15 min read

True Cost of a Dispensary

October 22, 2021

There is no doubt running a dispensary is a lucrative business. This new line of business is expected to generate over 20 billion dollars in this year alone. Yet, it has not reached its peak. Therefore, if you consider opening a dispensary you certainly have a good vision. However, before going into the business you need to know how much it will cost you. Of course, before going into any business you must ask how much does it cost to open a business? The same applies to a marijuana dispensary. It is important to find out how much you need before you can venture into it. How much does it cost to open a dispensary?

Well! The answer mostly depends on your location. Before you can open a marijuana dispensary, there are many actions to take. Cannabis laws and regulations vary widely by state. So, you must know the law in your state and how much it will cost to comply. Hence, let’s first discuss the states where you can open a dispensary in the US. 

Where Can You Open a Dispensary in the United States?

The use of cannabis is still illegal under federal law in the United States, but many states have legalized it for recreation al and medical use. There are 18 states currently that allow citizens to take marijuana and other cannabis products for recreation. These states include California, Washington, New York, Nevada, Arizona, Colorado, Oklahoma, Montana, New Mexico, and Illinois. Other states in this category are Delaware, Rhode Island, Michigan. Connecticut, Maine, Oregon, New Jersey, and Washington DC. 


The first thing to consider when thinking about how to start a weed business is getting a license. Unfortunately, the cost of obtaining a license to run a dispensary is higher than the license cost of many other businesses. You must also renew your license every year. The dispensary license cost includes the application fees and the license fees. So, how much is a weed license? 

dispensary, cannabis industry, licensing, start a business, costs, investments, marketing, taxes, website

Application fees and license fees vary from state to state, but a weed license cost is typically around $5000. You should also expect to pay a similar amount as a license renewal fee every year. In states like Connecticut, the application fee may be as high as $25,000, and the renewal fee up to $75,000. California cannabis license is even higher. In California, the application fee is $1000 while the license fee may be as much as $120,000.

Laws and Licensing

dispensary, cannabis industry, licensing, start a business, costs, investments, marketing, taxes, website

Before you can apply for a license there are many laws that you must consider. Otherwise, your application will not be granted and you will lose money due to an application fee being non- refundable. These laws and regulations also vary from state to state. It includes authorization by your local authority, having enough capital base, background check, location, and the compliance of the design of your shop to the acceptable design. 

Capital Requirements Preclude Many

dispensary, cannabis industry, licensing, start a business, costs, investments, marketing, taxes, website

One of the major challenges many people interested in opening a dispensary usually face is the capital requirement. While this is not compulsory in some states, many states will insist that you have a minimum capital before you can apply for a license to run a cannabis dispensary. This is to ensure you have enough money to guarantee the smooth running of the business. This capital may range from a few tens of thousands to millions of dollars. The capital requirement may be in the form of assets and cash in the bank. Some states will specifically state the percentage of your worth that must be in liquid form. This will necessitate providing your bank statement to show you have the minimum requirement in your bank account. Some states do not even have any capital requirement. 

Location / Construction / Rent

Location is another essential factor to consider when thinking of how much it costs to open a dispensary. Unlike many other businesses, you can’t just look for a place where you consider is ideal for opening your marijuana dispensary. It doesn’t work like this. Because the authority wants to protect people that are below the age of 21 from being exposed to cannabis, it is not allowed by the law to open a dispensary near a school or places where underage youths visit frequently. Religious centers like churches are also protected. Before you select a location for your cannabis business, you must first study the existing law. Understand where you are not allowed to operate and where you can open your dispensary. 

dispensary, cannabis industry, licensing, start a business, costs, investments, marketing, taxes, website

Because of the limitation on the location, the few places left may be extremely expensive. Also, some landlords are still not in support of cannabis and may not want to rent out their properties to a cannabis dispensary. This may also limit the space available for you and push the cost up. You will prefer a place that will be convenient for your clients to visit while avoiding the underage. Hence you should prepare to pay exorbitant rent for your dispensary. Even in the cheapest state to open a dispensary, you cannot expect to spend less than $100,000 a year on rent. Hence, a budget of between $100,000 and $200,000 per annum for rent is certainly in order. Surely, this also depends on location, state, and whether you want to open your dispensary in an urban area or rural area.

Apart from choosing a location, there is also a construction requirement to comply with. Different states have the format in which dispensary must be constructed and you need to adhere to it. Besides, you will also want your client to love the organization of your business. So, you will want to construct your shop in a way that will be attractive. You will also need to install furniture, shelves, counters, and many other pieces of equipment in the dispensary. These alone may cost up to $50,000, depending on how elegant you want your dispensary to look.

The Cost of Cannabis-friendly Banking

dispensary, cannabis industry, licensing, start a business, costs, investments, marketing, taxes, website

When discussing the marijuana dispensaries prices, you must not ignore banking. This is another important factor that affects running a cannabis dispensary. Because cannabis is not legal by federal law, many banks are careful not to be too friendly with the cannabis industry and be targeted by the government. That is why any banks are not so friendly with businesses dealing with marijuana and its products. Banks may increase charges and levies on the cannabis business. Therefore, you must first find banks that are friendly with dispensaries. Otherwise, you should be prepared to pay high bank charges on your business account.

Day-to-Day Costs & Smart Investments

When trying to answer how much it costs to open a dispensary, you must not forget the day-to-day expenses This starts from the cost of buying your products, transportation, energy usage in your dispensary, staff salary, cost of advertising insurance, cost of keeping an inventory, among others. You must also include your license renewal fees, legal fees, rent, and other associated costs. If you are growing your weeds, then the cost of that should also be included.

Many factors influence these costs and it may not be easy to give a specific value for them. For instance, the cost of buying edibles and other products will depend on the quantity you wish to keep in stock. You can budget around $500 per pound for growing your weed yourself. So, if you plan to grow one hundred pounds of cannabis that may cost about $50,000, and a thousand pounds will cost you about $500,000.

Advertisements can cost between $10 and $25000, depending on the scale of your business and how much you wish to invest. Staff salary varies from state to state and even within states. It depends on your location and the size of your dispensary. However, a budtender may earn between $30,000 and $45,000 per annum. A dispensary manager may charge anything between $60,000 and $150,000 a year depending on the location. If you plan to grow your cannabis, then you will also need to pay the growers. The number of growers you need will depend on the scale of your business. However, you must plan to pay a grower between a minimum of $50,000 a year. Some growers even earn up to two million a year.

Fortunately, you can reduce some costs by investing in technology. Although, that will also require a huge initial capital. The right application of technology in your cannabis business will surely pay off in the long run. Common technology that can reduce your day-to-day cost of running a cannabis dispensary includes investing in an integrated point-of-sale system and advanced security features. These will reduce manual activities and help save on running costs. However, it may cost between $20,000 to $100,000 to invest in technology for a cannabis dispensary.  

People Who Work at The Dispensary

You shouldn’t underestimate the importance of hiring the right people for your business. It is important to carry out a background check on all your employees before hiring them. Train your staff all teh time, the cost of all these must be included in your budget when calculating the cost of opening a dispensary. A skilled budtender is a must for all cannabis dispensaries. He must have good knowledge of different strains of cannabis and cannabis products. He must be able to assist customers to find the best products for them. He must also be able to advise a customer on the proper way of using cannabis. A cannabis dispensary budtender is like a pharmacist. He should know everything about the products he sells and how to use them. Unfortunately, the industry is still new and there are not so many highly knowledgeable budtenders. Hence, you must compete with other dispensary owners for the services of these budtenders. 

dispensary, cannabis industry, licensing, start a business, costs, investments, marketing, taxes, website

Apart from budtender you also need a dispensary manager that will be in charge of the day-to-day running of your dispensary. You need human resources personnel, marketing agents, accountant, and security personnel. If you want to grow your weeds, you will also need more staff to work with. If you follow the industrial standard, then you should budget between $200,000 to $500,000 per annum to pay wages to your staff. However, this depends on the scale of your business, your staff strength, and your location.

Cost of Software

Software is essential for the success of your dispensary. You need an efficient POS that will scan the products, accept payments, keep records of all transactions, and manage inventory. No doubt many popular POS systems will do all that effectively. Consider the cost of the software, while you can find POS that may be as cheap as $99 a month, the standard cost is between $200 and $500. While some may not require initial set-up capital you may have to pay for others to install the software. POS solution providers that do not require set-up capital will bind you to a long-term contract and if you do not love their services, you may have to pay even more in cancellation fees.

dispensary, cannabis industry, licensing, start a business, costs, investments, marketing, taxes, website

Using software to process your cash inflow and outflow and manage inventory will save a lot of manual labor, increase efficiency, drive more sales, and make life comfortable for you, your staff, and your customers. However, you must plan for the cost of the software.

With IndicaOnline POS system, you can be assured that you are always in compliance with the regulations. It also comes with real-time monitoring of delivery, and real-time display of digital menu and updates on TV. The POS is compatible and integrated with popular marketplaces like Potify, Leafly, and Weedmaps. Despite all its good features, its pricing starts from as low as $249.

Cost of Hardware

Apart from software, you also need hardware for the effective management of your dispensary. The cost of hardware will depend a lot on how many of them you want to install. To start with, your POS will need hardware installation. Some POS providers will install both software and hardware for you and allow you to pay for both their services and equipment on monthly basis. However, you will not be able to terminate the contract until after an agreed time. This is usually around three years. Some may be as high as five years. If you don’t want to be tied up with a contract you can opt to pay for your hardware and only pay for their services monthly. In that case, you can cancel the contract anytime you get a better option.

dispensary, cannabis industry, licensing, start a business, costs, investments, marketing, taxes, website

IndicaOnline hardware includes an all-in-one register, barcode scanners, cash drawers, label printer, receipt printer, scales, and Radio Frequency Identification Devices. 

Apart from the POS hardware you also need things like a TV to keep your customers entertained. Sound systems, ventilation systems, and security gadgets are all essential to keep your business running smoothly, safely and make our staff and customers feel comfortable.

Security Systems

Security is an essential part of every business. It is even more important when you deal with cannabis. Having a proper security structure is part of the requirements to run a cannabis dispensary in many states. Hence, it is vital that you comply with the minimum requirements. Luckily, technology has made security better. There are many security gadgets that you can install that will reduce manual effort and will be more efficient. Therefore, when thinking about how much it costs to open a dispensary, you must have a plan for installing a security system.

dispensary, cannabis industry, licensing, start a business, costs, investments, marketing, taxes, website

An appropriate security system depends on your location. However, in a typical location, a cannabis dispensary will need a security camera and gadgets against theft and break-in. 

Marketing and Advertising

It is not enough to get a license to run a cannabis dispensary, recruit knowledgeable staff, set up your software and hardware, ensure security, and stock up your store with products. You must also ensure sales. To sell your product, you must showcase it to people that need it. That is why marketing and advertising are important. Every business needs exposure to generate customers, and if done efficiently, the more effort you put into marketing, the more reward you get.

dispensary, cannabis industry, licensing, start a business, costs, investments, marketing, taxes, website

You should market your cannabis products both online and offline. We are in a digital age and more people are going online to search for marijuana dispensaries around them. Online marketing should include building a website and social media campaign. If you have a huge budget, you can go for paid advertisement online. However, you can reduce the cost by choosing an active social media campaign instead. You don’t need an elaborate website. A one-page or few-page website is good enough. The page will tell people about your product, allow customers to place an online order. You can also have blog posts on your website to educate people on the use of cannabis.

It is important to understand that many platforms may not accept advertisements of cannabis products. This is due to the legal status of the product according to federal law. Therefore, you should familiarize yourself with the advertising regulations of the state you want to run your business in while planning your advert strategy.

While planning the cost of opening a cannabis dispensary, you should budget between $25,000 and $75,000 for marketing and advertising This will cover the cost of hosting and designing a website, social media advertising marketers’ salaries or commissions, and other online and offline marketing.

Cannabis Delivery 

dispensary, cannabis industry, licensing, start a business, costs, investments, marketing, taxes, website

Online sales are significant to all businesses. Cannabis is not an exception. However, it is important that you track delivery of your products right from the moment it leaves your store till it is delivered. That is why you must also include the cost of an application that can track delivery in your budget for opening a cannabis dispensary. Many applications can do this but you can save cost if you choose IndicaOnline software. The software comes with an app. It also ensures safety and compliance with the regulation. IndicaOnline has POS services that are specially designed for marijuana dispensaries. It makes running the business easier, more comfortable, and cheaper. 

Taxes for cannabis businesses 

Another area that requires great attention is the taxes for the cannabis business. Unfortunately, rule 280E does not apply to the cannabis business. Section 280E which is usually regarded as rule 280E stipulates that a business can deduct its running cost from its income before calculating tax. However, cannabis dispensaries are not allowed to exclude these costs from their sales before taxation. They are only allowed to deduct the cost of their inventory. Manny weed dispensary owners do not fully understand how to calculate taxes for their business. But IndicaOnline POS can help you out. With the POS, calculating taxes becomes easier. These will help you to always be in compliance with all the tax regulations.


As stated earlier, you need a website to market your business. Digital marketing is essential for almost any business today. This is even more vital for a cannabis dispensary as some platforms may not allow you to use them for advertising marijuana. But you can do all you like within the law on your own website.

dispensary, cannabis industry, licensing, start a business, costs, investments, marketing, taxes, website

Apart from using your website to market your product, it will also help to promote your brand. Let your site showcase the name of your dispensary, your logo, and value. Having a website will also make your business look legitimate and standard. People will know they can reach you anytime they wish. Your website should also lead people to your social media pages.

Therefore, your website must be well designed. It must display all the important information about you, including your physical address, phone number, and social media link. It must also portray what you stand for. If you write blog posts on your website, it will be an opportunity to educate people on cannabis, marihuana cost, and best ways to use it. You can also share your opinions and get feedback from your readers and customers.

Your website doesn’t have to be complex or elaborate and you don’t have to spend a fortune on it. The most important thing is that it must represent you properly. 

Total costs

The total cost of running cannabis varies from place to place and based on scale and individual’s priority and preferences. However, the basic things you will need to spend on and the estimated amount can be summarized as follow:

  • License – $5,000
  • Rent – $150,000
  • Renovation – $100,000
  • Furniture – $50,000
  • Software (including POS) – $60,000
  • Hardware (including cash register, display counter, and others) – $25,000
  • Marketing and advertisement (including website design and hosting) – $70,000
  • Legal fees and Insurance – $60,000
  • Security Features (including cameras) – $50,000
  • Inventory and Packaging – $80,000
  • Staff Salary – $150,000
  • Miscellaneous – $200,000
  • Total – $1000,000

The estimate shows you may need up to a million dollars for opening a weed dispensary. This seems huge, and you may wonder how much does marijuana cost? But you don’t have to worry. Despite the huge cost of running a cannabis dispensary, over 90% of dispensary owners claim they are making profits. While medicinal marijuana business is more lucrative than recreational cannabis dispensary, both are recording high profits.


Opening a cannabis dispensary is a lucrative business and it has a prospect of improving even more. However, running this business may cost more than many other businesses. Therefore, the first thing when thinking about how to start a marijuana business is to estimate the cost. It is essential to find out how much it costs to start a dispensary. The answer depends on your location, the scale of your business, and your preferences. However, you should expect to spend about $5000, on application and license, over $100,000 to rent a facility for the business, a similar cost to renovate it, and about $70,000 on marketing and advertisement. 

If you plan to grow your weeds, then you should include the growing cost in your budget. Some states also require anyone interested in going into the cannabis dispensary business to provide evidence of having significant assets of which a certain percentage must be in cash. However, this may be waived in other states. Without considering this capital requirement, you may still need up to a million-dollars to open a cannabis dispensary .