Here’s How to Start a Marijuana Dispensary Business in California

By: John Ewers
On: November 12, 2019

For business owners who are brave enough to lift some boxes, roll up their sleeves, use some decent rolls of bureaucratic tape, and hand over some cash personally to clients, then opening a Marijuana Dispensary in California is the ultimate opportunity for you.

A dispensary will enable you to become a pioneer in the future massive medical and recreational industry. Later on in this article, it will explain why California is the perfect location to establish a marijuana dispensary business.

But for now, dig into the basics. Often, people ask these following questions:

How much will it cost you to start a marijuana dispensary business?
What could be the legalities involved to start a dispensary?
Is marijuana (medical and recreational) a profitable type of industry?
Where is the perfect location to start a marijuana dispensary?

With these undying questions for every business start-up, here are the following steps on how you can start and create your own marijuana dispensary business.

Understand the Potential Risk and Eligibility Features

Under this section, there are three categories that you must need to understand:

Legal Risks: Despite the leveraging number of states that have legalized the medical and recreational use of marijuana and hemp, some risks remain to linger in the industry. For other states and most countries all over the world, marijuana is still labeled as illegal at a federal level. Medical cannabis is categorized as a Schedule 1 drug under the Federal Controlled Substance Act in the US. Meaning, the herb is classified as a drug use product, not prescribed but can be suggested. However, in the case of a dispensary, up to this date, the legalities when it comes to some federal law are still not concrete. This makes it more difficult for dispensaries to stay within the legal parameters, which makes it prone to legal risks
Financial Risks: It’s not common in the business industry to have financial difficulties and dangers once you started to create a brand. If you’re planning to have a marijuana dispensary retail business, there are several challenges you need to overcome to get the required financial backing. Moreover, securing stable funding in the cannabis industry is quite tricky. This is due to traditional methods, risks, and most of the time, banks will not allow you to have a transaction if it is about cannabis.
Eligibility: Your eligibility may vary depending on your local government because most of them have a list of “must-haves” to be qualified as a dispensary owner. They also check some “red flags,” which can disqualify you from the running quickly. In general, here are some of the requirements needed:
- Investors, owners, and license holders should not have any felony convictions
- The dispensary office should be more than 500-1000 feet away from churches, schools, and other restricted areas which can vary from state to state
- Should have a complete business plan with a concrete outline of costs, business licenses, property ownership, etc.
- Should be able to comply with all the rules and regulations mandated by the law

Know the Licensing, Policies, Legalities, Location, and Expenses

Maybe now, you’re convinced that the marijuana dispensary business could be the right business for you, especially if you live in California. You might still have some lingering questions in your mind right now, which is why this is the perfect time to explain to you some hot questions that need informative answers:

What could be the laws in your state that involve marijuana dispensing and usage?
Would your business be protected and covered by the state and local laws?
What could be the expenses associated with dispensary?
What licenses and permits do you need?

State Laws

Laws that tackle marijuana dispensing and usage will vary from state to state. As of now, according to NCSL (National Conference of State Legislators), 34 states have been legalized the usage of medical marijuana and cannabis products. The law stated that there’s a limitation of low THC and high CBD that should be present in all of the marijuana products, which is only limited for medical use and reasons.

Licenses, Taxes, and Insurance

Paperwork could be a stressful part of establishing a business, especially in the cannabis industry – but this is the most crucial process.

When establishing a marijuana dispensary, you need a pile of documents for your protection. So what are those? It depends on where you live. However, as this article focuses on California, take a look at the example requirements below in the State of California:

Seller’s Permit: Like any other business, individual, partnership, or a corporation that has an interest in selling cannabis products, you need to acquire a registration certificate to get a seller’s permit. This is the most basic requirements when applying for a marijuana dispensary license
Cannabis License Duration: Two categories are associated with getting the license: temporary and non-temporary. For a temporary cannabis dispensary license, it has a duration of 120 days. But for a non-temporary, it needs to be renewed every 12 months
Marijuana dispensary License: A non-refundable dispensary application charges may range between $1000 to $5000 with registration and annual fees of $5000 to $20, 0000.

License rates and tax may vary depending on the state.

Insurance

Insurance policy is the perfect way to protect your business against damages, thefts, and fire. Of course, as a business owner, you want to protect your hard-earned investment with proper insurance coverage:

General Liability: Most of the time, it’s required by the landlords, depending on the state. It protects your business against general damages and potential injuries
Product Liability: It covers your business’s inventory and dispensary’s pieces of equipment
Medicine: It protects any medicinal inventory against theft, fire, as well as during the transport and deliveries from manufacturers to physical stores.

As this industry continues to grow and paves the way for a more natural healing method for many patients, many insurance companies are willing to be your partner to protect your investment from potential risks.