How Much Do Weed Dispensaries Make?
As the adage goes, “do something you love, and you’ll never work a day in your life.” For many cannabis enthusiasts who rejoiced when legislators legalized marijuana across multiple states, this meant they could live their dreams by opening up a dispensary.
With a booming, relatively nascent industry, there is a lot of room for new players to enter the market. However, since weed is technically illegal at the federal level, it begs the question, “how much do weed dispensaries make?”
As with any business venture, several factors need to be accounted for before you can break down your marijuana profit margin.
To answer the question “how much do dispensary owners make a year?” you will need to calculate startup fees, rent, and logistics and also develop a sustainable business model.
This article will cover the many aspects that go into the average dispensary income and help you determine whether this is a market you want to enter.
Are Dispensaries Profitable?
Marijuana is a delicate subject when it comes to legality. Some states have decriminalized it, others restrict it to medical use, while a few have completely legalized it.
Regardless of which stance a state has taken, there’s no denying that the cannabis market is rapidly expanding as its user base grows. To fill this demand, dispensaries have started popping up, either as recreational outlets or as pharmacological stores.
As an example of the growing trend in cannabis use, in 2017, the global market was projected to be worth $7.7 billion. According to a Forbes report, the industry would likely reach $31.4 billion in the near future.
These future projections are a good omen for a dispensary owner income bottom line for those entering the market space.
Recreational VS Medicinal Dispensaries
To break down how much money do dispensary owners make, you first have to see which segment of the market space you wish to occupy.
Dispensaries can run the gamut between a head shop to a well-maintained pharmacy, and this also reflects in your product offerings. A dispensary run by a cannabis aficionado may have a “budtender” at the front of the shop who can relay knowledge concerning the various strains and the effects when consuming CBD oil or THC.
The differences between dispensaries continue to diverge when you begin comparing medical and recreational stores.
Medical dispensaries are more akin to traditional pharmacies in that they will dispense prescribed marijuana per a doctor’s prescription. Similar to trying to obtain antibiotics or strong painkillers, you will need written documentation that you’ve been diagnosed with a disorder requiring medical marijuana.
Conversely, a recreational dispensary will act more like a bar. Anyone who is 21 years of age or older can purchase whichever THC-infused product the store offers without a doctor’s written consent.
How Do Dispensaries Make Money?
Like any other product or service-based industry, a dispensary will generate revenue from its product lines’ sale and distribution. In the case of a marijuana dispensary, its product line just happens to be weed.
While this may seem like a win-win business endeavor, there are several factors you need to consider before jumping head-first into the industry.
As stated above, marijuana is still a Schedule 1 drug, meaning its legality hasn’t been recognized at the federal level. This grey area is relevant to marijuana dispensaries because many banks won’t issue loans to budding companies to build their infrastructure or manage daily operations.
Workarounds have been found to mitigate this issue, with many would-be owners turning to credit unions, SME business lenders, and even private marijuana banks. However, this federal restriction has created a lender market, meaning that the larger lenders will hold all of the cards during the negotiations. When calculating how much do marijuana dispensaries make, you will have to deduct the monthly $2,000 holding fees these institutions impose.
This cost is further compounded by the associated costs of operations, including:
- A compliant POS system
- Security systems
- Logistics, stocking, and inventory
- Legal retainer fees
All of the costs that go into daily operations can quickly add up. However, regardless of all the legal loopholes that have to be overcome, around 90% of THC business owners report profitable margins.
How Much Does a Weed Dispensary Owner Make?
The marijuana business is a profitable one as it’s estimated that one in five Americans is consuming some form of legalized THC or CBD- infused product. As the market becomes more normalized, this figure is expected to grow.
While the market is highly competitive, there’s a lot of room for future expansion if planned accordingly.
By building a strong network of suppliers, curating the product line, and delivering exceptional customer service, you can join the ranks of dispensaries generating over $1 million in revenue annually.
The answer to how much do weed dispensaries make will rely on several aspects, such as location, access to quality merchandise, and target demographics. The average dispensary’s annual revenue can vary significantly from $100,000 to over $2 million. However, as more states begin restructuring their marijuana laws, the chances of this industry skyrocketing become more likely every day.
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Your dreams of being a business owner shouldn’t be hampered by mismatched legislation. Contact L3 Funding today to see which of our merchant funding solutions or cannabis business loans is the right fit for you and your company.