The cannabis industry is going through an exponential growth right now. You might be considering opening up a cannabis dispensary. Before you start doing anything, it’s strongly encouraged that you get started by writing a cannabis dispensary business plan.
A dispensary business plan is a critical tool when trying to raise capital. It can provide strategic guidance that covers every part of ownership to preparations for ownership.
By having a well-written dispensary business plan, you’ll have one of the essential components to get state licensing done. A dispensary business plan can also attract investors and other important members to create your management team.
Statistics show that most entrepreneurs in other industries who took the time to write out a business plan were twice as likely to secure funding and grow their business as those who don’t write a business plan.
By taking the time to be meticulous about every detail in your dispensary business plan, you’ll be maximizing your chances ocaf being approved for a cannabis business license.
You might even want to consider if you should hire an experienced cannabis consultant to help you make sure that your dispensary business plan is organized, concise, and detailed as possible.
Missing steps or presenting investors with a rough draft of your dispensary business plan could be detrimental to your cannabis dispensary success.
Understanding Legal Risks
Despite the number of states that are legalizing marijuana, there is still some risk. The most important risk is that marijuana is still considered illegal at the federal level.
Medicinal cannabis is classified as a Schedule 1 drug under the federal Controlled Substance Act. This means that medicinal cannabis is classified as a potential drug use product, which means that it can only be suggested, not prescribed.
There isn’t much case law on the topic of cannabis, so the true legal status of cannabis dispensaries can be cloudy at the federal level. This can be a problem because dispensaries won’t know how to stay within federal level parameters, which can open your dispensary up for legal risks.
Opening a dispensary requires a substantial financial investment. However, opening a cannabis dispensary has other challenges when it comes to getting financial funding.
It’s been proven that obtaining financial funding in traditional methods, such as going to the bank for a loan, is harder to accomplish. This is because most banks won’t let your transaction your dispensary through them because of the associated risks.
This might mean that you have to start your dispensary on a cash basis. The capital needed to open a cannabis dispensary can be anywhere around $250,000 to $750,000.
Are you even able to open a cannabis dispensary? Local governments have quite a few “must-haves” that you must follow to become a dispensary owner and some red flags that can automatically disqualify you.
In general, there are four standard requirements:
- License holders, investors, and owners must not hold any felony convictions
- Location of the dispensary should be more than 500 – 1,000 feet away from churches, schools, and other state restricted locations
- You must have a complete dispensary business plan with an outline of business licenses, costs, property ownerships, and more
- Must comply with all safety regulations
Some general tips to guide you in writing the best dispensary business plan are:
- Be thorough, concise, professional, and enthusiastic
- Avoid industry acronyms, buzzwords, and jargon and use short sentences
- Use bullet points to help with understanding
- Use pie charts and/or bar charts to show market share, projected revenue, etc.
- Avoid using a small font and stick to one to two types of font
- Make sure that your spelling and grammar are correct
The Best Location for a Dispensary
An important factor that you need to consider is securing an excellent location for your dispensary. You will need to do quite a bit of research to do this. You can hire someone familiar with state and local laws that specify where a cannabis dispensary can legally operate in your area.
If you fail to consider these laws, it could result in a disaster for your blooming dispensary. Below are some real estate guidelines that you should keep in mind.
Zoning Restrictions and Laws
Wherever you’re hoping to open your cannabis dispensary, there are still city, county, and state ordinances that regulate where you can put your dispensary.
There are restrictions on putting a dispensary within a specific distance from addiction treatment centers, playgrounds, and schools. Cities might even have set aside specific areas where dispensaries can operate. They might have limitations on how many dispensaries can be in a certain area.
You also need to be aware of new laws that might have been enacted in your area. It would be a big waste of time and money to create a compliant dispensary and then be forced to shut down after a business year. These factors, combined with other zoning laws, can be a big challenge when finding the appropriate place for your dispensary.
Remember: just because a location is compliant with zoning regulations and laws doesn’t mean that it’s the best place for your cannabis dispensary. Like with any other business, you have to figure out if the local market is the correct place for your cannabis product.
Is your dispensary convenient for the target demographic? Will the location’s neighborhood be okay with a cannabis dispensary? Are there other dispensaries in the area? You might want to consider if there are any known security risks in that area as well.
Figure Out Your Financials
A financial plan is to figure out how much money you will need, how soon after opening that you will achieve profitability, and how much you can afford to offer potential investors.
The first step in doing this is figuring out the start-up costs. You must have a complete understanding of the amount of money that you’ll need to get your cannabis dispensary going.
Take your time when researching the cost of every line item that you’ll need. Some potential expenses are a cannabis dispensary consultant, an attorney, an accountant, accounting software, tracking software, computers, security cameras, insurance, electricity, monthly rent, lighting, etc.
There are also branding and marketing costs to consider, such as promotional items, graphic design, a website, social media marketing, and more.
Once you have an item about your starting costs, you’ll want to design a month-by-month forecast of expenses and revenues. Is there going to be a time when you have a higher demand for your cannabis products – it could be caused by tourist season?
If so, what costs would be associated with increasing your supply for that period before to anticipate the increased demand?
Be very precise about your expenses. Small items, like office supplies, can quickly add up. Look for ways to purchase in bulk; a larger single time purchase will save you money down the line.
Finally, it’s highly recommended that you perform a break-down analysis by determining how many ancillary products, edibles, and cannabis that you’ll have to sell before you’ve covered your variable and fixed costs.
A break-even analysis is an essential part of a dispensary business plan. You need this part of your dispensary business plan to prove that the plan is viable. This is especially true if you’re planning on taking on investors and other debt to fund your dispensary.
Services and Products
A few more questions you should ask yourself include: What issues will my cannabis dispensary solve? What are the key benefits and features of my products? How do these benefits help my target customers?
It’s recommended that you spend time analyzing existing cannabis dispensaries in the area as well as doing market research. What mistakes did existing cannabis dispensaries make that you can learn from?
Are there any other opportunities or insights that you can put into your cannabis business plan? Is there a certain niche in your target market that your dispensary can cater to? This is especially important if there are other dispensaries in your area.
You need to be able to differentiate yourself from the others to make sure that you get your fair share of the market.
Marketing Budget and Strategy
The success of your dispensary depends on a variety of factors. One of which is having a well thought out marketing plan and strategy that includes a budget designed for marketing for your cannabis company.
To begin, you’ll want to design a customer persona (or more than one persona) that have the following information about your target customers:
- Demographic information, for example, location, income level, gender, and age
- Common lifestyle, values, attitudes, and interests
- Pain points and problems that your target customer might have
Another important part of your dispensary business plan is the staffing plan. How many roles and staff will be needed to make sure that all customers are taken care of in a courteous and timely manner? What experience and skills will each staff member need to make sure that they’re able to succeed in their role?
Consider the points listed below when working on your staffing plan (to make sure that you have adequate staffing at all times):
- Day of week and time of day
- Seasonal changes and business trends
- Vacations, holidays, and sick leave
- New hire orientation and training for specific responsibilities
- All job and specific responsibilities of each role (criteria-based descriptions)
- Supervisory and management roles
Having an understanding of how much traffic your cannabis dispensary will have on a daily basis is important information to make sure that your dispensary is adequately staffed to meet and exceed the needs of your customers.
To ensure that customers come back to buy from you another time, you must train your staff to provide excellent customer service.
After you’ve completed your research on what services and products you will offer, who your target audience is, and how you’ll staff your business, it’s time to create the executive summary of your dispensary business plan.
An executive summary should be located near the top of your dispensary business plan – right after your title page. You don’t want to make potential investors search for the important information that they’ll need to decide if they should invest in your dispensary or not.
Keep in mind that the organization of your dispensary business plan can also be a deciding factor for potential investors.
Your executive summary should only have the most important points of your dispensary business plan. You want to be brief and to the point, while also demonstrating that you have put enough thought into your dispensary success.
The executive summary should include:
- A quick description of your services and products
- Your dispensary’s competitive edge, including how your dispensary will be unique from the competition
- An accurate analysis of the overall market as well as the regional and local market
- Concise information regarding your dispensary’s growth potential
- An overview of your funding requirements
There are several parts to a dispensary business plan that you have to follow before you can be approved to start your cannabis dispensary. A good dispensary business plan will guide your investors through every stage of starting and managing your dispensary.
It should include sections such as where you want to put your dispensary, a financial plan, a section describing your services and products, your marketing budget and strategy, a staffing plan, and an executive summary.
Remember that the most important part of your dispensary business plan is the executive summary. This is the section that most investors will focus on when they decide to provide funding.
Overall, you should make sure that your dispensary business plan is concise, professional, and has short, easy to read sentences. This makes it so that your potential investors can quickly read and understand what you’re proposing for your cannabis dispensary.
By creating a dispensary business plan, you’re increasing your chances of succeeding in your endeavor.