Dispensary tips

How to create an effective dispensary business plan

By
Dutchie
March 31, 2022

Craft an ironclad dispensary business plan with these tips—or jump to the bottom to get the full guide.

It’s a fact: cannabis is the fastest-growing industry in North America. Canada is well in the lead with federal legalization, and states like Colorado, Oregon, and Washington have pioneered the establishment of legal cannabis markets in the US. The rest of the country is steadily following suit with new states legalizing recreational use each year.

With every new state or province that joins the cannabis industry, new opportunities arise. Those dreaming about running retail operations (maybe that’s you!) become the entrepreneurs who operate the cultivation, processing, distribution, and dispensary businesses the industry relies on.

The explosive growth of the cannabis industry presents some of the most lucrative entrepreneurial opportunities available today. For example, US sales are projected to soar to $100 billion in 2030, according to data from Cowen Research Themes 2022. No other current industry promises greater growth—nor a more profitable long-term outlook.

Dispensaries are capable of high profit margins, and statistically, three out of four recoup operating costs within their first year of operation. But opening a dispensary carries a unique set of challenges when compared to opening most other small retail businesses.

Your business plan is the primary document the state will use to determine whether your dispensary license application will be approved or denied. You will need to refer to it every time authorities have a question about how you plan on satisfying the legal requirements of running a dispensary.

Your business plan should detail: 

  • How you’ll secure funding
  • How you’ll source your products
  • How your dispensary will operate
  • What kind of community commitments your business will make

All of these are strategic elements that will distinguish your application from every other application on the state or province’s docket. 

A cannabis dispensary business plan should contain the following sections:

Executive summary. Regulators and investors will refer to this general overview of your dispensary business plan before reading further to understand the basic details of how you plan on achieving success.

Market overview. Describe your target market, demonstrate detailed knowledge of your state or province’s cannabis laws, outline the level of competition you expect to face, and differentiate your business’s advantages.

Strategy and implementation. Here, you will describe your launch strategy, marketing plan, and some figures from your financial projections. This is a good place to share your familiarity with your area’s cannabis advertising laws. These laws are particularly strict for our friends in Canada.

Operational plan. This section is dedicated to the details of your location, facilities, equipment, SOPs (Standard Operating Procedures), and security plans. This is also where you will describe how your dispensary will adhere to seed-to-sale tracking requirements—where you must report every single sales transaction that occurs in your dispensary to regulators through their preferred system. A compliant retail technology platform such as Dutchie is essential for fulfilling this requirement.

Organizational structure and management. This is the section that describes how the dispensary will operate and introduces the individuals responsible. You will also have to list investors and other stakeholders, along with their backgrounds and experience. Everyone associated with your business must be approved by state or province regulators.

Financial projections. This section includes profit and loss forecasts, balance sheets, and sensitivity analyses. It’s important to have clear and reasonable financial goals for your prospective business.

Appendices. This section will store your monthly income and revenue statements later on. Appending these statements to your business plan will help regulators and investors understand how closely you are following your initial plan.

Remember: compliance is key in cannabis. Before going further, you should familiarize yourself with the cannabis retail legislation in your area, and think about how you can comply with those laws now and when they change. Several US states and Canadian provinces post these regulations on their government websites. Your business plan will have to cater carefully to the fluctuating demands of the city and country you live in.

Now that you understand the fundamentals of the business plan, you’re ready for the whole process from the plan to the application.

Ready to dive in?

Download Opening a Dispensary: An 8-Step Guide to Success.

About the author
Dutchie
The Dutchie Squad