How much does it cost to start a dispensary?

Budgets in this type of business are different, and depend on a lot of factors when it comes to the capital needed to start one. Some costs will be in your control, while others are linked to the jurisdiction your business operates in.

Here's a closer look at the startup costs of a dispensary:

• Dispensary license application fees. These are required costs that vary from state to state. However, you can expect to spend at least $5,000 for your license application.

  This cost is usually non-refundable. You also have to consider your annual license fee cost which can range anywhere from $1000 to $10,000, or more, per year.

• Location costs. Location costs can vary widely, but it isn't as simple as finding an affordable space to rent or purchase.

  Dispensaries have strict regulations with regard to zoning, they often have to be a certain amount of distance away from schools, and sometimes from other dispensaries.

  You need to not only find an area that makes sense in terms of foot traffic and possible customers, but also one that has a space permitted for dispensary use.

  You also should be aware that cannabis businesses tend to pay premiums because of the products they sell. Annual commercial real estate costs for a dispensary can run up to or over $100,000 per year.

  You also need to factor in remodeling or renovation costs to your retail space, and any work to match your dispensary's brand identity. This translates into possibly $50,000 or more upfront.

• Dispensary banking fees and rules. Dispensaries are complicated because they often fall into the illegal category from a federal standpoint. Many banks steer clear of working with dispensaries due to this fact.

  However, there are many credit unions and even private cannabis banks that work with dispensaries. This does come with an added cost. Many of these entities charge holding fees of up to $2,000 per month.

• Operating costs of a dispensary. Some things to consider in this area before you can even open your doors include a fully compliant POS system, inventory, and a security system.

  Electronics needed for a dispensary business can set you back around $25,000. In certain states, it is illegal to grow your own cannabis for your dispensary, so buying the proper products could initially cost you around $1,500 per pound of cannabis.

  Marketing and advertising a dispensary business costs around $25,000 initially, if you are fully embracing a digital and traditional marketing strategy.

  You should also consider hiring a lawyer, as dispensaries can often find themselves embroiled in legal problems and other legal issues. This will run you about $50,000 annually.

  Perhaps the biggest operating cost is that of your staff. Depending on the size of your operation, you might need a considerable staff or one that's a bit smaller. Sales associates, security professionals, accountants, and other possible administrative staff are all options worth considering.

  Other roles include a supervisor and/or store manager. Most dispensaries have nearly all of these types of employees. If you seek to pay your staff at the standard industry rates, you are looking at an approximate annual payroll of $250,000.