company website. Today, it is becoming increasingly challenging to reach customers without an online presence, particularly for brand-new small businesses and startups attempting to compete with all the white noise on the web. This also holds true for long-established companies.

Indeed, a study recently found that around 97% of buyers had researched their purchase online beforehand.

Your company website is a keystone to your branding strategy and your marketing efforts.

Do not hesitate, get a company website, and make this crucial business engine work for you. Ensure the website design reflects your branding identity. Site users should immediately understand what your business and brand are all about.

Website visuals and marketing content should project the brand identity and values.

Here are our top tips to get the branding right:

  1. Stick with your brand’s color scheme.
  2. Feature your business logo.
  3. Outline your dispensary’s philosophy.
  4. Write web content that speaks to your target market.

As well as being a brand ambassador, your dispensary website is an excellent means to grow your customer base.

Finally, a professionally designed website will give your business credibility and legitimacy. Just make sure you are making the most of the opportunity presented by your web site.


As the CBD market expands, it is easy to feel overwhelmed by the constantly evolving regulatory landscape. It can be awkward to keep abreast of state and federal laws.

Advertising is another area where these regulations impinge. Advertising is strictly governed, and many online sales platforms simply ban or severely restrict cannabis-related adverts due to the federal status of the plant.


Website, Leafly has compiled a guide to marijuana advertising regulations state-by-state. This guide may help dispensaries stay on the right side of the law in the state where they are based, and in other states, they wish to place advertisements.

Open Doors/Go live!

Well done! You are now ready to launch after having considered the risks and the benefits, acquired funding, hired a quality team of workers, and started your advertising campaigns. All that’s left to do now is open the doors of your dispensary.

A great way to kick off your new business is by hosting a grand opening event. An open event should include the following elements:

  • Meet the Team
  • Patient Education
  • Product Information
  • Sales & special offers

Meet The Team

Gathering the best team possible to serve your customers deserves

their introduction to your customers. You spent a good chunk of time assembling your team, so introduce them.

Acceptance within the community is a vital first step in ensuring your dispensary’s success. Meeting and chatting with the team will make your dispensary more approachable, especially to those customers who may have had initial misgivings.

The grand opening is an opportunity to show off your passion for the CBD industry, your belief in adhering to medical standards, and commitment to complying with the law and cooperating with the local community.

By being completely open, you may be surprised by the amount of support you receive.

Patient Education

Customers will undoubtedly want to know more about your business and products, so the grand opening is an excellent chance for patient education. You will also learn more about your customers and have the opportunity to grow email and prospect lists.

Topics to include in your patient education are the qualification for medical marijuana use, the buying process from your store, and what products will work best for individual patients. Also, outline the most recent research on marijuana.

Sales, Discounts & Special Offers

The most prominent part of any grand opening is the exclusive deals and promotions available on the day.

You have a golden opportunity to make a great first impression, so speculate to accumulate. Grand opening day offers will almost guarantee repeat business.

Some commercial rivals routinely offer new customers a massive 50 percent off their first order. And throw in free shipping as well.

Launching a marijuana dispensary is hard work. You can become a pioneer in this blossoming industry through hard work, determination, and planning.