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Having just recently opened a dispensary in the heart of Denver, I can say from personal experience that opening such a store is no easy task. It takes a long time to get a dispensary from a fun thought to a physical, operational store, and the process requires a great deal of effort, forethought, patience, and financing.
In today’s political climate, many people would view the opening of a dispensary to be a hyper-risky venture that’s not even worth considering. I would argue, however, that there are few business ventures that have greater potential for a high return on investment while simultaneously improving the surrounding community and bringing about a great deal of internal satisfaction. So long as one follows generally agreed-upon steps towards the opening of a store in the cannabis industry, it’s hard to go wrong. Here are a few things would-be dispensary founders can do to ensure for a smooth process and successful opening:
The cannabis industry is complex- there’s no doubt about it. State-specific regulations vary greatly from Colorado to its neighbor states of Kansas and Wyoming, while federal restrictions are much more stringent and enforced by entirely different governing bodies. Meanwhile, individual municipalities have the ability to enact and enforce their own rules regarding cannabis use and sales. In order to be successful in any corner of the cannabis space, one needs to do their due diligence and conduct as much research as reasonably possible. I’ve spent a tremendous amount of time researching and documenting everything from state and local industry regulations, to zoning restrictions, to cannabis business tax codes, to lending requirements for dispensaries, and while it can be exhausting, every bit of research helps.
If you’re going to open a dispensary, you’ll need to consider your priorities. Some dispensary owners are focused entirely on the bottom line, while others (like myself) place customer satisfaction, a positive impact on the community, and the development of a quality product to be major factors in the way a store’s success is perceived. Before trying to set up a dispensary, you’ll want to know what type of operation you’d like to run and how you’re going to do it. This seems like an extraneous step to take, but it’s often overlooked.
The financing process for any business can be stressful, let alone one in an industry that revolves around a plant that’s still illegal on the federal level. The successful funding of a dispensary requires buy-in on the founder’s part, a hard lobbying effort in the friends and families round, and a well thought-out business plan and pro-forma projections, including use and source of funds, that can be presented to VC and private investors in the area.
A poorly managed fundraising effort can spell the end of a dispensary’s formation, and it has for a number of startups in the space, so attacking this component of the process with diligence is crucial. I’ve met with over 40 different investors to secure financing for my ventures. Most of the investors I’ve met with have been through referrals from friends, family, and business associates.
Our dispensary was opened at the former site of VIP Cannabis, a dispensary that was raided in November of 2013 as part of the largest-ever federal raid against Colorado’s medical marijuana industry. The business’ owners were suspected of funneling money from Columbia, and while the charges weren’t proven to be true, they ended up losing their ability to own cannabis operations and work in the Colorado cannabis industry anyway due to not having followed compliance regulations.
If you want to be successful in the cannabis industry, whether you’re looking to start a social media platform or an organic growhouse, you need to be aware and compliant with all relevant regulations. Like the research phase, this isn’t something that should be taken lightly, and essentially all successful business owners in the space are on top of the ever-changing net of regulations surrounding the space.
There are plenty of sectors that provide able, intelligent and creative entrepreneurs with opportunities for success that don’t involve the massive headaches that are part and parcel for the cannabis space. My primary motivation for being in the space stems from a passion for the plant, for the people it helps, and the innovations surrounding it that are dramatically improving the way our society operates. Putting aside know-how, ingenuity, and insight, passion, determination, and perseverance plays a larger role in a cannabis entrepreneur’s career than any other factor.
Neil Demers is the CEO of Diego Pellicer – Colorado, an independent brand licensee based out of Denver, CO focused on owning and operating legally compliant dispensary and grow operations. Learn more at https://co.diego-pellicer.com/