These days, you need quite a bit of capital to start a cannabis business…
Today, I’d like to answer an important question that was posted by a reader on part one of my cannabis entrepreneurship series.
Donald asked, “Charles, I know you have the experience concerning weed, which is great. Here in Ohio, the state wanted prospects for weed dispensaries to have $500,000 in your savings account as a reserve. How do you handle that in addition to starting the company with basic startup costs as well? This is a very expensive project.”
Thanks for writing in, Donald. You’re right – some states make it downright prohibitive to get a license. It’s hard to overcome if you don’t have the financial backing.
The worst part? State’s do this on purpose to limit the field of applicants. So much for free markets, right?
When you’re in this kind of situation, your choices are limited: Either you get an investor to back you financially or you go into a state with less onerous rules.
State-to-State Licensing Requirements
In Oregon, there used to be no limits on who could get a license. And there were no crazy financial backing requirements like you see in Ohio. You literally just needed $5,000 and the money to endure a 10-month licensing process, plus a build-out.
Oklahoma was even easier. When the medical program first started, businesses were getting licensed in less than 30 days!
In both states, there was a time where you could start a dispensary for less than $500,000.
In fact, you could license, build-out, and operate a dispensary for a year and still not burn through $500,000 – assuming you never turned a profit.
Today, both states have placed limits on who can get a license.
Still, you could easily buy a profitable, operating dispensary for $500,000 or less in many states.
Ultimately, if you want to run a cannabis business but don’t have the liquid savings or backing from an investor to meet an insane financial licensing requirement, your best option is to look at other states.
Advisory Board Member, National Institute for Cannabis Investors
5 responses to “Starting a Cannabis Dispensary With Less Than $500,000”
May 28 2020