If you’ve ever found yourself wondering how much a dispensary owner makes, you would not be the first or the last. In response to the phenomenal boom in the cannabis dispensary business, there has been increased interest in starting up a dispensary and the potential profits a dispensary owner can make. If that’s you, then this article is the perfect read.

If you know precious little about dispensaries but you are curious about this business, this article provides a crash course overview of the dispensary market. We will cover what a dispensary is, how much it costs to open a dispensary, expected dispensary owner profits, along with the salary's of other players in the space.

Here are some of the things you should know about dispensaries and why earning money as a dispensary owner is something you should pay keen attention to.

What is a dispensary?

Generally speaking, a dispensary is a place that offers and sells a unique or specific type of product. But the term is commonly used to refer to a cannabis or marijuana dispensary—that is to say that a marijuana dispensary is a place that sells marijuana for medical and/or recreational purposes.

A cannabis dispensary is different from a regular medical dispensary because the latter by law cannot provide cannabis for sale to the public. 

A few decades back, the idea that dispensing cannabis would become legal in many US states would have been inconceivable. But now cannabis has become a major part of the medical intervention of our healthcare system and, with ever-growing support for its legalization, investors and manufacturers are waking up to the opportunities this brings.

Though cannabis is still illegal under federal law, it has now been legalized in 35 states and the district of Columbia. California was the first to make the drug legal in 1996. Since that time thousands of dispensaries have opened across the country, offering cannabis for sale either for recreational or medical purposes. As of April 2021, the number of states offering marijuana for recreational purposes had increased to 18. The state of Colorado officially has the largest number of marijuana dispensaries. With these impressive stats, it’s easy to see why there is growing interest in the marijuana dispensary business. 

As a dispensary owner, you become a community educator on the many benefits of using cannabis, especially for medical and health-related issues. Also, this would be a great opportunity for cannabis enthusiasts looking to get a job at a dispensary.

How much profit do dispensaries make?

There are no constant figures here, but an estimate puts the profit after tax at 12 percent. The question of how much profit dispensaries make isn’t up for debate as over 90% of dispensaries have reported good to great revenue. And the projections show a continuous increase year on year. 

how much do dispensary owners make

Of course, there are several factors to take into consideration when talking about profitability. The size and the location of the dispensary matter. A small dispensary located in a town with little customer traffic will make a profit but not in the same league as a major distributor dispensary that serves thousands and even tens of thousands of customers.

Other important dispensary costs to consider include:

  • Taxes
  • Pricing of the product
  • Daily transactions
  • Operating Costs

What is the cost of operating a dispensary?

The average cost of operating a Dispensary is between $200,000 to $1,000,000. But much of the operational cost is dependent on the size of the business outlet. A cannabis dispensary is not the same as your regular Walmart  shop—the costs involved are far higher than what is required to open a simple retail shop. 

As with all businesses, there are necessary operational expenses that must come with running a dispensary. These costs begin at the point of application and licensing, which can be as high as $200,000. Indeed, in some cases this fee is not refundable. That can be a lot to process. There are other specialized legal licenses that dispensary owners are required to pay for and adhere to, not to mention the day-to-day operational costs of running the dispensary. 

Daily costs can run to thousands and even tens of thousands of dollars. Let’s not forget the cost of providing adequate security to keep the product secure. 

On average in 2017, studies show that regulated dispensaries were running on annual operating costs of $1.2 million and had annual  revenue estimated at $3 million.

What do budtenders make?

The average budtender can earn between $12 - $18 per hour working at a dispensary. Again the size and structure of the dispensary also come into play. The job comes with great flexibility and options for career growth. 

Dispensaries offer employment opportunities to a lot of people. One key position you will often come across is the Budtender. Think of the budtender in the same way you would think of a bartender at a bar. While a bartender serves the drinks at a bar, the budtender works the storefront of the cannabis dispensary. The budtender is the face of the business customers interact with when they enter a dispensary. They provide customers with information on the different cannabis products available at the dispensary—the effects, benefits, experience, and how to use the products. They don’t have to be medically trained but will need a license that allows them to work at the storefront of a dispensary.

We can summarize the budtender’s responsibilities as follows:

  • Representing the dispensary as the first person customers interact with
  • Setting up the sale of any cannabis product
  • Providing useful information on the products available
  • Providing proper safety measures to customers
  • Verifying the identity of the customers and maintaining a sales database 
  • Operating the cash register

Budtending offers a great opportunity for people to earn well. 

how much do dispensary owners make

How much do dispensary owners make?

Dispensary owners make an average of $500,000 annually from running a dispensary. This is one great reason why a lot of investors and entrepreneurs are taking a second look at the business. The numbers do not lie and the numbers are not small. 

Not everyone wants to work in a dispensary as a budtender. If your eyes are firmly set on being the owner of one, that’s a great choice. A dispensary owner occupies one of the top-tier positions in the cannabis retail business. But it isn’t just a matter of raising capital for the business and setting up the administration for it. A dispensary owner will have to sacrifice time, and a good deal of capital if they are going to make the dispensary work.

There are many loopholes for dispensaries to pass through and legal hurdles to jump over every single day. The dispensary owner bears the weight of that responsibility and does everything to keep the business operating smoothly. If you feel drawn to the opportunities that come with owning a dispensary, you also need to be aware of the many responsibilities that come with it—especially when it comes to getting a license and setting up initially.

If these responsibilities do not scare you off, then you are up for running a successful dispensary. There’s no doubting that being a dispensary owner has proven to be profitable for many entrepreneurs,  with some of them earning a regular six figures from the job. At the moment, there is no sure way to substantiate the profits of dispensary owners, one reason being that there are few who have made their accounts public. A survey completed by MJbizdaily, estimated that more than half of dispensary owners receive over $500,000 in annual revenue. A quarter and more are estimated to have revenues of $1 million and over.

How much do dispensary franchise owners make?

Dispensary owners can make an average of $400,000 to $900,000 annually. How much dispensary owners make has a lot to do with the structure of the franchise they bought. 

If the weight of starting a dispensary from scratch isn’t something you are willing to bear, there is an alternative route a lot of entrepreneurs are beginning to take. Like many businesses around the world, you don’t have to get your hands dirty when you can simply acquire a franchise. 

Much of the success of some of the world’s largest companies has come from understanding and utilizing the power of franchising. The cannabis industry is no different in this regard.

how much do dispensary owners make

What is a franchise? 

A franchise is set up when a business allows a third party (called a franchisee) to operate under their brand structure and to sell a product or service under the business's trade name.

The franchisee pays the business (franchisor) an initial fee and continues to pay annual royalties or a certain percentage of sales. 

Entering a franchise opens you up to a lot of great opportunities. As the franchisee, you will get access to the same systems that have made the larger operator successful. You get to run a business with the same name and structure as the head business while still earning a profit. 

For a dispensary business, this would give you access to operating standards, marketing templates, existing products, and a brand name customers can recognize. Think of it as standing on the shoulders of others. The downside, of course—besides the royalty fee—is that you cannot change the brand or use your own business name. It's a personal choice that you would have to make. You either carry the weight of building the dispensary business on your own or use an existing framework with some terms and costs conditions. 

As ever with the cannabis industry, some legal peculiarities present themselves to franchisees.

For one, because federal law has yet to legalize the use of cannabis, your franchise activities are limited to the state where it is legal—there can be no across-the-border trade. This can pose a problem when you're located in a different state from the franchisor and, as required by the franchise agreement, all outlets must use the same products. In some cases, individual stores are given the freedom to grow their produce. 

As to the profitability of running a franchised dispensary, the data isn't consistent. It will depend on the growth and strength of the existing business and how well you can run the franchise. As we have seen already, most dispensaries are running at a profit. If a franchise agreement is entered, a fixed fee (roughly around $100,000) or a percentage (5-6%) will be charged from the profit. 

How KayaPush levels the playing field.

There are a lot of decisions and management practices that go into running a retail dispensary. Along with tax concerns and expense management, a profitable venture can quickly turn into something that will be difficult to manage on your own.

What KayaPush offers is a simplified solution that does much of the heavy lifting in these areas for you. This way you can start up your retail dispensary with minimal stress. 

KayaPush gives you innovative software that manages your dispensary’s payroll, paperwork, and HR management while you focus on creating the values and structures that will make your dispensary a memorable experience for your customers. 

You will never have to worry about the paperwork involved with running a cannabis retail outfit. KayaPush brings on board a wealth of experience and expertise that will be invaluable to you as a dispensary owner. 

If you are looking to learn more about how to open or scale your dispensary, check out our hiring guide below.

how much do dispensary owners make?