The idea of owning and operating a dispensary is often romanticized. In fact, it’s perceived as a relatively simple, sure-fire way to make money. But legalization’s proven the opposite to be true. Opening a dispensary is a grueling, expensive, multi-step process that’s easy to botch. The legal hurdles of running a cannabis business are so intricate and expensive, it’s almost impossible to navigate the waters of compliance without some sort of professional guidance.
The team at Cannabis Advising Partners (CAP), a Long Beach-based consulting firm, specialize in helping people navigate the legal industry without getting chewed up and spit out by the merciless canna-laws in California. They gave us some stellar tips on the do’s and don’t’s of opening a dispensary. Keep in mind that, although these tips are exceptional, they won’t suffice for professional or legal advice. They will, however, provide you with a base-understanding of what you need to do to get your dispensary going.
Outline the Future
The process of getting licensed by the state is almost as daunting as becoming a dual citizen. It takes time, money, diligence, and a lot of research. But there are things you can do that can make the process a bit less complicated. Creating an outline that functions like a to-do list (or a plan of attack) is a good place to start. It should sketch out the brush strokes of the whole process from identifying your budget to opening the dispensary, and everything in between. Doing this not only helps you keep track of what needs to be done, but it will also assist with developing a business plan. A stellar business plan is the only way officials on the municipal level (and state regulators) are going to issue a canna-business a city permit, which is the first step to obtaining a license from the state.
“Creating an outline is Step Zero,” says Devon Martinez, a CAP compliance specialist. “You want to outline the steps you need to do prior to getting started, which will help you realize your budget requirements. From there, you’ll have a better understanding of what kind of building you’ll need, what cities you should look to operate in, and what the business plan will look like.”
Manifest Your Vision
Similar to creating an outline, Nathan Wofford, also a compliance specialist at CAP, believes having a vision for your business is a vital preliminary step to opening a dispensary. This vision, he explains, should be about who you are and what, specifically, you’re trying to accomplish with your business—for the community and beyond.
“If everything from your outline to vision to business plan basically says ‘we’re going to make money and you can take our taxes,’ it’s not going to look very good to the community or city officials,” Wofford says. “If you want to start benefits plans or help the industry actually become something that cohesively works not just from seed to sale, but from the top to the bottom of business structures, make sure that’s understood.”
Rent or Own in the Zone
After identifying the budget, creating a plan, and having a vision, the next step is finding the real estate—arguably the most important part of the whole process. But before putting money down on a place that may seem ideal, it’s imperative to find property in a “green” zone.
“Finding the right real estate can be very difficult and requires understanding the local cannabis laws and their zoning rules,” says Martinez. “Every city’s laws are different. So in one city where it’s required to be 1000 feet away from schools, it might only be a 500 foot requirement in another city. Other cities might have distance requirements from rehabilitation centers and beaches while others don’t. It’s nebulous—a complicated subject in its own right.”
Often, this is where people tend to lean on consulting firms or lawyers to help them—and for a good reason. Locating real estate in the proper zones is a time consuming and complicated process. But it should be noted that anyone can find this information. Most cities that permit cannabis activities have online portals on their website that outline where the zones are.
“Do your own research and don’t depend on someone just because they say something is zoned,” Wofford says. “Don’t put money down on a property just because your real estate person says it’s zoned only to find out that it’s not. Maybe they don’t know cannabis well, but if you would’ve done some extra reading, you could’ve figured it out.”
Seek Opportunity, Not Location
Wofford also emphasizes the fact that even cities within the same county are likely to have different laws. So, it’s imperative to do your research. At the very least, it will help you understand the type of risk you’re taking by opening a canna-biz.
“Pasadena is going to be different than the areas in LA that allow cannabis businesses to exist,” Wofford says. “But just because these cities are open doesn’t mean that other cities have given cannabis the green-light. Doing your due diligence will tell you if there’s a limit to cannabis businesses, if there’s a lottery system, if there are phases, and how much it’s going to cost you.”
The age-old adage of “location, location, location” doesn’t apply to the cannabis industry—yet. Considering most of California still prohibits cannabis, Martinez and Wofford say the mentality needs to be “where’s the opportunity” instead of being glued to a certain location.
Know Your Council Members
The licensing process in California is tiered. Before you can get a state license, you must first obtain a permit from your local government. So, it’s crucial to know who’s who in the city. Martinez explains that you want to know who on the council is for and against cannabis, and if there’s anyone outside of the council members–like the city clerk, for instance, who has involvement in the licensing process.
“When it comes to interfacing with government officials and bureaucracy in general, it’s imperative to interact with them as much as possible,” Martinez says. “Constantly put a face in front of them. Go to every city council meetings and speak during the public comments.”
Martinez recommends talking to the council about how much benefit your company is going to bring to the community and the city as a whole. The goal, he explains, is to cultivate the reputation that you’re always around and an ingrained member of the community. The best way to achieve this is through your presence.
Don’t Bribe Them
We’ve all heard of corrupt city council members who’ve taken money-offers from people wanting to open cannabis businesses. And we don’t recommend anyone do this. Because, even if it worked, it’s important to note that illicit-market behavior is not the smartest way to do business these days—especially if your city officials are scavenging for reasons to maintain prohibition. Although the cannabis world is still the Wild West in many ways, there are rules now and, thus, major consequences. Not only will your integrity be reduced to smushed bug on a windshield, but there’s a chance you’ll also get exiled from the cannabis industry by state regulators. Is a bribe really worth the risk? No.
“Don’t ever talk about financial compensation,” says Martinez. “Communicate from a place that’s going to benefit the community. Do not come from a place thats going to jeopardize your integrity.”