Cannabis dispensaries are like any retail business, only they come with a host of added costs related to licensing and meeting regulations. With the rise of the medical marijuana industry in Missouri, there are many new business opportunities, but licensing, control measures, and other cannabis-specific requirements will affect your store’s bottom line.
The cost to open a cannabis dispensary in Missouri varies and includes licensing, acquiring property, store security, a compliant point-of-sale system and much more. Whether you’re in Kansas, St. Louis, Springfield, or any other municipality, this guide gives an overview of the costs and how to avoid the pitfalls of starting in this exciting new market.
Cannabis Dispensary Start-Up Costs in Missouri
The estimated up-front cost of opening a medical dispensary in Missouri is between $85,000 and $150,000. This price tag includes costs like licensing, acquiring property, store security, a compliant point-of-sale system, wholesale product procurement, staff, taxes, and hidden fees specific to dispensary businesses. These topics are explored further below.
Time spent waiting for licensing can also be expensive. Opening any business takes time, and this will likely be especially true for medical marijuana. As Missouri goes through the process of establishing its cannabis industry, potential dispensary owners should budget for delays in licensing and real estate zoning.
Medical Cannabis Dispensary Licensing
The application fee for a medical marijuana dispensary license in Missouri is a non-refundable $6,000, and the annual license renewal fee is $10,000. There are also standard fees any new company has to pay to register as a business entity for legal purposes.
Property and Cannabis Zoning
Like any retail store, lease or mortgage payments can be anywhere from $1,500 to $6,000 per month in Missouri, depending on the area, square footage of the property, and financing agreement. Renovations to create the right look and feel for your dispensary can also run anywhere from $25,000 to $50,000.
Entrepreneurs have to account for the available zones dispensaries can operate within. Centers like Kansas, St. Louis, and other municipalities are essentially treating medical dispensaries like pharmacies; however, state medical marijuana laws prevent them from operating within 1000 feet of schools and churches.
Additional marijuana dispensary zoning rules can vary in every municipality and neighborhood, and many of these area-specific regulations are still being finalized. Cannabis entrepreneurs need to budget for potential delays due to regulation adjustments at the community level.
Beware of The “Cannabis Tax”
There are, unfortunately, stigmas and assumptions that go along with running a dispensary. There is a term called the “cannabis tax.” This doesn’t refer to actual government taxation (which is covered further down), but many cannabis entrepreneurs face: There may be an assumption that your business will be both highly profitable and problematic, and so some individuals will charge more for goods and services when dealing with you.
This means when negotiating with landlords, you could face more expensive lease agreements than other businesses. The so-called cannabis tax can affect other aspects like loan agreements and contractor rates.
Cannabis and Federal Taxes
Taxes can be another financial challenge. While medical marijuana is legal at the state level, federal laws run counter to that. Cannabis business owners must be aware of the federal tax code, specifically statute 280E. This rule says you cannot make standard business deductions “in the trafficking of a Schedule I or II controlled substance,” which includes cannabis in any form. Basically, cannabis entrepreneurs have to pay taxes on all of their revenue without the benefit of claiming business expenses to reduce their taxable income.
Security is a major start-up cost for dispensaries. Compared to other retail businesses, the value of cannabis products — as well as the amount of cash dispensaries deal with — makes them a target. Security measures like video surveillance, key-card access doors, inventory tracking systems, and even security personnel are essential. The up-front cost for cameras and secure doors and windows can range from $5,000 to $20,000.
Staffing Your Dispensary in Missouri
To run any business successfully, you need dedicated and fully trained employees. The size of your shop will dictate how many people you need on staff, but assuming you have a few budtenders, a supervisor, and store manager, you can expect your annual payroll to run close to $250,000 if you’re paying them at industry standard rates. Security personnel will cost extra.
Cannabis Product Sourcing
You also need to be aware of how to legally obtain your marijuana products. According to Missouri’s medical marijuana rules, there are many industry-specific licensing categories. These categories include cultivation, infused product manufacturing, testing, transportation, and dispensary licenses.
Licensed dispensaries can only grow and cultivate plants if they are also certified as a cultivation facility, which requires businesses to meet a whole host of other criteria and further fee payments. This means dispensaries that aren’t also certified cultivation facilities must obtain their product from approved wholesale vendors.
New dispensaries will need to budget around $30,000 to $50,000 for bulk buying, with the expectation of selling an estimated half to two pounds of marijuana per day. That said, these numbers can vary wildly from market to market.
Seed-to-Sale Tracking Systems
There are strict rules related to tracking medical cannabis inventory and sales information. Specifically, Missouri law requires businesses to document “inventory, harvests, acquisitions, sales, disbursements, remediations, disposals, transfers, ending inventory, and any other data necessary for inventory control records in the statewide track and trace system.”
The state refers to this information as “seed-to-sale tracking data.” Failure to document this data can result in the loss of your licensing. Dispensaries must budget for systems, like cannabis-specific point-of-sale technology, that automatically tracks seed-to-sale information to be compliant.
Need a seed-to-sale compliant point-of-sale system? Contact our team to book a demo today.