Whether you are looking to open up your own dispensary, or just curious about the business side of marijuana, we have all you need to know about marijuana dispensaries and how much they can make. Most of our article will focus on the aspects of a dispensary for recreational purposes, but we will also touch on some medical dispensaries.
First off it is important to know exactly where you are able to set up your dispensary to sell marijuana recreationally. Marijuana is now recreationally legal in Maine, Massachusetts, Colorado, Nevada, Alaska, California, Oregon, Washington, and the District of Columbia.
If you do not already live in one of these states or do not care about moving my first advice would be to go to a state where the market has not already been filled with copious amounts of dispensaries. For example, Denver cannabis businesses are facing cash flow crunches due to too many stores which have driven down product prices. However, just because a state has a lot of stores, does not mean yours will not be successful.
Every State is Different
When it comes to laws regarding cannabis no two states are quite the same. Before expecting to make it big with your dispensary it is important to take into consideration the laws of the state.
Stating a dispensary at first can be extremely intimidating and can cost you a lot of upfront money. States require a dispensary application which comes before you even have to get your license, and combined, the two can exceed $20,000 in costs.
Not to mention, after obtaining a dispensary license, owners may be required to obtain a cultivation license for the growing of their products. A cultivation license can cost up to a few thousand dollars. As if this isn’t enough money you have already put into your new business, many states require extra fees, and residency in the state before this process can even begin.
How Much Do Marijuana Dispensaries Make
Despite all of the extra taxes and fees you will be paying, most dispensary owners are not starving. According to Marijuana Business Daily (MBD) the average recreational marijuana store makes on average$1,773 per square foot. However, every dispensary is different, Harborside Health Center, based out of California revealed their financial data publicly and claim to make $22 million in annual revenues. This makes them one of the top cannabis centers in the nations.
These numbers may seem great, but the average dispensary does not even come close to these numbers. According to data collected by Marijuana Business Daily 60% of owners make $500,00 or less annually, and more than a quarter of dispensary owners reported making over $1 million in revenues annually. While the other 15 or so percent bring in less than $100,000 dollars a year.
Whether these numbers excite you or scare you, most owners still find it difficult to measure their success and calculate the company’s value. Due to the complicated nature of the business, it is often hard for dispensary owners to find a company willing to do a valuation.
Another way to look at dispensaries is as a retail store. The larger ones with thousands of loyal customers, professional packaging, and tested products, with more than a dozen employees and multiple locations within one state, are going to be the more successful dispensaries more often than not.
While at the same time, the small local mom and pop stores with only one or two employees and a few hundred customers are not nearly as likely to make as much money as the larger stores.
MBD states, “How big a dispensary gets from a revenue perspective depends on many factors, including local regulations, plant limits and permitting and licensing requirements (the higher these are, the larger dispensaries usually are).”
“Additionally, it depends on the intentions of the owner. Some entrepreneurs prefer to fly under the radar given the industry’s shaky legal status, so they keep their dispensaries small to avoid unwanted attention and scrutiny.”
This is not saying that either way you are guaranteed to do better or worse, just some advice from the statistics so far. As you can see, starting a dispensary is not as easy as you would think. Goodluck!