Legalization goes on spreading, and investors, business people, and entrepreneurs across the country are trying to get involved in the “green rush” or the explosive activity of the legal cannabis industry. Opening a medical marijuana dispensary is one of the biggest ways to make money.
According to ArcView Market Research, the sales from retail shops in the industry are projected to account for $21.8 billion by 2020. To open a dispensary, you should understand the requirements and costs associated with it. It’s important to note that each state has its own minimum capital prerequisite.
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- Startup Capital Requirements
When opening a marijuana dispensary, you must prove you have access to $150.000 in capital. E.g., in Arizona, $150.000 for startup capital is required. In Nevada, you need $250.000 in capital.Massachusetts requires at least $500.000 in liquid capital before you apply for a license.
- Licensing, Registration and Renewal Fees
In states where medical cannabis businesses are legal, you must pay $5.000 (non-refundable) foran application. States like Louisiana, where a $5.000 application fee along with a $150 licensing fee arerequired, are on the low end. States like New Jersey, where you must pay $20.000 to apply for a license, are on the upper end.
- Startup Fees forCannabis Growers and Cultivators
If you’re interested in growing your own weed in addition to opening a dispensary, be aware that there are separate startup fees you should pay. You’ll be charged an application fee and a license fee that is to be renewed annually. E.g., in Nevada, cultivators pay a yearly growing fee, which for producers residing in the state is $3.000. In Connecticut, you must pay $25.000 for the grower’s application fee and $75.000 annual license maintenance fee.
- Operational Costs
Don’t forget about rent, marketing ($2.000 to get things started), employees ($4.000 – $10.000), security ($15.000-$20.000 to get things up and running), interior ($10.000), and inventory (cannabis ran around $1.000 per pound at the beginning of 2017).
- Insurance
Annual premises and casualty liability insurance costs vary based on the size of the business and its location. A products liability policy will be required.
- Other Requirements
Capitalization and licensing fees aren’t the only ones to focus on. In most states with legal cannabis laws, you must adhere to personal guidelines, ranging from age to history of felonies and convictions.
Indirect costs associated with opening a marijuana dispensary can cost you as much as the initial startup fees. Go through the above-mentioned points to get a better idea of how much it costs to open a dispensary.