If you are wondering how to open a dispensary, then a business plan is perhaps the single most important document an owner needs to create before setting up a cannabis dispensary.

Studies show
that having a business plan can potentially double your chances of attracting investment and growing your business. This document will not only be helpful when applying for licenses and permits from authorities but also when pitching to potential investors and partners.

To get a license to open a cannabis dispensary in North America, you need to submit a business plan to the licensing bureau for approval. There are specific elements in the business plan that the states’ licensing bureaus are looking for, which must be present in your business plan for you to qualify for a license or permit to open a dispensary in a specific area.

While all states might require details like location, information about the product and the team, some requirements are state-specific. So you need to do your research and find out what your state licensing commission prioritizes before writing your business plan.

To stimulate investor interest in your business idea, you need to be able to present a good, compliant business plan. In the investor community, this is considered the bare minimum an entrepreneur should do to get their idea considered. It is not enough, however, to tick all the boxes. You need a business plan that will make investors sit up and  call you rather than one of your competitors.

Going into the cannabis industry could be considered risky at such an early stage in the industry's life cycle. With the absence of nationwide federal regulation of the industry, each state is beating its own path through the legalization process, which translates to increased risk for investors. That increased risk, along with the wave of cannabis businesses opening up, means that your business plan needs to help investors answer the question, “Why you in particular?”

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 A good dispensary business plan can also help you to flesh out the parts of the implementation process that you don't necessarily get to cover during the ideation phase of launching a new business.

Aspects about running the business like day-to-day operations, human resource management, compliance, and even security can get overlooked during ideation. Writing the business plan enables you to engage with all aspects of your future business, not just the exciting ones. This is why it is such an important document to get right.  

To ease this process for you, we have created a list of the ten most important elements to include in your business plan to give yourself the best chance of attracting investors and getting licenses.

 

What should I include in a dispensary business plan?

Within a dispensary business plan there are 10 key factors you need to be sure you include: Market need, branding, target market, location, execution strategy, products and ops, finances, the team, marketing and compliance. In this article we will touch on each one of these topics in more depth.

1 - Market need and opportunity.

Like every other business plan an entrepreneur has to write about their idea, you need to establish the need in the market that your business is solving and the way in which you plan to solve it. That is not as simple as saying there is no cannabis dispensary in the area because what if there is no need for one in the first place?

To establish a compelling argument for the need for your business in a particular area, it will help to do some research. Find out how the market in your area is accessing the product. What is wrong with that method? How would your business be a solution to that problem that you have identified? That is how you establish a need for your specific business and validate the opportunity you have identified to potential investors.

2 - Brand identity.

One of the essential elements to include in a cannabis business plan is your unique brand identity. This is important for both your potential investors and your license application process.

Brand identity
refers to how the organization sees itself as a brand. For instance, what is your company's long-term vision? What are your values? What do you stand for? This information will help your potential investors understand you better and align themselves with your vision.

Furthermore, thoroughly articulating your brand identity will also help distinguish you from other license applicants at the licensing bureaus, which is vital because uniqueness and innovation are considered when awarding licenses.

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3 - Target market.

Another essential feature of a good business plan is the target market. While the details of this are typically covered in a separate marketing plan, it is important enough to merit its own mention in the overall business plan. This is because identifying your target market early will help with many of the processes involved in setting up a cannabis dispensary.

Deciding whom you are targeting as a customer base will inform decisions to do with the product itself as well as branding, location, and the effective marketing strategies available to your dispensary. Furthermore, properly identifying and articulating your target market can help when applying for a license, as any ambiguity around your target market could be misunderstood as an intention to market to minors, which will get your application for a license turned down.  

4 - Location

Location is more important for a cannabis dispensary than for most businesses. In most states, cannabis dispensaries are required to have a location before they apply for a license. This is partly due to the various zoning laws restricting where one can open up a cannabis dispensary.

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States limit the number of cannabis dispensaries allowed to open in their cities and municipalities. Furthermore, in many states cannabis dispensaries are not allowed to be set up close to schools, hospitals, or youth centers. 

This is the reason why you need to include your intended location in your business plan, and you need to make sure that your area's zoning laws approve this location.

5 - Execution plan.

Before approving an applicant for a cannabis retail license, most licensing commissions need to know that the applicant’s business model is feasible and that the applicant is capable of executing the plan once they get a license. As mentioned above, states limit the number of licenses they can give out and, as a result, the feasibility of the idea matters.

To establish feasibility, you will be required to submit a detailed execution plan. This includes your go-to-market strategy, launch budget, and your strategy to recruit employees. Other features like the technology you plan to use and your community outreach programs can also be included in this section of the business plan.  

6 - Product and operations.

Another critical element of your business plan is your product description. This section appeals to investors and the licensing commission, as well as potential partners in the team. Describe the products you wish to sell in this section. This is important because not all products are allowed to be sold in all states. If applicable, explain the process of making that product along with the associated costs. Another important feature to add here is the paraphernalia required to consume your products and the benefits to your customers.

In addition to the above, you should also indicate where you plan to source your flower and the logistics involved in getting it to the store. All this information will increase your credibility to potential investors and cement the feasibility of your idea to the licensing commission in your area.

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7 - Financial information.

 The financial section of a business plan is a significant element that investors consider before investing. That is because this section usually includes the projected revenues and profits of the business over time, the dividend sharing policy of the business, and details of other investors already on board. All this information is important for potential investors.

In addition to investors, the licensing bureau will also be interested in your financial information. This is because starting and operating a cannabis business is expensive, and you will need to demonstrate a capacity to raise capital before being granted a license. So make sure you indicate what your plans for raising capital are and who are your existing investors. 

8 - The team.

Your team is one of the biggest determinants of whether or not your business will succeed. The right team can help you identify opportunities, save time and resources, and meet your business goals. It can be a significant selling point for investors. That is why you need to include a section on the core team members, their credentials, and what they bring to the enterprise.

It is also crucial that you indicate the organizational structure and the business hierarchy so readers can understand what the decision-making process is in the team.

how to open a dispensary

9 - Marketing and sales plans.

No business can survive today without a marketing plan. The cannabis industry is no different. It would help if you had a section in your business plan that covers how you intend to reach your target customers. Illustrate the consumer's journey from the first contact with the brand to becoming a qualified lead and eventually a brand customer.

In this section, you should identify your main marketing avenues based on where your target market can be found. This section should also include information on your competitors as well as your competitive advantages. Finally, indicate your key milestones and how you intend to measure the success of your marketing and sales performances.

10 - Compliance and security.

To get approved for a cannabis license, you need to demonstrate an understanding of and ability to comply with the regulations governing dispensaries in your area. Compliance is crucial for cannabis businesses, as failure to comply could mean losing your license and losing your backing.

Highlight the standard operating procedures for running a cannabis business in your area and how you plan to ensure ongoing compliance with them. You should also indicate how you plan to secure your premises and inventory. What inventory management system will you use? What security equipment do you plan to put in place? You might need some help from a licensed security company to secure your business and to eliminate any liability from negligence.

Did this article help you understand how to open a dispensary? Great! If you are ready to open your dispensary be sure to check out how we can help you manage your people with one easy to use platform!

 

how to open a dispensary