Following the legalization of cannabis in Canada, each province was given complete authority over the decisions regarding the production and distribution of cannabis. Most provinces permit individuals to obtain licenses and operate dispensaries and even sell cannabis online.
But if you want to start a cannabis dispensary, no road is easy. You will have to follow the deadlines and regulations of the province and municipality you want to open your dispensary in. However, most rules on how to start are still ambiguous at best, and undefined at worst. The best advice for anyone starting in this industry is to talk to a Cannabis Business Consultant.
If you want to open a dispensary in Canada, you can read this blog. Because in this post, we are going to cover how much does it cost to open a dispensary in Canada.
Initial Capital Requirements
The initial capital requirement for a dispensary in Canada can range between $150,000 – $2 million. Now, this does not mean you must have $2 million before starting your dispensary. This is an approximate cost that you may have to spend if you are planning to open a dispensary in Canada. You will have enough time to raise capital for your dispensary in between applying for licenses to choosing the location. You can seek help from family, friends, and lenders to get enough funds for opening a dispensary.
If you emphasize the most important aspects of the process and reduce other overhead expenditures, you can start your dispensary with a lot less money. This cost covers the application expenses for obtaining a license, purchasing a dispensary infrastructure, and recruiting employees.
The capital requirements also demonstrate that you can manage the business financially in terms of operations (some states require this proof before your cannabis business begins). Liquid assets that will keep the organization afloat in bad times could be the “proof” here.
You’ll need money to order cannabis dispensary equipment, as well as security, marketing, wholesale product purchases, and other costs. Before getting into the specifics, it’s always a good idea to know the range of your general costs, since this will give you an estimate of how much money you “could” spend on this journey. Below is a list of some of the various start-up costs and what they include, as these parts will be included in your dispensary budget.
Licenses Required to Open a Dispensary in Canada
You need three licenses to start your own cannabis dispensary in Canada. The first step is to submit an application for a retail operator license. The retail store authorization comes next, followed by the cannabis retail manager license. The application must adhere to the format outlined above. You cannot apply for a retail store authorization license without first submitting an application for a retail operator license.
A sole Proprietor who chooses to operate as the manager and owner of a specific store is exempt from applying for all three licenses. You may not need to obtain a cannabis retail management license in this situation.
The Cost of Licenses
The retail operator license costs around $6,000 and is valid for two years. It has a four-year renewal price of $4,000 on it. The retail store authorization license costs $4,000 for a two-year term and $3,500 for a four-year renewal.
The cost of a cannabis retail manager license (ROL) is $750 for a two-year term, with a $500 renewal charge or $1,000 fee for four-year term renewal.
You might also need documentation for ROL. Documents such as founding documents, shareholder information, schematic diagrams, tax assessments and returns, financial statements, and background verification are examples of documentation.
These documents may not be required at the time of application submission. However, it is preferable to submit it in advance; otherwise, the entire licensing process may be slowed.
Location Cost for Cannabis Dispensaries
There are a few more regulations to consider, or you risk being turned down by the licensing body. Retail cannabis establishments must meet specific conditions, according to the Cannabis License Act of 2018. They include:
- The dispensary has to be in a reserve or municipality that is a part of the retail cannabis program.
- Municipalities can set hours of operation.
- Not located within 150 meters of schools.
- Only approved cannabis items, as well as cannabis accessories such as rolling papers and pipes, may be sold at the dispensary. It can’t be used for anything else.
Location is a major investment if you want to open a dispensary in Canada. The dispensary must operate from a location that the municipalities approve of, yet at a place that is easily accessible by the patron and patients. The landlord must be comfortable with the idea of a cannabis dispensary running from his premises. So, you will have to go out to the market and get an idea about the cost of the location as well as make sure it is compliant yet accessible.
Advertisement Restrictions You Should Know About
In Canada, there are advertisement restrictions in all provinces. The Cannabis Act, which governs the entire country, imposes strict limitations on advertising and marketing. The following are the five main prohibitions on cannabis advertising:
- Restrictions on publicity by adding testimonials or endorsements from clients. celebrities, or employees.
- Not pricing information of cannabis except at the point of sale.
- No appeal or advertisement near children or minors.
- Restrictions on making cannabis appear glam, cool or exciting
- Not depicting characters, people, or animals whether fictitious or real
So basically, you wouldn’t have to invest much in advertising about your dispensary as it is restricted by the government.
You need expert and experienced employees, and that also costs money!
Hiring a winning team has always played a crucial role in the establishment of any business, and a dispensary is no exception. As a cannabis business owner, although you may have a clear vision of how you want to run your dispensary, you will find it difficult to put your plans into action without the help of an expert team.
Furthermore, the cannabis market provides several job prospects; however, the dispensary owner is accountable for handling such processes, and there is a need of funds. It would be beneficial if you had a team of motivated, experienced, and well-trained individuals ready to take the company from start-up to conglomerate status.
Employees must get salaries, and you’ll need to set up a payment plan as soon as you begin operations. The size of your dispensary and the number of positions you need to fill will dictate the number of employees you hire.
You will need security personnel, store managers, budtenders, supervisors, and a marketing team. Employee compensation will average $250,000 per year (based on industry-standard estimations).
IT Set-Up Hardware & Software
Cannabis businesses need computers, POS systems, networks, Wi-Fi, and much more to operate successfully. Interestingly every inch of the dispensary space could be holding thousands or even tens of thousands of dollars worth of equipment. Additionally, you would also need a robust security system to secure your dispensary from thieves and other troublemakers.
You must partner with tech companies like Cure8 to set up your dispensary. We can design your dispensary as per your ideas, and make it sale-ready in a quick span of time. XO offers a complete range of hardware ranging from POS systems, laptops, network set up to Wi-Fi devices. We can also suggest good software for your business that is compliant and innovative.
One of the most important aspects of running a cannabis dispensary is an efficient inventory control system. In Canada, dispensaries must keep a watchful eye on their inventory due to government regulations. Inventory audits and discrepancy reports are practically difficult without a POS system in place to handle inventory data in real-time, which can result in costly compliance infractions that drive dispensaries out of business.
You will have to find a vendor to supply products to your dispensaries. Make sure they are well placed in terms of quantities so that you don’t have to worry about supply chain management. You could also have multiple vendors to avoid any last-minute setbacks.
When you are ordering products for the first time to set up your dispensary, don’t order in excess. Also, you need to have a stable inventory management process in place. Furthermore, if you lose track of what you have, you may find yourself with an excess of products and no place to put them. Worse, if your records aren’t up to date, you risk running out of supplies and endangering your clients’ health and well-being.
Last But Not The Least
In this competitive sector, staying mindful of dispensary costs is critical. Bringing money in is necessary for profitability. However, if costs go too high, this might become a severe issue.
Monitor your dispensary expenses on a regular basis and make necessary adjustments. Concentrate on the expenses that have the most impact on the company’s success, and outsource non-retail operations such as IT support and management to experienced professionals like Cure8.
Cure8 can help you set up your dispensary and give you the IT management support you need. From POS stations to computers and networks to Wi-Fi, we can help you with everything. We follow a transparent pricing policy that will be well within your budget.
When you partner with us, there is very little chance that you could go overboard with your expenses.
Get to know more about our services here.