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Opening a Dispensary Business: Everything You Need to Know

Starting a dispensary business can be a lucrative venture, but it requires careful planning and execution. This article will outline the steps you need to take for opening a dispensary business.

Understand the legal requirements for dispensary businesses

Before diving into the world of dispensaries, it’s crucial to understand the legal requirements you must comply with. Research the laws and regulations surrounding the cannabis industry in your area. This includes licensing and permit requirements, as well as any restrictions on the location and operation of dispensaries.

When it comes to the legal landscape of the cannabis industry, it can be a complex and ever-changing terrain. Each jurisdiction has its own set of rules and regulations, making it essential for aspiring dispensary owners to conduct thorough research. By familiarizing yourself with the legal requirements, you can ensure that you are operating within the boundaries of the law and avoid any potential legal issues.

One of the key aspects to consider is the licensing and permit requirements. Different regions may have different processes and criteria for obtaining a license to operate a dispensary. It is important to understand the specific requirements in your area, including any application fees, background checks, and documentation needed.

READ: Polis Administration Announces Cannabis Business Loan Program

Research the local market for potential customers

When conducting market research, it is important to gather data on the demographics of the area. This includes information such as age, gender, income levels and education levels of the potential customers. Understanding the demographic profile of the local population will give you insights into their purchasing power and preferences.

Additionally, it is crucial to analyze consumer preferences in the area. This involves studying the buying habits, preferences and trends of the local population. Are they more inclined towards organic and natural products? Do they prefer specific types of cannabis strains or products? By understanding these preferences, you can tailor your offerings to meet the demands of the market.

READ: Determining Your Business’s Target Market – Why It’s Necessary and How To Do It

Design a business plan for your dispensary

Creating a comprehensive business plan is crucial for the success of your dispensary. It will serve as your roadmap and help you secure financing from investors or lenders. Your business plan should include an executive summary, a market analysis, a description of your products and services, a marketing strategy and financial projections.

When developing your executive summary, it is important to concisely summarize the key elements of your business plan. This section should provide an overview of your dispensary, highlighting its unique selling points and competitive advantages. It should also outline your mission statement, vision and goals.

In the market analysis section, you will need to conduct thorough research to gain a deep understanding of the industry and your target market. This includes analyzing the current trends, customer demographics and competition. By identifying market gaps and opportunities, you can position your dispensary strategically to meet the needs of your customers.

A well-defined marketing strategy is essential for attracting and retaining customers. Your plan should outline your target audience and the tactics you will use to reach them. This may include online advertising, social media marketing, partnerships with local businesses, or hosting educational events. 

Financial projections are a crucial aspect of your business plan, as they demonstrate the potential profitability and sustainability of your dispensary. This section should include projected revenue, expenses and cash flow for the first few years of operation. It is important to be realistic and conservative in your estimates, taking into account factors such as market volatility, regulatory changes and competition.

Obtain capital to fund your business

Starting a dispensary business requires a significant amount of capital. You can explore various funding options such as bank loans, investors or crowdfunding. Create a detailed budget that accounts for all the expenses involved in setting up and running your business, including rent, renovations, inventory, staffing, marketing and ongoing operational costs.

Be prepared to present a solid financial plan to potential investors or lenders, demonstrating how your dispensary will generate revenue and sustain profitability.

Identify and secure an appropriate location

The location of your dispensary can make or break your business. Look for a location that is easily accessible, visible and in an area that aligns with your target market. Make sure the location complies with all zoning laws and regulations for dispensaries.

Consider factors such as proximity to residential areas, traffic flow, parking availability and the presence of other businesses that can complement your dispensary. Leasing or purchasing a property that meets all your requirements is an important step toward opening your doors to customers.

READ: Weathering the Storm — How the Colorado Cannabis Industry Can Thrive Amidst Market Disruption

Acquire the necessary licenses and permits

Obtaining the appropriate licenses and permits is essential to operate legally as a dispensary. This includes a business license, a seller’s permit and any additional permits required by local and state authorities.

Ensure you complete all necessary paperwork and submit your applications well in advance to prevent delays in the opening of your dispensary.

Develop strategies for marketing and promotion

Once your dispensary is legally set up, it’s time to focus on marketing and promotion. Design a comprehensive marketing strategy that includes online marketing, social media presence local advertising, and community outreach.

Connect with potential customers through educational campaigns, events and partnerships with other businesses or organizations in the cannabis industry. Always adhere to the advertising regulations specific to the cannabis industry to avoid any legal issues.

Hire trained and qualified staff

Building a knowledgeable and friendly team is crucial for the success of your dispensary. Look for individuals who have a passion for cannabis and understand the importance of customer service. Consider hiring staff with experience in the industry who can provide valuable insights and recommendations to customers.

READ: Embracing Neurodiversity in the Workplace — 5 Benefits of Hiring Neurodiverse Talent

Establish the right suppliers

Having reliable and quality suppliers is essential to ensure you always have a consistent supply of cannabis products for your customers. Research and establish relationships with reputable suppliers who can provide a wide range of products that meet your customers’ needs and preferences.

Set up accounting and financial systems

Efficient accounting and financial systems are vital for the smooth operation of your dispensary. Implement a robust point-of-sale system to track sales and inventory. Keep accurate records of all financial transactions and expenses.

The bottom line

Starting a dispensary business requires careful planning and execution. By understanding the legal requirements, conducting thorough market research, designing a solid business plan, securing funding, finding the right location, obtaining necessary licenses, implementing effective marketing strategies, hiring qualified staff, establishing reliable suppliers and setting up accounting and financial systems, you will be well on your way to starting a successful dispensary business.

 

Olivia DavisOlivia Davis is deeply passionate about the dynamic landscape of the cannabis industry. She is enthusiastic about sharing her knowledge on the intricacies of starting and running a successful cannabis dispensary.

Weathering the Storm: How the Colorado Cannabis Industry Can Thrive Amidst Market Disruption

A perfect storm of macroeconomic conditions, including higher interest rates and rising inflation, have combined with cannabis industry-specific challenges like a growing black market, increased competition from neighboring states and supply dramatically outpacing demand. This combination has led to plunging profits for the Colorado cannabis industry. 

Beyond their impacts on individual businesses, the challenging market conditions will no doubt result in significant structural changes to the Colorado cannabis industry as a whole. While the current environment continues to evolve, it is clear that the cannabis market of 2024 and beyond will look far different than the one of today. 

READ: Polis Administration Announces Cannabis Business Loan Program

Although it’s difficult to predict where the market is headed with any real certainty, it’s critical for cannabis businesses to take a look at their own operations to identify how they can position themselves to both endure in the short term and thrive in the long term. 

In the short term, consider the steps below. 

Take stock of your financial position

Every decision you make about your cannabis business today must flow from a realistic, honest internal review of your current financial situation. Evaluate the impact of a prolonged slowdown on revenue, cash flow and profitability. This will provide a clear understanding of the resources available for sustaining operations during the downturn. It’s also important to use this time to build or enhance your finance and operations foundation to aid in making critical decisions during these uncertain times.

READ: Navigating the Economic Crossroads — Fed’s 11th Rate Hike and Its Impact on Investments in 2023

Revisit financial forecasting

The assumptions made during boom times need to be given a second look through an updated lens to ensure they remain accurate for today’s market. It’s also a good idea to make contingency plans that factor in worst-case scenarios and other potential challenges. 

Make the tough decisions

Cutting costs is an unfortunate yet necessary step during slowdowns. Every business has non-essential or discretionary expenses that can be reduced or eliminated, including renegotiating contracts and finding efficiency improvements. In addition, identify areas of your business where outsourcing could make financial sense. For example, some businesses will elect to find third parties for their accounting services and finance needs.

While these are often triage steps to survive the downturn, it’s important to also think long-term and identify the steps that can be taken to better position your company to succeed in what looks to be a much smaller and more concentrated market. 

READ: How to Prepare Your Business for Success in 2023 — Financial Forecasting Insights from Fractional CFO, Dan DeGolier

Strengthen governance and controls

A strong governance and control culture stands at the heart of every successful business. By ensuring your company’s financial and operational processes are well-documented, transparent and compliant with relevant regulations, you can run a far more efficient and profitable organization in both good and bad times. It also helps to prevent fraud and mismanagement.

Additionally, companies with strong governance and controls will stand out above the competition in a tighter credit and investment market. If you are anticipating a need for additional working capital or hoping to be purchased, strong governance and controls will be critical to demonstrate your organization’s stability and potential for long-term viability and success.  

Reevaluate investment decisions

Depending on the type of cannabis business you are running, your capital needs can be quite extensive. However, tight credit markets, rising costs and overall uncertainty can make planning for strategic investments in your business difficult. Analyze your needs and postpone or scale back projects that are not critical to current operations or strategic goals. 

READ: How to Maximize Your Investment Potential — Asset Diversification Strategies and Allocation

Find the exit

If you’ve thought about the steps above and the pathway to survival looks insurmountable, begin planning for an exit strategy. Consulting with legal, accounting and other experts can help you understand your unique situation and the available options to get out with as much of your investment left as possible. The methods of exit range from outright sale of the business to liquidation of assets or intellectual property. In your unique situation, every option should be on the table. 

The bottom line

As the Colorado cannabis industry navigates uncharted territory, business owners must contend with these complex decisions, steering their businesses through the storm with a combination of short-term considerations and long-term strategic vision. The evolving landscape holds both challenges and opportunities, and those who respond with agility, insight and a commitment to adaptability stand a better chance of navigating the shifting currents to become a key piece of the Colorado cannabis industry. 

 

Kevin Mclaughlin headshotKevin McLaughlin is a Managing Director at Centri Business Consulting, LLC and is the leader of the Cannabis Practice. He has over 10 years of public accounting and consulting experience. Kevin specializes in supporting clients with documenting the accounting treatment of various transactions, including complex debt and equity analysis, acquisition accounting process integration, and due diligence. 

Speed and Weed — How Does Colorado Feel About Driving While Stoned?

How often do cannabis customers consume and drive? Is driving while high really a usual practice thing these days?

Native Roots Cannabis Co. in Colorado wanted to know the answer in order to find the best way to reach its customers and make a positive impact. Finding a gap in existing data, they partnered with RBI Strategies to find out for themselves. After reviewing the results from 520 respondents, all 108 Native Roots budtenders are completing CDOT’s Cannabis-Impaired Driving Course. Read the full survey results in the Topline Report and Data Analysis Report, or view the standout findings below.

READ: Native Roots Guest Commentary — Inclusivity in the Cannabis Industry

  • 41% of respondents may drive while under the influence of cannabis, with 11% indicating they were “very likely,” 8% responding “probably”, and 22% indicating that they would drive while feeling the effects of cannabis depending on the amount consumed.
  • Some consume while driving, with 15% opting to consume cannabis in a vehicle or on a scooter or bicycle.

  • Some regularly travel with drivers who are under the influence of cannabis, with 12% indicating they rode with someone who had consumed cannabis once every day or two and 10% indicating once a week.

  • Knowledge of the law varies. When asked, “If you fail a sobriety test after being pulled over but are under the legal limit of alcohol or cannabis, you can get a DUI. True or false?”, 76% of daily cannabis consumers answered correctly, that number dropped to 62% with less than weekly consumers.

  • There is marked hesitancy of traveling with someone who has consumed cannabis. 71% of respondents indicated they “almost never” or “never” are a passenger where the driver has consumed cannabis.

  • Nearly all surveyed usually consume at home. Approximately 96% of respondents said they usually consume at home, with the next most popular answers being at a friend’s home (22%) or at an event (21%).

  • Regular cannabis consumers aren’t regular alcohol consumers. While 71% of respondents reported using cannabis products at least once a day, with one-third indicating they use cannabis products more than once a day, nearly two-thirds of the respondents indicated that they “almost never” or “never” consume alcohol and cannabis at the same time. Note: The latest data from the Colorado Division of Criminal Justice shows the most common combination of substances involved in crashes are alcohol and Delta 9-THC at 43%.

  • A majority abstain from driving while feeling the effects of cannabis. The data found that 59% of respondents are “not very likely” to drive a vehicle after consuming. 

  • Less frequent cannabis users aren’t likely to drive while under the influence of cannabis. In respondents who consume once a week or less, only 2% indicated they were likely to drive a car or operate a motor vehicle while feeling the effects of cannabis. 

  • Rather than driving, respondents use multiple modes of transportation, with 56% indicating they will ride with a friend who has not consumed or a designated driver, 43% indicating they will use a ride share service such as Uber or Lyft, and 32% indicating they will walk. One-third (33%) indicated they would go nowhere or stay at a friend’s home after consuming cannabis.

Survey Research Methodology

RBI Strategies in association with Native Roots conducted an in-store survey of Native Roots customers. The survey was conducted February 7-23, 2023, at 10 Native Roots stores across the Front Range and two mountain community stores in Colorado. The total number of respondents for the survey were 520; respondents had to be a Colorado resident to qualify. An online questionnaire was distributed to respondents in-store via QR code. Interviews were staggered across three dayparts (morning, afternoon, and evening). Respondents were provided an incentive of one joint to participate. The margin of error for this survey is +/- 4.2 at the 95% confidence level.

Limitations and Considerations

The data sample includes respondents at 10 Native Roots locations in Colorado and should not be extrapolated to indicate overall statewide cannabis user behavior. The significant portion of the sample from the suburbs may under-represent younger cannabis users, with 49% of users in Urban areas ages 18-29 whereas only 39% of cannabis users in the Suburbs are 18-29. The sample population also skewed heavily toward Men under 40 (43% of the total sample). Data from CDOT indicates the highest prevalence of DUI incidents involves young men.

 

About Native Roots Cannabis Co.

Native Roots Cannabis Co. is one of Colorado’s most successful vertically integrated medical and adult-use cannabis operators. Native Roots has 20 dispensary locations across Colorado, serving thousands of adult consumers daily and the state’s largest number of registered patient members. With over a decade of experience providing cannabis to patients and adult consumers, Native Roots has won national recognition for its sustainable business practices, retail design, high-quality products and employment practices. Since 2010, Coloradans have turned to Native Roots as their trusted leader in cannabis for wellness and recreation. Native Roots offers a vast assortment of affordable products and a welcoming environment for cannabis beginners and experts alike. Rooted in the community, we are Colorado’s Happy Place. In 2022, Native Roots was named to the Civic 50, an initiative that recognizes and celebrates the 50 most community-minded companies in Colorado. To learn more about the company, visit nativerootscannabis.com. Follow Native Roots on LinkedIn, Facebook, Twitter and Instagram.

Native Roots Guest Commentary — Inclusivity in the Cannabis Industry

If you are a woman on an executive team in the cannabis industry, you’ve probably noticed a decrease in fellow female co-workers since the start of 2020.

According to a Special Report from MJBizDaily, the percentage of female executives in cannabis has been on a rollercoaster ride. In 2015, 36% of executive positions were held by women, which dipped to 26.9% in 2017, then back up to 36.8% in 2019 only to drop to a new all-time low of 22.1% in 2021. These numbers are significantly below the national average of females in leadership at all U.S. businesses, which lands at 29.8%. With the COVID-19 pandemic disproportionately impacting women in the workplace, we can safely assume this as a factor.

In an era where societal awareness of social equity needs is growing, as evidenced by recent local legislative changes to foster social equity with cannabis delivery businesses, there still remains significant opportunity for improvement in workplace gender equality. But hiring women isn’t just a task for your DEI checklist – it also makes good business sense.

READ — A budding relationship between cannabis and real estate

Research shows that when you add more women to senior leadership roles, you can expect more significant profits, better customer experiences, heightened social responsibility and higher-quality customer experiences with an emphasis on safety.

As the saying goes, “If you want to change the world, start in your backyard.” As a female executive leader in human resources at Denver-based Native Roots Cannabis Co., a vertically-integrated operator with 20 locations throughout Colorado, I understand personally and professionally why gender equality in the workplace is important – and why positive change is so meaningful. You can’t be what you can’t see.

It is a privilege to work with the star-studded Native Roots executive team that is 57% female. Chief Operating Officer Beth Kotarba received the C-Suite Award from Denver Business Journal, a highly-competitive distinction that recognizes C-suite executives outside of CEOs who have demonstrated vital leadership and business savvy to implement their company’s vision. Kotarba’s accomplishments include guiding the company’s growth in size, complexity and consumer footprint while also implementing policies to expand opportunities for women within the company and creating programs that foster learning, teamwork, and employee appreciation. She also led the implementation of environmentally conscious practices and technology, and served an instrumental role in 30% revenue growth over the past five years.

READ — TARRA: A New Way for Women to Work

Chief Sales Officer Denise DeNardi was selected this year as an Outstanding Woman In Business from the Denver Business Journal. Rising above in a highly competitive nomination process, honorees were appraised by an editorial panel based on nominees’ leadership within their organization and industry, career accomplishments and community involvement. De Nardi is one of only two women from the cannabis industry honored this year. In her role at Native Roots, De Nardi develops ongoing strategies and oversees performance for multiple revenue channels. Under her leadership, the company increased its top line revenue to ensure margin protection; developed and implemented an internal sales structure to achieve company objectives; and embraced a company culture that champions continuous experimentation to drive growth, elevate the brand experience and enhance customer engagement.

Achieving these notoriously competitive recognitions is a challenge, with only the most talented of executives being named. Securing recognition of two with female executives in the cannabis industry for a mainstream highly-esteemed regional business honor signals a shift in both the perception of the industry and gender in leadership.

Gender workplace changes are also happening outside the executive team. Production and management, two departments historically staffed by male employees, are now more balanced after hiring or promoting qualified female candidates. This includes roles such as bay manager, head grower, facility manager, director of supply chain and senior manager. These changes happened with the mentorship and guidance of the executive team supporting talented female staff looking to advance.

Working in your “backyard” is a start; driving change in your community comes next. Our executive leaders are passionate about advancing the industry towards success. De Nardi teaches a 10-week course at The Color of Cannabis, a nonprofit organization devoted to helping people of color enter, thrive and advance within the industry. DeNardi and Kotarba are also mentors with the Marijuana Industry Group in a program established to promote diversity and inclusion in the Colorado cannabis industry by fostering relationships between social equity entrepreneurs and established cannabis business leaders.

While we are proud to have covered some ground on this journey, we are just getting started. We must continue to engage with our community, community partners and industry partners around the incredible opportunities the cannabis culture can provide all individuals, regardless of gender identity. Our goal is to have a culture of diversity and inclusion that threads through everything we do. The only way to make this happen is to ensure people of all backgrounds are represented. We are committed to the journey.

Do you want to see more change in your workplace? Creating a committee – women in business; diversity, equity and inclusion; social justice; accountability – is a good start to harness like-minded individuals looking to drive change. Plant the seeds of change now, and you will see your “backyard” grow with the fruits of your labor.

 

Adria HeadshotAdria Hamberger is the vice president of human resources at Native Roots Cannabis Co., Colorado’s largest privately-owned vertically-integrated operator with 20 dispensary locations in the state. She brings 25 years of management experience to her role. At Native Roots, she leads the team that develops and maintains company culture, creates HR plans and strategies, implements talent strategies and provides insight around people initiatives.