With marijuana legalization continuing to sweep the nation, cannabis dispensaries are popping up like weeds. Recreational cannabis is currently legal in 20 states, and if federal legalization actually passes, there will be a plethora of opportunities to open up your very own dispensary and cash in on the weed boom.
The fact of the matter is that entering the legal cannabis industry can be incredibly profitable. With sales in 2018 nearing $10 billion, and projected to triple by 2023, cannabis is poised to soon pass the NFL in terms of revenue. Dispensaries do enjoy a healthy profit margin, and most new dispensaries are in the black within their first year of operation, with over 75 percent profitable or at least covering their operating costs.
Even though marijuana is currently legal in 20 states, not every one of those has available applications and regulations in place for opening your own dispensary. Leaf Retailer breaks down exactly which states allow dispensary applications and what you need to do in order to complete your business venture:
Alaska
Alaska was the first state to officially license onsite cannabis consumption. GoodSinse LLC in Fairbanks and Cannabis Corner in Ketchikan were the first two businesses to be approved for onsite consumption endorsements. In order to open a cannabis dispensary in Alaska, entrepreneurs need to:
- Read up on relevant laws, such as the Regulations for the Marijuana Control Board, and the Alaska Statutes 17.38, which explains how marijuana is regulated in Alaska. Section 17.38.200 is particularly relevant for dispensary owners.
- Apply for a Marijuana License here, and you can expect to pay a non-refundable application fee, a fingerprint fee, an initial marijuana licensing fee, and an annual marijuana license renewal fee. They tell you when each renewal fee is due at the top of the website. You must be an Alaskan resident in order to apply for a license.
- Understand where you can and cannot open a storefront. According to FindLaw, The Alcohol and Marijuana Control Office will not issue licenses to dispensaries located within 500 feet of the following premises:
- Outer boundaries of youth centers
- Recreational centers
- School premises
- Buildings where religious services are conducted
- Correctional facilities
Arizona
With 7.2 million residents and being the 14th most populous state, Arizona is anticipated to be one of the country’s largest cannabis opportunities. Currently, with projections between $770 million to $910 million for 2020, the recreational cannabis market will continue to grow. Smart and Safe Arizona projects $300 million in tax revenue from recreational legalization. In order to open a cannabis dispensary in Arizona, entrepreneurs need to:
- Read up on local laws here to get the most up-to-date information on opening a dispensary in certain areas.
- When applying for a Marijuana License, it is common for most new applicants to have a minimum amount of liquid cash on hand. This is to ensure that applicants have the financial wherewithal from the Arizona cannabis licensing process through to the initial 2-5 years of operation. General requirements for applications include bank statements, CPA letters, Letter of Credit, or similar documentation. Additionally, a 2-3 year Pro Forma is also submitted as a component of the formal Business Plan. The initial registration fee for applying for an Arizona Cannabis Cultivation License is $5,000. Of this, $1,000 is refundable in case the application is not successful. The annual registration renewal fee is $1,000; $2,500 to change the location of any Arizona cannabis dispensary or cultivation facility. You can apply for a Marijuana License here.
- Arizona Marijuana License applicants must attest to meeting zoning requirements and provide documentation from the local government saying either there are no local zoning requirements or the location meets the requirements when choosing your storefront.
- Once you obtain your dispensary registration certificate, a copy of the certificate of occupancy or other documentation issued by the local jurisdiction will be necessary when requesting approval to operate the dispensary, according to Cannabis License Experts
California
In 2016, California joined the growing number of states that have legalized cannabis for recreational sale and use. This legalization of recreational marijuana generated incredible excitement, and it has been and will continue to be the largest marijuana market in the world. With that kind of market available, it is not surprising that entrepreneurs are lining up to open marijuana dispensaries. In order to open a cannabis dispensary in California, you need to:
- Read up on state regulations, including the Uniform Controlled Substances Act-Cannabis, the Business and Professions Code, sections 2600-26250, and the California Code of Regulations Title 16 Division 42 Bureau of Cannabis, sections 5000-5905.
- You must have a valid DCC license before performing any commercial cannabis activity, and you can apply for one here. In addition, you will need approval from the local jurisdiction (city or town) where your shop will be set up before you can receive a license. There are two types of licenses:
- Adult-Use Retail (A-License)
- Medicinal Retail (M-License)
- California allows retailers who offer delivery-only sales and sales from a storefront. Entrepreneurs need to provide this information on their license application:
- Business organization structure
- Valid social security number or federal employee identification number
- Primary contact person
- Seller’s permit from the California Department of Tax and Fee Administration (CDTFA)
- A declaration that the location will not be within 600 feet of a school or youth center
- Evidence of compliance with the California Environmental Quality Act (CEQA)
- Expect a non-refundable $1,000 application fee. License fees are based on an estimated gross annual revenue, and the minimum fee is $2,500 for an estimated $500,000 or less annual gross revenue.
Colorado
In 2012, recreational cannabis was permitted in Colorado, and the state’s green rush had officially begun. Since that period, nearly 600 recreational and 500 medical dispensaries have found a home in The Centennial State. In 2020, Colorado eclipsed $2 billion in dispensary sales, up 25 percent from the previous year, according to Blaze. With Governor Polis signing Bill 21-111, which aims to give social equity licenses to new applicants, those numbers will rise. In order to open a cannabis dispensary in Colorado, entrepreneurs will need to:
- Read up on current state regulations, such as the Colorado Constitution: Art. XVIII sec. 16, which allows for the personal use and regulation of cannabis, the Colorado Retail Marijuana Code, and Medical Marijuana Rules 1 CCR 212-1.
- The licensing body in Colorado is the Department of Revenue Marijuana Enforcement Division (MED), and you can apply for a license here. After the state approves your license, you have one year to get a local license. Marijuana business applications must also be submitted through the same website, and there is an application fee of $4,500, plus $2,500 to the local jurisdiction. The annual renewal fee is $1,800. The state license and application fee is $7,000, and the annual renewal fee is the same $1,800. You must be a resident of Colorado for at least one year or a U.S. citizen prior to the date of application.
- Colorado has strict inspection rules, so a complete set of all business transactions must be open at all times during business hours. Records must also be kept for the prior three tax years, and all areas of the licensed premises are subject to inspection during business hours.
- When choosing a brick-and-mortar location, your dispensary is required to be within a limited access area that is an enclosed building, room, or contiguous area. All customers must also be escorted in your store at all times, and all employees must have an identification badge.
- In a retail marijuana store, the following information must be on every container, according to FindLaw:
- Active THC information
- The license number of the facility where it was grown
- The license number of the retail establishment
- Identify statement and graphic symbol of the retail marijuana store
- Harvest batch number
- Date of sale to the consumer
- Net weight in grams
- The universal symbol that the container holds marijuana
- Required state warnings
Connecticut
Recreational marijuana just recently became legalized in CT in July 2021, and it is projected to be a multi-billion dollar industry. Connecticut is the third most densely populated state in the US and has one of the highest cannabis consumption rates due to its proximity to other nearby major suburban areas. Since there is little competition in this newly legalized state, it is a great place to open a dispensary. Here is what you need to do in order to open your business:
- According to an article by the Labate Group, before applying for your dispensary permit, you will need an active pharmacist license issued by the Department of Consumer Protection. Additionally, you will need to have a position with a Connecticut licensed medical marijuana dispensary facility.
- Entrepreneurs must submit an application to the Department of Consumer Protection, which needs to include several things: a cover letter and dispensary permit application, dispensary site plan if available, and dispensary owner-management information. As of June 2022, the state is no longer accepting applications, but be sure to check back regularly as that may change.
- The application process requires you to submit dispensary articles of incorporation, dispensary bylaws, and dispensary board member names. In Connecticut, cannabis dispensary applications require standard government documents, including personal information, state and local licenses, employment and facility information, ID, and records of any past criminal actions.
- The application fee costs a non-refundable and non-transferable fee of $100, with an additional $100 annual renewal fee. Since a medical marijuana facility license is required when applying, it has a one-time payment of $1,000 to apply, a $5,000 registration fee, and annual renewal fees of $5,000.
- After you submit your dispensary application, owners must pass dispensary inspections. Connecticut requires a pre-operational inspection, an operational inspection, and an annual dispensary inspection in order to stay open in the state.
Illinois
As of Jan. 1, 2020, the cultivation, trafficking, sale, or possession of a small amount of marijuana is legal in Illinois under the Cannabis Regulation and Tax Act. The state also allows the use of medical marijuana for eligible patients, who also are permitted to grow their own medicine. Non-medical users, however, may not cultivate their own cannabis. Now that entrepreneurs in the state have the opportunity to start their own cannabis business, here is how they can do so:
- Read up on current state regulations through the Cannabis Regulation and Tax Act.
- The licensing costs for starting a new dispensary include a non-refundable $5,000 application fee, as well as a $60,000 licensing fee for a two-year license.
- This PDF form offers everything you need in order to submit a dispensary license.
- According to FindLaw, in one day, Illinois dispensaries can sell specific amounts of cannabis to adults 21 or older who are residents of the state, while non-residents can only purchase up to half of what Illinois residents can consume:
- 500 milligrams of THC in a marijuana filled product (edibles)
- Up to 5 grams of marijuana
- 30 grams of marijuana flower
- The Adult Use Cannabis Program page on the Illinois Department of Financial and Professional Regulation website provides information on the general administrative rules for opening and running a dispensary business.
Maine
Maine legalized recreational use of marijuana in 2016. However, retail sales did not become legal until three years later, when the Maine Legislature passed a bill regulating the adult use of marijuana, which went into effect on September 18, 2019. If you are a new business owner, you may want to look into starting a dispensary to be part of this growing industry. But, first, here are some things you need to do:
- Read up on relevant laws, including Maine’s Adult Use Marijuana Program, which established a regulatory framework governing recreational use of cannabis, as well as the Act Regarding Adult Use Marijuana, which amends a few provisions of the provisionally adopted rules.
- If you own at least 51% of the ownership shares of a marijuana business, you must be a resident of Maine for at least four years before applying for a license. Here are the list of steps owners need to follow in order to obtain a cannabis license:
- Your first step to open a dispensary is you need to receive a conditional license. You must go through a background check, apply for the OMP-issued Individual Identification Card (IIC), and then pay the fees.
- To get an “active license,” you must be authorized by the local municipality. Each municipality has 90 days to respond to your request.
- The OMP will review your supplemental information and if all approved, will issue an invoice to the applicant for the licensing fee.
- All of the applications and forms can be found here.
- There is a limit to the amount of cannabis you can sell to each consumer per day. They can purchase no more than 2.5 ounces, and no more than 5 grams of concentrated marijuana, whether sold alone or infused in edibles.
- Owners cannot run a dispensary within 1,000 feet of any preexisting private or public school. Local laws may, however, limit that distance to no less than 500 feet.
Massachusetts
Massachusetts was the first state on the east coast to allow recreational marijuana businesses. As long as you have no felony record involving prohibited substances, this state offers some great opportunities to open your own cannabis dispensary. You can open a retail store, manufacture marijuana products, cultivate or grow marijuana, open an RMD, or run a marijuana lab with testing capabilities. Here is what you need in order to open your business:
- Read up on local laws, including Chapter 369, which states the compliance factors and regulations a business must follow, and Section 935 CMR 500.00, which covers adult use of marijuana, and Section 935 CMR 501.00, which covers marijuana operations.
- The following licenses must be renewed each year. The application fees are only paid one time if you are approved. If you are denied, you must pay the fee again:
- Registered Marijuana Dispensary (RMD). The application fee is $1,500, and the management and operation profile costs $30,000.
- Retail stores or dispensaries. The application fee is $300, and the license for a retail store costs $5,000.
- Cultivation businesses. The application fee is anywhere between $100 – $600, and the license for a cultivator costs anywhere between $625 – $12,500.
- Manufacturing businesses. The application fee is $300, and the license for marijuana manufacturing costs $5,000.
- Visit the Massachusetts Cannabis Industry Portal (MassCIP) to begin the process for an adult-use license application or an MTC license application.
- Dispensaries are opening quickly in Massachusetts and the state government can cap the number of new licenses at any time, so move quickly to create your business before the application process is paused by the government.
- There are many nuanced packaging and labeling laws you need to observe for your products. The full list is online and includes regulations from the CCC, such as:
- Warnings about impairment, habit-forming risks, driving or operating machinery restrictions, health risks, risks involving use while pregnant, and the 21-year-old age limit must be listed on all marijuana products.
- Must have child-resistant packaging
- Cannot have packaging that appeals to minors
- Packaging must indicate multiple servings within the package
- Must list a statement saying the product is not analyzed or approved by the Food and Drug Administration (FDA)
Michigan
The laws allowing adult-use of recreational and medicinal cannabis were passed in 2018 by Michigan voters, but legal frameworks for cannabis-focused businesses are still in development. Expect the laws and regulations to change as businesses open and the frameworks develop. In order to open a cannabis dispensary in Michigan, entrepreneurs will need to:
- Read up on local laws, including the Michigan Regulation and Taxation of Marijuana Act, Michigan’s Marijuana Tracking Act, and the Medical Marijuana Facilities Licensing Act.
- Your dispensary can sell both recreational and medicinal marijuana.
- The first step in obtaining a cannabis license is pre-qualification, which involves a full background investigation of all individuals associated with the application, which starts by filing an Entity/Individual Pre-qualification Packet (EIPP). Once you have completed the EIPP and collected all required documentation including Supplemental Applicant Pre-qualification Packet (SAPP), submit your pre-qualification packet either in person, by mail, or through LARA’s online application portal.
- The application fees are around $6,000, all cannabis businesses help pay the $500,000 annual fee for substance abuse disorder programs, and licensing fees cost between $10,000 and $66,000.
- In Michigan, retail products are legally restricted to the following amounts per customer per day: 2.5 ounces of marijuana, 7 grams of vapor cannabinoid extract or concentrate, 16 ounces of marijuana-infused solid products, 36 fluid ounces of liquid marijuana-infused products, 12 cannabis plants, and 15 grams of concentrated cannabis.
Nevada
Medical marijuana in Nevada was legalized in 2000, and then recreational use was legalized in 2016. There is currently a budding economy in Nevada for cannabis dispensaries, and there is still room to join in and make a profit. Here is everything entrepreneurs need to do in order to open a dispensary in Nevada:
- Read up on local laws, including the Cannabis Control Board, Assembly Bill 164: Agent Cards, Advertising, and Penalties, Statue 453D: Regulation and Taxation of Marijuana, and Chapter 453D: Regulation and Taxation of Marijuana.
- You can establish 5 types of retail licenses, including a Distributor, Product Manufacturing Facility, Cultivation Facility, Retail Store, and Testing Facility licenses. There is a non-refundable $5,000 application fee, and a licensing fee of $20,000. You can apply for a license here, but be aware that the state can open and close applications whenever they want. There is an option to receive a notification when they decide to reopen applications.
- According to section 453D.562, a cannabis business owner can only sell marijuana products that do not exceed:
- 1 ounce of unconcentrated usable cannabis
- 1/8th ounce of concentrated cannabis containing less than 3,500 milligrams of THC
- Edible marijuana products that contain no more than 3,500 milligrams of THC or 1/8th ounce of concentrated cannabis
- The regulation restricts cannabis businesses to selling only marijuana. That means you can’t sell food, beverage or nicotine in your dispensary.
New Jersey
An amendment legalizing cannabis became part of the state constitution on January 1, 2021, and enabling legislation and related bills were signed into law by Governor Phil Murphy on February 2, 2021. More recently, on April 21, 2022, licensed sales of recreational cannabis began, and now entrepreneurs can begin their marijuana business venture. If you want to be a part of this growing economy, here is what you need to do:
- The official New Jersey government website has a page with many different business resources for owners to look over, including packaging and labeling and different fees involved.
- You can apply for a cannabis business license here. The state is currently accepting applications for recreational cannabis businesses for Cultivators, Manufacturers, Retailers, and Laboratories. There is a $200 application fee and an $800 approval fee.
- The Notice of Application outlines:
- Eligibility requirements
- Prioritization processes
- Application requirements, including a list of necessary forms and supporting documents
- Scoring methodology
- How approval or denial is determined
New Mexico
New Mexico is now among the 30 plus states in the US to have decriminalized marijuana for medical and recreational use, and applications are now being accepted from individuals interested in becoming legal marijuana retailers and dispensary owners licensed by the cannabis regulatory body of New Mexico. If you are interested in opening a dispensary in New Mexico, here is what you need to do:
- Read up on current cannabis laws and regulations, all of which can be found on the state’s official website here, including the Cannabis Regulation Act 26-2C NMSA 1978, Food Safety Emergency Rules 16.8.1, 16.8.2 and 16.8.6, and Emergency Rules 16.8.2, General Licensing Requirements, among others.
- You can apply for a marijuana license here. For a vertically integrated license, you only have to upload the social and economic equity plan, proof of age for every controlling person, and water and energy use plan one time. For a standalone cannabis producer or cannabis microbusiness producer license, prepare the following documents to upload to the CCD Online License Application System:
- A social and economic equity plan
- Proof of age for every controlling person
- CHS Affidavit and DPS background check authorization form
- A premises diagram attestation for each store you are opening
- For a cannabis retailer license, annual licensing fees cost $2,500, and each licensed premises costs $1,000 per year.
New York
On March 31, 2021, New York became the 15th state to legalize recreational cannabis after Gov. Andrew Cuomo signed the Marihuana Regulation & Taxation Act (MRTA). This means that it is just a matter of time until you start seeing a cannabis dispensary nearby. Assuming the Cannabis Control Board’s 18-month schedule is followed, recreational dispensaries should be able to operate legally by the summer of 2023 at the latest, according to Cannaspire.
On March 10, 2022, the CCB proposed rules for conditional adult-use retail dispensaries. Only justice-involved candidates in the state may get conditional adult-use dispensary licenses. A “justice-involved” person is one with prior cannabis-related offenses or direct family members with prior cannabis-related offenses, who have prior company ownership and operating experience. Then on March 11th, 2022, Gov. Hochul announced that the first licenses to establish the newly authorized marijuana retail stores in the state later this year would be reserved for those with past marijuana-related crimes, according to Cannaspire.
Unfortunately as of right now, there are no exact rules or applications set in stone to open a dispensary in New York other than those that sell medical mariuana, but that should soon change with the newly proposed rules.
Oregon
Oregon was one of the first states to get a head start on the legalization of marijuana. In 1998, they legalized it for medical use, and in 2014, they legalized marijuana for recreational use. Although this may sound favorable since they have been utilizing pre-established rules and regulations for businesses that they have been able to perfect over the years, this also means that entrepreneurs face a tough competition against veteran cannabis companies. Staying ahead of trends and compliance issues can give your new business a helpful edge. If you are looking to open a dispensary in Oregon, here is what you need to do:
- Read up on local and current laws and regulations, including the Oregon Revised Statutes 475B, which is the law that legalizes recreational marijuana, the Oregon Revised Statutes 475B.400-525, which is known as the Oregon Medical Marijuana Act, and Chapter 845 – Division 25, which has the administrative rules for recreational marijuana.
- If you plan on growing your own marijuana, businesses must register for their land usage. Growers must track how much they grow, and pesticide use on cannabis has separate regulations.
- Depending on your role in the industry, you will need to secure a variety of licenses here, and pay a licensing fee. You can apply online for licenses and permits here after creating an online account. Fees for applications and licenses range from $100 to $5,000.
- Be aware that on April 4, 2022, the Governor signed House Bill 4016 (2022), requiring the OLCC to stop processing applications for new producer, processor, retailer, and wholesaler licenses and will remain in effect until March 31, 2024. This does not apply to existing businesses who are looking to submit a Change of Ownership.
- Retail documentation and signs are required in stores, which the state details here.
- Your dispensary must be over 1,000 feet away from all schools, and some local laws may require dispensaries to be over 1,000 feet away from each other. Various cities and counties in Oregon have banned marijuana-related businesses.
Rhode Island
On May 25, 2022, Rhode Island legalized marijuana, making it the nineteenth state to do so. The Rhode Island Cannabis Act provides for a maximum of 33 retail licenses to be dispersed throughout six zones around the state, including the state’s three current medical cannabis dispensaries and the six recently awarded compassion centers in different stages of planning, according to Cannaspire. Who gets the 24 other retail licenses and when will be up to a governor-appointed cannabis control commission, and the start of in-store sales may happen as early as December 1. If you are interested in beginning your dispensary venture in Rhode Island, here is what you need to do:
- In Rhode Island, some municipalities do not permit cannabis anywhere. Others enable it only under particular conditions, such as requiring a special use permit in certain circumstances, so be sure to check the local laws in your area.
- To open a dispensary, candidates must be state residents, be at least 21 years old, pass a background check, show that the planned retail site conforms with local zoning and rules or has municipal approval, and pay a nonrefundable application fee, among other things.
- You can apply for a license here. There is a $125,000 application fee, and annual renewal fees cost $30,000.
Vermont
Even though the Governor signed a bill that legalized possession and the limited cultivation of cannabis in 2018, legal framework for opening and running a marijuana business for recreational use is still in progress. According to Dispensary Permits, licenses will begin being issued for cannabis retailers by October 1, 2022. Until then, applications are not available.
Washington
Medical marijuana has been legal in Washington since 1998, and in 2012, the state also decriminalized the recreational use of marijuana. Since then, the cannabis industry has boomed, and entrepreneurs have opened successful businesses. While most come with risk, the cannabis industry is particularly risky, with numerous complex regulations and requirements. According to FindLaw, here is what you need to do in order to open a dispensary in Washington:
- Read up on current local laws, including Chapter 314-55 of the Washington Administrative Code: General laws on marijuana licenses, application process, requirements, and reporting, as well as the initiative measure No. 502, which legalized recreational marijuana and outlines the licensing requirements.
- In order to receive a marijuana retailer license, applicants must be 21 years of age or older and be a Washington resident for at least six months prior to applying. The application fee costs $250, and the annual fee for issuance and renewal is $1,381. You can apply for a license here, but be aware that as of June 2022, the state is not currently accepting new applications. Come back and check frequently to see when they will open applications again.
Revised Code of Washington (RCW) section 69.50.331(8) prohibits marijuana retail stores to be within 1,000 feet of primary and secondary schools, playgrounds, recreational facilities, public parks, public transit centers, child care centers, and libraries. Individual cities and counties can reduce the distance to a minimum of 100 feet by enacting ordinances.