What You Should Know Before Opening A Dispensary

Hindsight advice from leaders in the cannabis industry.

Things you should know before opening a dispensary iStock / A_Melnyk

The legal cannabis industry is young, but it’s growing rapidly. While operating a marijuana dispensary may be the dream job you’ve been waiting for, the sheer amount of work and time involved can come as a surprise, especially for those new to operating a business.

Research BEFORE Applying

New cannabis entrepreneurs may find themselves overwhelmed with the amount of work it takes to get the actual business up and running. It’s not possible to decide you want to start a dispensary one day and have a license in hand the next day. You’ll need to start with a plan.

The boxes future dispensary owners have to check off before opening shop depends on the state and regulations. In Washington state, this means establishing systems for security and traceability, as well as the destruction of product waste among other plans. In Massachusetts, prospective business owners have to conduct a community outreach meeting as part of the application process a whole six months before even filling out an application of intent.

Shea Hynes, co-founder and General Manager at Lux Pot Shops in Seattle, Washington said they could have been much more prepared before opening shop several years back. “If I had to pick one thing that I wish I had known more about before starting Lux, it would be having more knowledge of how to navigate the different regulatory landscapes we encountered along the way,” said Hynes.

Working with the Seattle building department, one of the busiest in the country at the time, meant long waits and over a year-long queue just for issuing a building permit. And then there was the process of obtaining cannabis business licenses through the Washington State Liquor Cannabis board, an entirely different application for a City of Seattle business license, and requirements for complying with seed-to-sale product tracking.

“Prior knowledge of these processes would have saved our team a lot of time and money,” said Hynes. When Lux Pot Shop was getting started though, a lot of the processes were still new and untested, meaning regulatory bodies often didn’t have answers when questions would inevitably come up.

“When you are starting a business in an emerging market, first movers advantage is huge and knowing how to navigate the tricky regulation that comes with opening a cannabis business can be key,” said Hynes.

Create Clear Standard Operating Procedures for Your Employees

As Hynes demonstrated, getting through all of the regulatory application processes is one of the biggest hurdles to getting a dispensary started. Even in non-recreational states, like New York, prospective medical marijuana dispensaries have a long and arduous application process.

Hillary Peckham, co-founder and co-owner of Etain Health, a women-owned medical marijuana dispensary in New York said the most difficult part of getting started was the application process. In a vertically-integrated market, where licensees must cultivate, manufacture, and dispense products, the application process was extremely competitive and once selected, Etain Health was under the pressure of tight deadlines while trying to navigate zoning and construction regulations.

A lack of clear guidelines got in the way of creating useful standard operating procedures for employees to abide by. “The biggest surprise for us getting up and running was that in 2015 there were almost no standard processes, equipment, or services for the industry,” said Peckham.

Business owners should prepare for some confusion and lack of concrete standards in a new and blossoming industry and plan accordingly. It’s a good idea for businesses to come up with a standard operating procedure for employees that complies with regulations to avoid any confusion amongst staff.

“Even today, the production of products is done manually in most instances and inventory tracking software for the cannabis industry is relatively inefficient and poor,” said Peckham. If all employees understand the store’s exact policies for tracking and maintaining all elements of their store, there is less room for error.

It’s crucial for staff to work together to keep the operation running smoothly. Erik Danielson, an owner of The Source, a newly-opened medical marijuana dispensary in Arkansas, echoed Peckham’s statements about regulatory hurdles, adding that figuring out which products to sell and from which vendors proved difficult.

The Source opened in August of this year and Danielson said he had to distinguish “legitimate operators who actually bring value to the project versus those that are just blowing hot air and trying to steal your money.”

The Cannabis Industry is Pay to Play

Starting any business is costly, but new marijuana retailers may be surprised at just how much they have to spend to get the operation started.

In Washington state, the application fee for a marijuana retailer license is $250. For the issuance and annual renewal of a retailer license, the cost is $1,387. The Washington State Liquor and Cannabis Board will then conduct random criminal checks upon renewal and the licensee will be responsible for all costs. And that’s just to get started.

Washington State is not even accepting licenses for new marijuana retailers at the time, so it’s important for those looking to get started in the industry to research the ins and outs of their state’s marijuana industry. Nothing would bum a dispensary-owner-to-be out more than discovering they can’t even apply for a license at the time.

Getting started on a marijuana business venture means reading through all of the rules and guidelines for the state you’re looking to open shop in. If you’re in Massachusetts, for example, you’re going to need at least six months preparation before completing the application process because “community outreach meetings”, designed to explain the proposed business to the public and discuss any community impacts it may have, must be conducted half a year before a final application may be submitted.

According to the Massachusetts Cannabis Control Commission, “if an applicant files its Application of Intent on November 1, 2018, the Community Outreach Meeting must have occurred after May 1, 2018.” With rules like this, it’s imperative that all prospective marijuana dispensary owners start by looking at their state’s requirements and building a timeline to check off each box.

Danielson of The Source dispensary in Arkansas said he wished he knew “the length of time to actually get all of the boxes checked and the amount of time and expense to get open,” before diving into the business venture.

If you’re looking to start a cannabis dispensary, it’s crucial to do your research. There are many hurdles to obtaining a license and they vary from state to state and continue to evolve over time. Prospective owners should spend as much time as they can preparing a business plan that covers all regulations and anticipated costs before making any other decisions.

What You Should Know Before Opening A Dispensary was last modified: by