How to Successfully Start a Cannabis Dispensary in 2021
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The Cannabis Industry offers many exciting and worthwhile opportunities for both aspiring entrepreneurs and old-timers. It has become one of the fastest-growing industries in the US and is projected to increase exponentially in the future. Cannabis businesses such as dispensaries, cultivation facilities, and delivery services have been popping up all across the United States. Many people from different backgrounds are jumping in each year for a piece of this lucrative multi-billion-dollar pie.
If you plan to get into the cannabis business, the first thing you might think of is a dispensary. Cannabis dispensaries are getting insanely popular especially in recent years. Not only do they provide huge steady streams of profit, but they also attract support from local communities because of the medicinal benefits of cannabis products. In this article, we will cover all the necessary steps to successfully start your own cannabis dispensary.
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6 Steps to Start a Cannabis Dispensary
Cannabis legalization has been gaining considerable momentum throughout the country. As of this writing, only 6 remaining states have not yet legalized the use of marijuana. Entrepreneurs are placing huge amounts of money into dispensaries due to their track-record of sizable returns, and huge growth potential. If you plan on opening a cannabis dispensary, follow these steps so you can start capitalizing on a fast-growing enterprise.
Step 1. Conduct Thorough Research
Research is king when you plan to navigate the cannabis retail sector and its legalities that can still get quite confusing. Begin your research by covering the basics.
Understand the Two Types of Retail Cannabis
Retail cannabis is classified by the intended purpose. The two categories are medical and recreational. These two variants are not only different when it comes to composition and purpose. They also have different regulations, taxing, and licensing requirements.
Study Your Audience and Competition
There’s no denying that demands for cannabis products will only likely increase in the future. When conducting market research, your primary focus should be on your local consumer base as you cannot distribute outside your state’s regulatory coverage. Cannabis retail will only get more competitive as more and more players enter this newly-legal setting. An earlier start would be advantageous as it allows you to establish your brand prior to the competition. A good insight into the existing local competition is also necessary if you want to provide better products.
Step 2. Get to Know the Legal Landscape
Due to the stigmatic nature of the newly-legalized industry, the laws that govern it are still fragmented. This often confuses budding entrepreneurs. Cannabis laws and regulations vary widely depending on which state you are in. On a federal level, cannabis is still considered a Schedule I drug and is therefore illegal. However, cannabis sales and consumption are rapidly gaining acceptance and being normalized on the state level. In the past decade alone, 11 states have begun to legalize cannabis for recreational use.
Operating a cannabis dispensary will require licensing. The application requirements also vary per state. It is best to check in with your own state’s specific licensing requirements so you’ll know what to prepare before going through the application process.
Step 3. Conceptualize a Brand That Stands Out
How you’ll portray your brand’s image to your target audience plays a big role in your success as a dispensary owner. A brand identity communicates your unique personality, values, and standards. It also helps you build a great reputation in the eyes of your customers.
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Write a Killer Business Plan
If you want your dispensary to be unique and successful, writing a clear plan would be a good start. Your plan should include an extensive roadmap for your business. It should clearly communicate your unique selling proposition, your operational model, and how your business will earn money for you and investors. Due to the strict regulations governing the cannabis industry, you’re going to need a more detailed plan than usual. A well-written plan is necessary especially when pitching to investors and acquiring your dispensary license. It can also be an indispensable guide when creating a brand that lasts.
Create a Unique Selling Proposition
Brainstorm all the ways that your dispensary can be unique. What unique vibe will it offer to customers? What voice or tone will your brand use to communicate? Do your products have unique packaging designs? How well can you educate customers with regards to usage? Find out what your customers need and give it to them.
Step 4.Get Funded
The initial costs for starting a dispensary ranges from a few hundred thousand dollars to a couple of million. If you’re short on cash, the best route would be to engage investors, preferably those who already have experience in the industry. Make sure to pitch your ideas well and present a solid business plan. Be wary when approaching banks as most tend to shy away from this business due to the country-wide federal prohibition. This makes securing a business loan challenging if not impossible. However, other financing options in the form of alternative lenders may prove useful. Many of them also specialize in cannabis businesses.
Step 5. Acquire a License for your Cannabis Dispensary
Once you have the necessary funding in place, the next step is to acquire a cannabis dispensary license. The criteria for approval varies for each state, but generally, every licensing agency will look for:
Sufficient capital and a good financial standing
An ideal location
A sound operation plan that employs state-of-the-art equipment and technology
Staff and leadership with good background and reputation
A sound security system plan
Potential positive impact on diversity and benefit to the local community
Affiliations with experts such as doctors and professional consultants
Step 6. Promote Your Brand
Once the procedural stuff is taken care of, you can now start promoting your new cannabis dispensary. An attractive and professional-looking website is essential if you want to reach a wider audience. Building a strong social media presence and tapping into the potential of search engine optimization are great ways to place your products in front of your target audience.
When marketing offline, consistency is key. You can offer special promotions, discounts, and store events to further increase your customer base. Be creative when designing your ads and make sure that every content is consistent with your brand voice. You can use media such as television ads, magazines, and billboards. Just make sure to measure the results of your marketing efforts
Building a successful cannabis dispensary requires hard work and determination. When in a pinch, you can always get in touch with professional cannabis consultants. There are a ton of consulting services that you can engage in every stage of your journey to building a successful canna-business. You can hire consultants when business planning, getting approved for a license or setting up your business’ security plan. Remember to also build a good relationship with an attorney experienced in the cannabis field to help you smoothly navigate the legalities.
When traversing the delicate landscape of the cannabis industry, insurance coverage would be indispensable to protect your assets and to make sure your mind stays at ease. Coverage can serve as your safety net for any unforeseen events.
Here at The Shands Agency, we offer the best policies designed with your canna-business in mind.
Get a Free Quote and Consultation Today.