Choosing the right location is an often-overlooked critical factor in getting started with a new business. The location will determine your success based on the demographic you’re targeting, how accessible the business is for foot traffic, and the competitors surrounding the area. If you’re trying to open a cannabis dispensary, you’re going to face even more conflict. Successfully securing a location is certainly doable, though, just look at states with thriving cannabis industries.
The location for a cannabis dispensary can be a make or break situation because cannabis businesses tend to face more obstacles than others when first starting out. Restrictive zoning laws can leave prospective dispensary owners with few options to choose from, and learning to navigate them can be a challenge.
Make Sure You’re In The Clear Before Doing Anything
Just because cannabis is legal in your state doesn’t mean businesses can open anywhere. In fact, some states with legal cannabis allow municipalities to “opt-out” of the industry, banning the presence of marijuana retailers in their city and town. Though they may be temporary, this can wreak havoc on business plans if the municipality is anti-cannabis.
Michigan, for example, has already seen over half of its communities opt-out of having marijuana facilities before applications for business have begun. Make sure the state you’re in is currently accepting applications for licenses before investing time and energy into the endeavor, as well. Some states have stopped accepting licenses for new retailers.
Familiarize Yourself With Zoning Restrictions
If your prospective business is not in a “no” zone for a cannabis dispensary, you’re still going to need to read through your local zoning ordinances. And then read them again. Jeff Anderson, the co-founder of the Evergreen Market in Washington State, went through this several times as his dispensaries operate in four different cities. Anderson advises prospective dispensary owners to do their homework and make sure their location is compliant before reaching out to a landlord.
Even then, it can be a bit tough. “The codified laws and the buffer maps provided by the city were oftentimes inaccurate,” said Anderson. “It is not fun to get down the path with a lease or with the LCB [Liquor and Cannabis Board] only to find out the location is not compliant.”
Alicia Wingard, Founder & COO of Flora Terra, a newly-opened boutique dispensary in Santa Rosa, also faced many challenges navigating zoning laws before opening the dispensary. The city had such tight restrictions on cannabis businesses they were limited to industrial areas and business parks, where foot-traffic, a crucial part of the business, is non-existent.
“Most available locations were outdated and in need of major renovations,” said Wingard. “One place we found would have required $800k to $1M just to bring it to code and no building owners were willing to pay any portion of a tenant’s improvement project for a cannabis business.”
Navigating the strict zoning requirements meant the Flora Terra team spent nearly a year to find and secure their current location.
Choose a Location That Fits Your Target Demographic
Once you’ve narrowed down the places you can and cannot open a dispensary, you’ll want to do some market research to make sure you pick the most lucrative location. Check out the demographics of the area to get an idea of what kind of customers may be coming in. Of course, with tight restrictions in zoning, it may be less about choosing where you want to be and more about fighting to secure a location in general. If you have the opportunity to choose between several locations though, be sure to pick the one that will fit your target demographic’s needs.
If you want to cater to the young and hip crowd, a college town may make more sense than a quiet, small community. Try to keep your location selection as close to your target demographic as you can. Take note of the surrounding businesses and who you may be competing with as well as other retailers in the area that may draw target customers to your shop. Consider the parking options as well. If you’re located in a place with primarily foot traffic, parking may not be as important to consider as those opening a dispensary off of a major road with little foot traffic.
Find a Good Landlord Willing To Take on a Cannabis Business
Finding a landlord that is willing to work with cannabis retailers is an often-unanticipated challenge in securing a location for a dispensary. The industry is still new and many landlords are hesitant to get involved. This doesn’t mean you can’t find a good landlord willing to work with a cannabis dispensary. The key is to keep pushing, be completely honest about your plans, and talk to as many people as necessary to find answers.
“If the property is not owned outright or is financed outside of a cannabis-friendly credit union, there can be major pushback to doing a lease,” said Anderson. “Brokers usually just say ‘no’ to cannabis, but we have been successful going around them and talking to the owner.”
Once you’ve found a landlord willing to work with you, it’s important to pay close attention to their proposed terms and make sure you’re not being taken advantage of, especially in this industry. “Now more than five years ago, landlords know they have a location that is zoned for cannabis use and will use it against you when negotiating terms and lease rates,” said Anderson, noting that approaching potential landlords with honesty and respect is the best way to go. “Landlords have their preconceived disposition towards cannabis, yet with the proper education, they can be turned and become your advocate. They end up liking the extra traffic to the area as well as the extra rent and corresponding property value increase.”
Final Thoughts on Finding a Location
As with every aspect of starting a dispensary, or any business, the key is to plan ahead and be prepared for a lengthy process. Navigating zoning laws and securing a location are unavoidable first steps in getting a dispensary up and running, and the process can take a long time. “Opening a dispensary isn’t for the faint at heart,” said Wingard. “We’ve had to fight the entire way, from calls to city officials for local authorization to calls, emails, and tweets to senators and assemblymen for licensing.” Securing a location is a huge first step in opening a dispensary, and once you’ve crossed that off your list, you’re on the right path.