How Much Would It Cost To Open a Dispensary in My State?

Most states allow for medical marijuana to help patients with a variety of medical conditions. Almost half of states have legalized recreational adult-use cannabis. Legalization for recreational use creates fresh cannabis business opportunities.

However, if you’re looking to apply for a dispensary license, you may have to wait a while until the next application period in your state. If you do plan to apply and become a dispensary owner, the process requires a lot of capital and meeting strict state requirements.

States and local governments regulate recreational cannabis dispensary licensing. The requirements vary greatly by state. To find out how much it costs to open a dispensary and how to get started, talk to a local cannabis law attorney.

Applying for the Right License in the Cannabis Industry

Depending on the state, there are different types of marijuana business licenses available. Generally, license categories include:

• Marijuana dispensary license
• Cannabis cultivation facility license
• Cannabis product and production facility license
• Independent testing laboratory license
• Cannabis distributor license

“The way to get involved in Nevada’s marijuana industry, for example, would be to purchase an already issued license since they are transferable,” says Amanda N. Connor of Connor & Connor in Henderson, Nevada.

“You have to pass a criminal background check and have no excluded felony offenses within the last 10 years. And then there’s also a financial component. The company or individual has to show a minimum of $250,000 in liquid assets in a U.S. banking institution.”

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Cannabis Dispensary Licensing and Operational Costs

An applicant must have the appropriate license for their specific operations and submit any application fees. Before starting the application process, consider the high upfront costs of opening a dispensary. In addition to licensing fees, operating expenses could include:

• Staffing costs
• Real estate costs
• Renovation costs
• Social equity fees

For example, it is expensive to seek a cannabis dispensary license in Nevada. The retail adult-use cannabis license fees are $20,000 for the initial license and $5,000 for renewal. For medical cannabis licensing, fees are $30,000 for the initial license and $5,000 for renewal.

Compared to many other businesses, the application and licensing fees are especially high. Licensing fees are generally to operate annually or for two-year periods. There are renewal fees that could be as high as the initial license fee, depending on the state.

Of course, these costs are only the beginning. You must also have enough capital for startup costs — including selecting and securing property for the proposed dispensary.

Many states have closed the licensing process because the maximum number of dispensary licenses allowed has already been allotted. You may have to apply through your state’s lottery system when they open the window for new dispensary licenses. Many states also allow the transfer of dispensary licenses while meeting all other requirements.

Recreational Dispensary Licensing Fees by State

The following is a list of the recreational retail cannabis licensing costs and renewals by state. License and renewal periods generally run from one to five years, depending on state cannabis law. 

The list does not include additional fees, such as application fees, locality licensing, or social equity fees. 

Meeting the Application Requirements

To obtain a marijuana dispensary license, you must meet a number of different specific requirements. Perhaps most notable are the capital requirements. Beyond paying for the application fee and the initial retail license costs, business owners must maintain sufficient capital.

Most states require all dispensary applicants to prove that they have control of enough liquid assets for the business entity’s operating costs. Capital investment requirements for retail spaces can range from about $250,000 to $1 million or more.

If an entrepreneur lacks sufficient startup capital, the dispensary license application will be denied on those grounds.

Real Estate and Renovation Needs for Cannabis Businesses

The marijuana retail business application process also requires designating property for a retail store. The selected property should comply with all state and local municipality regulations related to marijuana dispensaries.

Notably, most property needs renovations before they can be turned into a recreational cannabis store. Most states require marijuana establishments to have secure entrances and to be built in the style of a traditional medical or pharmaceutical facility. Many states also require surveillance and security systems.

Protect Your Investment

Opening and operating a retail cannabis or dispensary business is a complicated process. Your cannabis market business lawyer can advise you on all relevant issues related to the application and licensing process. It’s also highly recommended that you speak to an experienced attorney before purchasing any real estate to open a dispensary.

If you are considering making a major investment in the industry, consult an experienced cannabis attorney.