3 Things you Should Do Before you Apply for a Cannabis Business License
Updated for February 2021:
Since this post was first made in 2016, the industry is well underway to meeting projections. The latest US total cannabinoid spending for 2018 surpassed the $10 billion mark, with projections still holding to hit $45 billion by 2024. The other thing that holds true is these important first steps to consider before you apply for a cannabis license.
As we come into 2021, the five states that passed legislation in the November 2020 election are charging toward full launch of their programs and numerous other states are on their heels, along with speculation about what might change at the Federal level. With industry dynamics changing so fast, early preparation is key to jumping in with success. It’s never too early to start these 3 steps.
The medical marijuana industry is still in its infancy and already showing tremendous potential for growth, profits, and patient care. In January 2014, CNBC estimated that the cannabis business would be a $45 billion industry and many entrepreneurs are lining up to get in on the ground floor. What they may not truly grasp is the expertise, time-commitment, and capital required to meet the complex requirements of a successful application
Your best bet is to work with experts like Canna Advisors’ team of professionals who all have first-hand knowledge from the earliest days in this industry.
So, what are your first steps – Before you even apply for a Cannabis License?
- Make sure you have adequate capitalization
- Evaluate your real estate options
- Understand how to build your team
There are a variety of expenses you need to consider when opening up your own dispensary or cultivation facility. Because of regulations, application fees, licenses, security systems, special equipment, background checks, and payroll for specially trained employees who will manage and monitor your inventory; this isn’t your typical start-up scenario.
The application process is complex and requires extensive knowledge of growing methods, operational protocols, day-to-day processes, blueprints, security software, and more. Knowing the cost of acquiring this expertise and crafting a successful application is a key component of your capitalization requirements.
You could be charged tens of thousands of dollars just to apply for a marijuana business license and your operational licenses can run from as much as $200,000, as in New York. Each state has its own fees, and regulations and laws are constantly changing as the industry evolves. Some states are treating the cannabis business much like the alcohol industry in terms of sales regulations and fees, while others are creating a completely new category for this industry.
While costs vary, you can expect your start-up expenditures to be on the order of $250,000 to multi-millions when you build into the investment: purchasing real estate, building out facilities, securing a storefront, insurance, security, and other expenses. And even with a well-developed business plan, it may be hard to find financing, since banks have not yet embraced relationships within the cannabis industry. You may want to consider minimizing your risk and raising capital by investing with partners.
In any case, it’s critical that you begin gathering your resources and navigating the process of designing your business plan 6 to 9 months before you plan to apply. If you miss the application deadline, another opportunity may not be available for a number of years, missing the chance to be first to market in your area.
2. Real Estate Options
Be sure you research your local zoning laws when considering your dispensary or cultivation facility’s location. A dispensary is considered a business and will need to reside in an area zoned for commercial use. You’ll need to know which permits are required and gather any other pertinent documents before proceeding. There may be other restrictions as well, such as:
- Distance requirements from schools, parks, churches, or libraries
- Residential area covenants
- Proximity to other cannabis operations
Be sure to secure a location that is the right fit for your operation. Proximity to hospitals and major thoroughfares can give patients who need assistance better access to your dispensary. Signage is strictly regulated and varies by state, so it’s important to understand what that means for your site selection as well.
3. Building your Team
To be successful, you need to compile an executive team of highly talented, educated, and experienced people who represent all aspects of your cannabis business. As stated above, the application process is complex, extremely detailed, and requires a compelling ability to clearly convey how you will build, grow, monitor, secure, train, package, sell, and much more. Canna Advisors has the experience, reputation, and contacts to assist you with assessing individuals in the key areas of horticulture, chemistry, security, highly regulated industries, medical backgrounds, substance abuse prevention, and more.
The cannabis business is lucrative, exciting, and gaining acceptance from the medical community as an effective treatment for many illnesses. Proper preparation is the key to a successful application and start-up. The landscape is extremely competitive and you want to ensure you’re doing all you can to successfully obtain a medical marijuana business license.
Canna Advisors offers assistance with business development, designing facilities, and advising investors as well as licensing, operational plans, and proven strategies for success in your cannabis business. For more information, please contact us or call us at 720.708.3154.
Source: BDS Analytics/Arcview Market Research