weed beginner wrote:
I live in Seattle, and I'm hearing each dispensary makes like $250K in revenue PER month.
That's some mind boggling numbers, so I looked into starting one. Unfortunately, the window for applications is now closed, but it got me thinking:
A) First off, why isn't the government allowing more pot retailers to open? Is there some shady dealing going on between existing dispensaries to limit # of retailers to limit competition, in exchange for some kick back?
B) Second, why are existing dispensaries all in some run down, tiny a** shops (very few have legit looking stores opened up)
C) Third, why aren't more people clamoring to start a dispensary? Seems way more profitable than opening another yoga studio, restaurant, etc.
I've been involved locally (in Ohio) in our local government approving a medical marijuana facility. I've been able to spend a lot of time with the higher-ups in the cannabis company that is behind the facility (they are the largest cannabis cultivator in the country).
From what I can gather:
A) The legal cannabis industry is in its infancy. Instead of just opening it up to anyone and everyone, the government is taking their time, hence the few licenses they are awarding to companies. Everyone is learning as they go as it is a new legal industry. Once the groundwork is laid with a few companies, I'm sure the floodgates will open and more licenses will be granted for cultivation, processing, and retail (all separate licenses). From what I've learned, there aren't shady kick-backs going on. The government doesn't need kickbacks as they are making more than enough in tax revenue from these companies.
B) Dispensaries will be getting much better now that recreational cannabis is becoming more legitimate. Because of its legal status in many states, more companies with proper retail/hospitality/customer service experience will be getting involved, which will add a much higher (pardon the pun) level of professionalism, which includes cleaner, larger, more customer-friendly shops in much better neighborhoods/shopping areas.
C) There are several reasons here: 1) you need a HUGE amount of capital to even apply for a license. You need to show a proper business plan, have contracts in place for building/growing, have a large amount of COH (in Ohio it was $500k), and pay the money for the application ($200k for the initial application and license with a $200k annual renewal fee). 2) Not only do you need a large amount of liquid capital, you also need to find a bank that is willing to work with you as many national banks (Chase, BoA, USBank, etc.) will not work with the cannabis industry as the Federal Government can seize those funds (since the bank is national and falls under Federal laws, not local state laws). And 3) the industry hasn't been around (legally) long enough to show a proper ROI to investors. Investors are going to be skiddish on investing in an industry that does not have a lot of history and that is constanty in a legal "gray" area (at least Federally). Without investors, it's tough to come up with that kind of money to start a business.