How To Open A Marijuana Dispensary In California (12 Simple Steps)

This is a simple yet detailed guide on how to open a legal marijuana dispensary in California.

Marijuana is legal in California for both medical and recreational use. Adults (above the age of 21) are allowed to purchase up to 28.5 grams of marijuana, or up to 8 grams of concentrated forms of marijuana.

The legal marijuana market is the largest in the US currently with an estimated value of about $2.75 billion. If asked, this is quite enticing for any pot investor. If you are one of them, you are in the right place as this article will show you exactly how to go about tapping into this lucrative market as a marijuana dispensary owner. 

I have outline 12 steps to guide you from the start to the finish of setting up a marijuana dispensary in California.

Let’s dive right in.

1. Hold your horses and do a thorough market research

You must be excited about starting a marijuana dispensary in Cali. But before you jump in, take a deep breath and conduct a thorough market research. Granted, with such a large market you should be able to attract a sizeable clientele. However, you will need to know how to position yourself in the market.

Market research should cover the following:

–         Demographics of marijuana clientele

–         Popular marijuana products and what they sell for

–         Unavailable marijuana products that may gain traction

–         Both legal and illegal competition

–         Challenges encountered by existing marijuana dispensaries

–         Underserved areas that may need a dispensary

It may be necessary to enlist the services of a professional market analyst to give you a better understanding of the market before you launch

2.  Find a suitable location for your marijuana dispensary in California

The location of your marijuana dispensary is the real business itself. You can have a fantastic dispensary but if it is located in the wrong place chances are high that it will be a flop. It really is a real estate business.

Unlike other businesses, marijuana dispensaries must be located 1000 feet away from the following:

–         A school or any institution with children

–         A church

–         A residential area

–         Another legal marijuana dispensary

The location will contribute to a large part of your budget. Therefore it is important to know in advance how much the ideal location costs and plan for it.

Renting vs. Buying

You may choose to either buy or rent space for your marijuana dispensary in California. There are definitely pros and cons to each alternative. This decision will be guided by how much the property costs vis-à-vis how much you can squeeze out of your budget. Also, some landlords may not be open to their idea of a marijuana dispensary on their property. Be prepared to push past this hurdle.

Here are a few resources to help you find the ideal spot for your weed dispensary:

1. 420 Property
2. Weed Rentals
3. Cannabis real estate consultants

 3.  Write a marijuana business plan

The next step is to draw up your business plan. The business plan outlines how you plan to execute the business and achieve profitability in a nutshell. This is also a good place to consult a business expert who is familiar in this niche. 

MMLG is a cannabis consulting firm based in California. They offer consultative services across a breadth of segments including compliance and investments. They charge $500 per hour for consultation. Looks pricey but it may be worth it in the long run.

If you opt to work on this on your own, make sure to cover the following vital areas:

• Business structure
• An overview of the industry
• Market analysis
• Your competitive advantage
• Business strategy
• Daily operations
• Projected revenue plan
• How to enter and exit the market
• Brand strategy

4. Draw up a budget for your marijuana dispensary

Chances are that you have drawn up a budget before. Depending on the size of your weed dispensary, you can do the budget yourself or consult a marijuana accountant to help you.

 Your budget should include rent, staff salaries, cost of raw materials, and other cost incurred in the course of running the dispensary. A budget for a marijuana dispensary is not so different from any other budget apart from some accounting considerations that you may have to make. This includes taking section 280E into consideration. 280E denies marijuana businesses the right to deductible business expenses. Therefore you need to factor this into your cost of doing business.

5.  Source for funds

With your budget in place it’s now time to source for funds. By now you should know whether you can bankroll the business or you will need help. If you can afford to pay everything from personal reserves it will be good for the business. There are many advantages to starting a business debt-free. But in the event that this is not possible, don’t panic. Here are a few suggestions on cannabis financing in 2020.

1. Get a loan from friends and family.

This is a soft landing spot. But you should ensure that you pay it back because you risk losing the relationship.

2. Find a venture capitalist

This can be a bank, organization, or group of individuals who are willing to give you funds in exchange for equity. Venture capitalists buy into the idea and take part in decision making. If the business is not profitable then you have no obligation to pay the money back. On the flip side, you lose equity. 

3. Find an angel investor

Angel investors are similar to venture capitalists, only that an angel investor is an individual. When choosing an angel investor find one who is an expert in the industry so that they can give valuable input during the decision making process. 

Marijuana dispensaries are largely unbanked in the US; this is because marijuana is still illegal under federal law. Banks need to submit Suspicious Activity Reports (SAR) when dealing with marijuana businesses .This makes it hard to get financing for marijuana dispensaries.

However, you should be able to access a loan from a private cannabis-friendly financial institution. Here are a few suggestions that you can check out:

–         Fundera

–         Cannabis credit lines

–         Industrial hemp farms

6. Prepare a site and facilities plan

You will need a consultant to help you create a site and facilities plan. This includes the general architecture, design, and layout of the dispensary. The consultant will analyze the topography of the land, space available, and access to roads and use this to generate a detailed plan.

7.  Get licensed

In California, you will need to apply to the Bureau of Cannabis Control for a marijuana dispensary license. You will be required to submit state and local agency approvals, security plan, sellers permit, property lease agreement, labor agreements, and the site and facilities plan. 

8.  Source for suppliers

You will need to find legal suppliers of marijuana products that you want to stock in your dispensary. You can compare prices between different suppliers and settle on the one that works best for you.

9. Hire dispensary staff

There are several sites that you can use to advertise for dispensary staff. This includes sites such as Indeed.com or 420 jobs.com. You can also use LinkedIn. 

For a medium-sized marijuana dispensary, you are looking at a team of between 10-16 full-time staff. This includes:

–         Budtenders

–         Manager

–         Cashiers

–         Marketing team

–         Security personnel

10.  Brand your marijuana dispensary

Branding is vital for marijuana dispensaries. Your brand is your public identity. Every process in the business should be in line with your brand identity. This also includes the layout of the dispensary.

 11.  Build a website

Today, it’s almost impossible to build a business without a website. Your website will be the first contact that most customers will have with your dispensary. Most customers will search for products online even when they intend to make a physical purchase. Make sure that your website is up-to-scratch and user-friendly.

12.  Market your marijuana dispensary in California

After getting this far, the next thing is to market your dispensary. For a new dispensary it may be helpful to do community campaigns to introduce your business to potential clients. Localized social media groups also come in handy.

 These are useful tips on how to open a marijuana dispensary in California, let us know if this was helpful to you.

 Cannabis Training for How To Open a Dispensary in California

To learn how to open a dispensary in California and all the latest California cannabis laws sign up for online cannabi training at the premier California Cannabis College.