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How to Start a Medical Marijuana Dispensary

Medical marijuana dispensaries legally purchase marijuana from vendors and sell it to physician-approved patients. Dispensaries have a physician on the board of directors to ensure that patient treatment adheres to standard accepted practices. They also have highly trained staff who are continually educated about the many different strains and forms of cannabis and their medicinal purposes. Those forms include vapor, tinctures, balms, oils, juices, and edibles. A medical marijuana dispensary provides patients with an alternative to pain-killers and other drugs that can have harmful side effects when used long-term.

Learn how to start your own Medical Marijuana Dispensary and whether it is the right fit for you.

  • 9 Steps to Start your Medical Marijuana Dispensary
  • Who is this Business Right For?
  • Take the Next Step
  • Useful Links

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Start a medical marijuana dispensary by following these 9 steps:

You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your medical marijuana dispensary. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

STEP 1: Plan your Business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

Luckily we have done a lot of this research for you.

What are the costs involved in opening a medical marijuana dispensary?

Obtaining a business license is one of the most substantial startup costs of opening a medical marijuana dispensary. In most states where medical cannabis businesses are legal, the cost for an application for a license is $5,000. However, the cost varies from state to state, as does the minimum requirement for startup capital, which can be as high as $250,000. If you plan to grow your own product, additional grower’s license fees are required. Other common startup costs include:

  • Monthly rent, including a security deposit (for those who don’t own commercially zoned property)
  • Initial inventory (some growers are willing to accept a percentage of sales in lieu of a complete initial payment)
  • Display cases, bottles and jars
  • Office supplies
  • Security system
  • Signs that display your company name and logo to create brand recognition
What are the ongoing expenses for a medical marijuana dispensary?

Ongoing expenses to maintain a medical marijuana dispensary may include:

  • The cost of purchasing the product from growers
  • Rent and utilities
  • Staff salaries
  • Advertising and sales promotions
Who is the target market?

Clients and customers are all patients who have been referred by a physician who has prescribed cannabis as a medical treatment for an existing condition.

How does a medical marijuana dispensary make money?

A medical marijuana dispensary makes money by selling cannabis products for medicinal purposes. Some dispensaries grow their own product to increase profits while others purchase the product from professional licensed growers and resell it at a higher price. Many also make money through the retail sale of pipes and vaporizers purchased in bulk at wholesale prices.

How much can you charge customers?

Customers are charged according to the quality and quantity of the product. The average cost of an ounce of medical marijuana is $200. However, high-grade organic medical marijuana can cost as much as $60 per gram. That does not include any state tax. Edibles such as cookies or brownies can sell from between $2 and $5 per single dose. Tinctures are priced from $15 to $50, depending on the strength.

How much profit can a medical marijuana dispensary make?

According to Forbes, established businesses can earn up to 50% profits, while new ones commonly earn about 20%. Annual sales figures are not yet available since the medical marijuana dispensary industry is new and still illegal in some states. It is still considered high-risk due to the discrepancies between state and federal laws.

How can you make your business more profitable?

Many medical marijuana dispensaries offer a variety of foods containing medicinal marijuana. Brownies, cookies, and other edibles have become extremely popular, and customers are willing to pay more for the extra time, effort and ingredients needed to make them. Some dispensary owners also grow their own product, which results in fewer expenditures and higher profits. Many dispensaries also sell accessory products, such as pipes and vaporizers, which sell for prices ranging from $20 to $700.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Medical Marijuana Dispensary Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

  • Your state’s business records
  • Federal and state trademark records
  • Social media platforms
  • Web domain availability.

It’s very important to secure your domain name before someone else does.

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After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google’s G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free

STEP 2: Form a legal entity

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your medical marijuana dispensary is sued.

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

  • ZenBusiness ($39 + State Fees)
  • LegalZoom ($79 + State Fees)

You can start an LLC yourself and pay only the minimal state LLC costs or hire a Business Formation Service for a small additional fee.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It’s really easy and free!

You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Additionally, learning how to build business credit can help you get credit cards and other financing in your business’s name (instead of yours), better interest rates, higher lines of credit, and more.

Open a business bank account
  • This separates your personal assets from your company’s assets, which is necessary for personal asset protection.
  • It also makes accounting and tax filing easier.

Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.

Get a business credit card
  • This helps you separate personal and business expenses by putting your business’ expenses all in one place.
  • It also builds your company’s credit history, which can be useful to raise money and investment later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Each state has different licensing procedures for growing and selling medical marijuana. This site has a list of state-by-state regulations , and also offers legal consultation for persons interested in starting their own medical marijuana dispensary.

Most states also require businesses to obtain a generic seller’s permit or resale certificate. Additionally, some states require both. A seller’s permit allows states to record and collect taxes from goods (and sometimes service) sales.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

In addition, certain local licensing or regulatory requirements may apply. Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.

In some states, such as California, it is required that medical marijuana dispensaries be opened up as non-profit organizations. Attached is a resource concerning state-specific non-profit requirements: Cornell University Law School – Non-profit organizations .

Release of Liability

To avoid liability and potential lawsuits, medical marijuana businesses should have their clients sign a release of liability. Here is an example of one such form.

Recommended: Rocket Lawyer makes it easy to create a professional release of liability form for your dispensary when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.

Certificate of Occupancy

A medical marijuana dispensary is generally run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.

  • If you plan to lease a location:
    • It is generally the landlord’s responsibility to obtain a CO.
    • Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a medical marijuana dispensary.
    • After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
  • If you plan to purchase or build a location:
    • You will be responsible for obtaining a valid CO from a local government authority.
    • Review all building codes and zoning requirements for your business’ location to ensure your medical marijuana business will be in compliance and able to obtain a CO.

STEP 7: Get Business Insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers’ Compensation Coverage.

Recommended: Learn what business insurance for your Medical Marijuana Dispensary will cost.

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

If you aren’t feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we’ll give you helpful tips and advice for creating the best unique logo for your business.

How to promote & market a medical marijuana dispensary

There are more restrictions on advertising within the cannabis industry than other types of businesses. Creating a blog on your business website is a great way to educate existing and potential customers about your products, their uses and their effectiveness. Social media can also be very helpful in building a regular clientele as well as offering sales promotions. Experts suggest featuring your best products and offering deals, loyalty rewards, and referral incentives.

How to keep customers coming back

It’s important to introduce yourself and your highly trained staff members to the community. Your customers will be referred by prescribing physicians. Planning or attending community education events and giving presentations to patient support groups and at medical facilities are also good strategies.

STEP 9: Establish your Web Presence

A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.

Start A Medical Marijuana Dispensary In Your State

Select your state below for an in-depth guide on completing each of these steps in your home state.

Is this Business Right For You?

This business is ideal for people who are passionate about alternative medicine and have a strong desire to help others. Those who have worked in the medical field are often drawn to this business, since the goal is to alleviate the severity of symptoms associated with many medical conditions that adversely affect quality of life. People interested in learning more about the practical application of the latest scientific discoveries in the fields of medical science, biology, and horticulture are ideal candidates for this business.

Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

What happens during a typical day at a medical marijuana dispensary?

  • Keeping abreast of federal and state laws and new legislation affecting the industry
  • Learning about the medicinal properties of existing strains of cannabis as well as those of new strains currently under development
  • Negotiating prices with growers and ordering products
  • Educating and training staff members
  • Communicating with patients about their needs and the effectiveness of your products in meeting them

What are some skills and experiences that will help you build a successful medical marijuana dispensary?

  • Knowledge of the medicinal properties of cannabis
  • Negotiation skills for contracting the best prices from growers
  • Interpersonal skills for communicating with patients about their needs and experiences with your products
  • Managerial skills for training and supervising staff
  • Accounting skills
  • Advertising and promotional skills for competing successfully within the industry

What is the growth potential for a medical marijuana dispensary?

A new report by a research firm revealed that legal cannabis sales rose 17% in 2015 to $5.4 billion and predicted that it would grow another 25% in 2016. Profits for individual dispensaries vary greatly. According to a recent industry survey, almost 60% of owners earn less than $500,000 annually. 27% of respondents reported sales between $100,000 and $250,000, and 15% reported earning less than $100,000. A little over 25% reported revenues of over $1 million, and 15% reported between $500,000 and $1 million.

TRUiC’s YouTube Channel

For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe below to view later.

Our guide on starting a medical marijuana dispensary covers all the essential information to help you decide if this business is a good match for you. Learn about the day-to-day activities of a medical marijuana dispensary owner, the typical target market, growth potential, startup costs, legal considerations, and more!

Business Application Information

Grower, Processor, Dispensary, and Transporter Application/Renewal Information

Don’t risk your business license getting rejected. We will take you through the renewal process step-by-step.

Program Changes for Businesses:

Additional Resources

Important Note Regarding Certificate of Compliance

A political subdivision may request an alternative COC form or resolution be accepted by OMMA.

Process to submit alternative Certificate of Compliance From:

  1. The City or County Official sends a copy of the official resolution, signed letter on official letterhead, or alternative form to: [email protected]
  2. OMMA will verify the documentation, ensuring that the official document identifies each requirement set forth 63 O.S. § 427.1 et seq. as being not applicable. By this documentation, the political subdivision is verifying it has none of the following applicable codes for which to certify compliance at this time:
    • Zoning classifications and ordinances
    • Safety codes
    • Fire codes
    • Electrical, plumbing, waste (including environmental waste) codes
    • Building or construction codes
    • No other ordinances/requirements need to be satisfied by the applicants
  3. Alternative forms that contain all the same information as the OMMA form that a city or county has established for use, can be submitted for approval. The city or county official must still sign off and address each component outlined in the law.

Important Note for Dispensaries: Distance from a School

As stated in OAC 310:681-5-3(e)(4), dispensaries must provide proof that the location is at least 1,000 feet from a public or private school. This distance is measured by the straight-line (shortest) distance from the nearest point of the location of the dispensary to any entrance of a school. It is not measured by walking or driving distance. Any school that holds classes or activities for students, such as field houses, track/practice fields or agriculture classes, is included in this restriction. It is the responsibility of the applicant/licensee to ensure the dispensary is not within 1,000 feet of any applicable school entrance. If this distance is less than 1,000 feet, the dispensary application will be denied and the application fee will not be refunded.

The OMMA must be able to verify the documentation provided by the dispensary. Officials use satellite measuring tools to verify the specific distance from the closest point of the dispensary’s property line to the closest entrance of any school. Applicants are encouraged to review the Proof of Distance from a School

document and use multiple tools (such as maps) and resources to ensure compliance with this requirement. Applicants with questions about schools near their location may want to contact the local school district. Please reference the document and use multiple tools (such as maps) and resources to ensure compliance with this requirement. Applicants with questions about schools near their location may want to contact the local school district. Please reference the Proof of Distance from a School document for more information.

New requirements starting August 30, 2019:

  • Applicants must supply a Certificate of Compliance for their business location
  • No individual with ownership interest in the business can be a sheriff, deputy sheriff, police officer or prosecuting officer, or an officer or employee of OMMA or a municipality in which the commercial entity is located
  • Applicants must supply ownership disclosure documentation
  • Applicants must provide proof of good standing from the Secretary of State (SOS) and/or their permit from the Oklahoma Tax Commission (OTC), if applicable, depending on the business type and business structure:
Sole Prop. Gen. Part. LLC Corporation Limited Part.
Grower N/A N/A SOS SOS SOS
Processor OTC OTC OTC, SOS OTC, SOS OTC, SOS
Dispensary OTC OTC OTC, SOS OTC, SOS OTC, SOS
Transporter N/A N/A SOS SOS SOS

Proof of Oklahoma residency can be established by providing a digital, color copy of one or more of the following documents:

  • Oklahoma driver’s license (front and back)
  • Oklahoma identification card (front and back)
  • Oklahoma voter identification card
  • Utility bills, excluding cellular telephone and internet bills
  • A residential property deed to property in the State of Oklahoma
  • A current rental agreement for residential property located in the State of Oklahoma
  • Other documentation deemed sufficient by OMMA

NOTE: If a business must meet the new 2 or 5-year residency requirements, a combination of documents that prove residency for the duration of the 2 or 5 years must be provided.

For a detailed list of all required documents and information, review this Commercial License Checklist prior to submitting a Commercial License Application online.

Frequently Asked Questions

What is a medical marijuana grower license?

A medical marijuana grower license allows a business to legally grow marijuana for medical purposes in Oklahoma. Licensed growers can sell to licensed processors and licensed dispensaries only. Grower licenses will be in the form of a license certificate. Licensed growers must comply with Title 63 O.S. § 420 et seq. and the Oklahoma Administrative Code (OAC) 310:681.

What is a medical marijuana processor license?

A medical marijuana processor license allows a business to legally process marijuana for medical purposes in Oklahoma. Licensed processors can sell to licensed dispensaries and other licensed processors. Licensed processors may also process marijuana into a concentrated form for a patient license holder for a fee. Processor licenses will be in the form of a license certificate. Licensed processors must comply with Title 63 O.S. § 420 et seq. and the Oklahoma Administrative Code (OAC) 310:681.

What is a medical marijuana dispensary license?

“Dispensary” or “Commercial Dispensary” means an individual or entity that has been issued a medical marijuana commercial license by the Department, which allows the dispensary to purchase medical marijuana or medical marijuana products from a licensed processer, grower, or dispensary; to sell medical marijuana and medical marijuana products to a licensed patient, to the licensed patient’s parent(s) or legal guardian(s) if licensed patient is an minor, and a licensed caregiver, a research facility, and an education facility; and to sell, transfer, and transport or contract with a commercial transporter to transport medical marijuana or medical marijuana products to another licensed dispensary, and to transfer to testing laboratories.

A medical marijuana dispensary license allows a business to legally sell medical marijuana and medical marijuana products, including mature plants and seedlings. Licensed dispensaries can only sell to patient license holders, caregiver license holders, research license holders, and the parent or legal guardian named on a minor patient’s license. Dispensaries engaging in unlawful sales may be fined, or their licenses may be revoked. Dispensary staff may validate licenses using the OMMA verification system, which will be available in early September. Staff may also validate the purchaser’s identity. Dispensary licenses will be in the form of a license certificate. Licensed dispensaries must comply with Title 63 O.S. § 420 et seq. and the Oklahoma Administrative Code (OAC) 310:681.

“Dispensary” or “Commercial Dispensary” means an individual or entity that has been issued a medical marijuana commercial license by the Department, which allows the dispensary to purchase medical marijuana or medical marijuana products from a licensed processer, grower, or dispensary; to sell medical marijuana and medical marijuana products to a licensed patient, to the licensed patient’s parent(s) or legal guardian(s) if licensed patient is an minor, and a licensed caregiver, a research facility, and an education facility; and to sell, transfer, and transport or contract with a commercial transporter to transport medical marijuana or medical marijuana products to another licensed dispensary, and to transfer to testing laboratories.

What is a medical marijuana transportation license?

Licensed transporters can legally transport medical marijuana from a licensed grower, licensed processor, or licensed dispensary to a licensed grower, licensed processor, licensed dispensary, or licensed researcher. Licensed transporters must comply with Title 63 O.S. § 420 et seq. and the Oklahoma Administrative Code (OAC) 310:681.

A medical marijuana transportation license will be provided with an approved grower, processor, or dispensary license. A transportation license is in the form of a notation on the grower, processor, or dispensary license and allows an individual/entity to legally transport medical marijuana with a copy of the license.

Licensed transporters can legally transport medical marijuana from a licensed grower, licensed processor, or licensed dispensary to a licensed grower, licensed processor, licensed dispensary, or licensed researcher. Licensed transporters must comply with Title 63 O.S. § 420 et seq. and the Oklahoma Administrative Code (OAC) 310:681.

What are the basic requirements to be eligible to apply?

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  • Oklahoma driver’s license (front and back) \r\n
  • Oklahoma identification card (front and back) \r\n
  • U.S. passport or other photo identification issued by the U.S government \r\n
  • Tribal identification card approved for identification purposes by the Oklahoma Department of Public Safety:
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    • United States Bureau of Indian Affairs identification card or a Oklahoma tribal photo identification cards: Muscogee (Creek) Nation of Oklahoma, Kiowa, Comanche, Apache of Oklahoma, Absentee Shawnee, Cheyenne-Arapaho, Choctaw, Delaware, Caddo Nation of Oklahoma issued on or after January 8, 2008. \r\n

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Each owner will need to supply an Affidavit of Lawful Presence Form and supporting documentation if he or she is not a U.S. citizen.

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  • Applicants must be 25 or older.
  • Individual applicants must be Oklahoma residents.
  • Members, managers, and board members of entity applicants must all be Oklahoma residents.
  • Entities must show that at least 75% ownership held by an Oklahoma resident.
  • All owners and officers must provide a background check; nonviolent felony convictions in the last two years and any other felony conviction in the last five years for any owner will disqualify the applicant.
  • Unless the business entity is a Sole Proprietorship or General Partnership, the applying entity must submit a copy of the Oklahoma Secretary of State’s certificate of good standing document. For more information, visit the Oklahoma Secretary of State at www.sos.ok.gov.
  • Dispensaries must provide proof that they are not within 1,000 feet of any entrance to any public or private school.

Proof of identity can be established by providing a digital, color copy of one of the following unexpired, valid documents:

  • Oklahoma driver’s license (front and back)
  • Oklahoma identification card (front and back)
  • U.S. passport or other photo identification issued by the U.S government
  • Tribal identification card approved for identification purposes by the Oklahoma Department of Public Safety:
    • United States Bureau of Indian Affairs identification card or a Oklahoma tribal photo identification cards: Muscogee (Creek) Nation of Oklahoma, Kiowa, Comanche, Apache of Oklahoma, Absentee Shawnee, Cheyenne-Arapaho, Choctaw, Delaware, Caddo Nation of Oklahoma issued on or after January 8, 2008.

Each owner will need to supply an Affidavit of Lawful Presence Form and supporting documentation if he or she is not a U.S. citizen.

Do I need to submit a separate license application for each location of my business?

Yes, separate licenses are required for each location. A separate application and non-refundable application fee for each location is required. You also will need to submit a separate application and non-refundable application fee for each license type (processor, grower, dispensary). However, you may use the same background check of owners for multiple license applications as long as the background checks have been completed within 30 days from the date the license was submitted.

How long does my business license last?

Licenses are valid for one year from the date issued, unless the license is revoked by OMMA. A license may be renewed before it expires.

How do I apply for a business license?

Applications and payment will be collected at omma.ok.gov. A valid email address is required for login. This email address will be used to send notices once an account is created.

What information and documentation do I need to provide in the business application?

To help with the application process review the Commercial License Checklist prior to submitting a Commercial License Application online.

Are background checks required?

Yes, background checks are required for all owners and officers. Please review the instructions on Commercial License Background Check Requirements prior to submitting an application. The applicant is responsible for all costs associated with the background checks.

How much does a business application cost?

The application fee for a grower, processor, dispensary, or transporter application is $2,500. Application fees will be paid by Visa, MasterCard, or Discover credit or debit card. An additional credit card processing fee will be added to the transaction. These application and processing fees are non-refundable. The payment will not be refunded for applications not approved.

Business Application Information Grower, Processor, Dispensary, and Transporter Application/Renewal Information Don’t risk your business license getting rejected. We will take you through the