What Licenses Are Needed To Start A Dispensary in 2018?

When people think about opening a dispensary, too many focus on the massive growth and potential of the cannabis industry. Not enough consider what licenses are need to start a dispensary.

The potential for marijuana dispensaries is definitely large. As more states legalize recreational use and the cannabis industry expands, there will be more opportunities. Revenue from dispensaries and retail stores is expected to reach $6.5 billion - $8 billion by 2019.

That doesn’t mean that a marijuana dispensary is easier or guaranteed to be more lucrative than any other small business or retail store. The fact is, with the license and other compliance concerns unique to the cannabis industry, starting a dispensary and applying for licenses can come with costs and challenges unique to the industry.

What licenses are needed to start a dispensary in your state. What licenses are need to start a dispensary in 2018 could be completely different than what is currently required. Here are some tips to get you on the right track with licensing your new cannabis business:

Marijuana Dispensary License Requirements

Whatever license you are applying for, whether it is a grower’s license, grower’s permit or dispensary license, you will have requirements that are unique to your business function and your state’s marijuana laws.

NORML has a good resource that allows you to look up marijuana laws and license requirements by state to get a full understanding of whether you are eligible and what you’ll need. In general, a few standard requirements are:

  • Owner, investors and license holders may not have any felony convictions
  • Dispensary location must be more than 500-1000 feet away from schools, churches, and other resitricted locations (varies by state)
  • Must have a complete business plan with outline of property ownership, costs, business licenses, etc.
  • Compliance with all safety regulations

These are some good general dispensary license requirements to start with. Work with an attorney or other expert for a better understanding of what licenses are required in your state and town.

Marijuana Dispensary License Fees

In Colorado, the application fee for a medical marijuana dispensary can cost as much as $15,000. Whether you are opening a medical or recreational marijuana dispensary, the cost of a dispensary license should not be overlooked as you are creating your dispensary budget and business plan.

This is just one of the many costs that are unique to opening a marijuana dispensary. For example, according to U.S. Code 280E dispensaries selling a Schedule 1 Narcotic have to pay taxes on the full profit of marijuana sales, before deducting expenses such as rent and payroll. This can make taxes of a marijuana dispensary much higher than other retail businesses.

Marijuana Dispensary License Availability

In some instances, getting a dispensary license may not be as simple as completing the application requirements and paying the application fee. Certain states and towns have a limited number of dispensary licenses available. This may mean all licenses are sold out.

For example, Massachusetts regulation of the use and distribution of marijuana not medically prescribed (Chapter 94G) outlines how the issuing of licenses will work. Next year the State of Massachusetts will begin issuing recreational dispensary licenses to established medical marijuana dispensaries who complete their application. Then, starting July 1, 2018, they will offer the remaining licenses in a lottery to the other applicants.

Each state and town will have their own process for how they will handle dispensary license availability so it is important you understand how to get a license in your state. If you miss important deadlines like the July 1 deadline in Massachusetts it could take years before your dispensary gets a license.

Knowing what licenses are needed to start a dispensary can be a complex and difficult process, but obtaining the required licenses are definitely worth it in the long-run. They will give your dispensary the opportunity to grow with the booming cannabis industry and last in the long-term.