The Complete Guide on How to Start a Medical Marijuana Dispensary Business

The Complete Guide on How to Start a Medical Marijuana Dispensary Business

August 26, 2020 0 Comment

As many people already know, cannabis sales have gone through the roof these last few years. The industry is rapidly growing, and more people are accepting this new normal of legal cannabis use in retail.

CNN is saying 2020 could be a make it or break it year for these businesses, and lucky for dispensaries, people just want more. So, for entrepreneurs who aren’t scared to get to work, keep reading to learn about how to open your very own medical marijuana dispensary.

Risks Involved in Starting a Medical Marijuana Dispensary Business

Look at all the risks involved in starting a medical marijuana dispensary business.

Legal risk:

Although cannabis is becoming more common, it’s still illegal under federal law. This can make it difficult for dispensaries to stay within legal limits. Hiring a lawyer who is educated in this cannabis law is highly suggested when starting your business. 

Financial risk: 

Any new business requires you to put some of your own money on the line, but with the cannabis industry, there are some additional costs that have to be satisfied. The capital required to open the doors can range between $250,000 to $750,00. Since securing funding is difficult, banks won’t allow transactions of your business through them, forcing you to operate on a cash basis. 


Before you get started, you have to pass all the qualifications without any red flags. These license requirements will vary by state. Some standard requirements are: 

  • No staff members convicted of a felony 
  • Business must be 500-1000 feet away from schools, churches, and other restricted areas 
  • Must have an outline of property ownership, costs, license, etc. 
  • Compliance with all safety regulations

Research Before Starting a Medical Marijuana Dispensary Business

Do the research before starting a medical marijuana dispensary business in your state.

State Medical Marijuana Dispensary Laws: 

Depending on your state, you’ll have different laws to obey for cannabis use and dispensing. Check NCSL (National Conference of State Legislatures) to see the regulations for each state.

State Cannabis Programs
State Cannabis Program

License For Medical Marijuana Dispensary        

To open your doors, the first thing you’ll need to get is a license. License requirements will vary from state to state. You can check out Find Law to look at your state’s requirements.                   

If we look at California’s, you can see that they expect: 

  • A seller’s permit 
  • Cannabis duration license
  • Cannabis dispensary license 

The license fees will also depend on your state. You can check out your licensing fee at MPP (Marijuana Policy Project).  

Insurance For Medical Marijuana Business 

Make sure you get proper insurance to protect your business from: 

  • General liability
  • Product liability 
  • Medicinal coverage            

Taxes For Medical Marijuana Business    

Medical cannabis can only be suggested not prescribed. Therefore, the product will be issued a state tax. To find out your state’s medical marijuana tax, check out MPP (Marijuana Policy Project).

Educate Yourself and Your Team

A key aspect in running a successful business is understanding what your product is. Clients will come to you for guidance and trust you to answer their questions.

It’s important that you can provide them with the information that they need at all times. To do this, you and your team can take a training course. Visit Leafly to learn more about their cannabis training course.

Have a Business Plan to Start Medical Marijuana Dispensary

If you take the time to make a business plan, chances are you’ll stick to it. Here’s what you should include in yours: 

  1. Executive summary 
  2. Company description 
  3. Products and services
  4. Market analysis 
  5. Strategy and implementation 
  6. Organization and team management
  7. Financial plan and projections

Funding For Medical Marijuana Business

A dispensary is an expensive business to start. It’s difficult to get loans, merchant accounts, or any financing since it is illegal at the federal level. Below are some ways you may be able to get funded. 

Equity funding: Is the process of raising capital through the sale of shares. This simply means you sell shares of your company in exchange for cash. This has become a popular option with the growth of the cannabis industry. 

Personal loans: With a good credit score, you could qualify for a personal loan to start your business.

Credit cards: This is a good option but risky if you don’t pay them off monthly. They are convenient for recurring expenses and emergencies. 

Build a Team 

Make sure you have a strong professional and day-to-day staff. Your professional team should effectively manage all the moving parts of the business.

The day-to-day team is who the customers will interact with. It’s important for everyone to use professional or appropriate proper language and act professionally. 

Choose a Location for Medical Marijuana Dispensary 

Location is everything for a business, but dispensaries don’t have that many options. There are certain rules you need to follow to decide the location of your dispensary.

These can be things like how close it is to a school, church, rehabilitation centers, and other dispensaries. The amount of foot traffic in the area can also impact the amount of business. Websites like GreenZones help you find the right real estate for you. 

Branding and Marketing

A good way to transition people from viewing marijuana as an illegal drug to a retail product is through branding. Develop your brand identity by asking yourself questions like: 

  • What personality do I want my brand to have?
  • Who will buy my product?
  • How am I different from other businesses?
  • How can I provide customers with the best service?

Answers to these questions will build your logo, name, and website design. 


It’s important to stay active on your website since it’s the place many people will look before stepping into your store. Make sure it aligns with your brand’s color and logo so it projects your identity clearly. 


Marketing can be difficult in the cannabis industry because there are many advertising restrictions, and since the federal and state laws are always changing, it can be hard to keep track. You can visit Leafly to help you get started.

Invest in a PoS Software 

As the cannabis industry grows, so does the need for a PoS software. Softwares like Zencanna offer their customers a variety of features: user check-in, multi-location management, reporting, ID verification, inventory management, delivery apps, and tax calculations. Zencanna also offers automated filing to help manage, track, and charge their users. 

There are many challenges to opening a medical dispensary, but with the right amount of research, you’ll be on your feet in no time. We recommend using Zencanna to assist with all your management and tracking needs.

It’s also the only software that automates cannabis taxes. Take advantage of this growing industry, because once it’s set up, it won’t be long before you start profiting.

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