6 Things you should know before starting a cannabis dispensary
Starting a cannabis dispensary is perhaps the first business idea that pops-up in the mind of today’s cannabis-frenzy generation. However, to open and successfully run a marijuana dispensary despite ‘insurmountable’ obstacles is not easy.
Given below are a few things that you should keep in mind before deciding to start one:
Getting financial help from banks is difficult
A cannabis business is not like any business, thanks partly to the rules laid down by the federal government. Thus, securing a loan for anything deemed illegal by the federal government is surely an uphill task.
As per official government data, 375 banks and 111 credit unions globally offer services to weed businesses. However, this typically means that cannabis businesses, including dispensaries, can open bank accounts but not get loans. If by the slightest of probability, a bank agrees to give you a loan, be prepared to share an ‘endless’ number of documents.
Very high taxes
The cannabis businesses are very heavily taxed, courtesy of the federal Tax Code 280E, which bars all ‘plant-touching’ businesses from deducting business expenses and using tax credits. So, cannabis dispensaries cannot deduct any of the expenses like, rent, equipment cost, insurance, advertising, etc. This brings the average tax paid by a cannabis business to nearly 70%.
Getting a license isn’t easy
Obtaining a dispensary license is an expensive, complex state (and city) specific process. Be prepared to spend at least a 6-figure amount for the license and, mind you, this doesn’t include the application and renewal fee.
Please note that applying for a license wouldn’t simply fetch you one. The state governments look at a lot of aspects before deeming you fit for the business.
Since banks won’t be willing to fund your business, you would have to either self-fund or ask for financial support from other cannabis hedge funds, companies, business incubators, etc.
A shortage of well-trained employees
Until recently, there weren’t any degree courses in weed and no-hands on training was available. However, the landscape has changed drastically during the past few months and a lot of people are now opting for degree and lab-courses in the same. These people, though, will take a few years to get their respective degrees and seek employment. Until then, the cannabis industry would have to deal with the shortage of well-trained employees who can prove to be an asset for their business.
Complex supply chain management
Owing to the strict laws, health and safety rules, no cannabis business can thrive without a proper supply chain management in place. However, unlike the food and beverages industry, the cannabis world doesn’t have a specifically trained workforce for it as of now.
If you have ever applied for a cannabis dispensary license, do share your experience with us in the comment section below.