Marijuana Dispensary Business Plan Example
The U.S. Small Business Administration (a great resource for small-business entrepreneurs) provides a business plan template. It is specifically tailored to meet the needs of someone starting a business. You can edit it to reflect your unique needs as a cannabis dispensary owner.
If there is one tool that can help a new business owner succeed, it's a solid business plan.
A business plan outlines your vision for the business and what it will take to get there. It also serves as a guide you can refer back to in the future. Think of your business plan as your road map to success.
A business plan is crucial no matter what industry or demographic you serve. This is especially true if you are starting a medical marijuana dispensary business.
Why You Need a Cannabis Dispensary Business Plan
Yes, the legal cannabis market is booming, but that also means fierce competition and big investors. You need to clearly articulate your client base, financials, and what sets your business apart. This makes outside funding easier to secure.
The marijuana business is riskier and more complex than just about any other type of business. Cannabis laws are not consistent between the states and the federal government, and they are constantly evolving.
Currently, 38 states permit the use of medical marijuana, and 23 states permit the recreational use of cannabis. However, marijuana is still considered an illicit drug under federal law in the United States. Thus, knowing the state laws that apply to your business is crucial. Please refer to the current state law in your business operation state(s) as legislatures and local governments pass laws regularly.
A business plan can help you feel in control, even when the cannabis industry is chaotic.
As far as business plans go, this plan is more detailed than you might need. Feel free to leave out any sections that don't apply. But keep in mind that potential investors will be expecting a thorough, traditional business plan like the one below. A cannabis business attorney in your area can also provide personalized business advice.
Sample Business Plan for a Cannabis Dispensary
Section 1: Executive Summary
This is your chance to explain what your business is and why it will be successful. This section is between one to two pages in length. It should also include a business plan summary that could stand alone if needed.
Include your business's mission statement, a description of your dispensary business, and your business location. You should also include basic information about yourself and any other founders or employees. Be sure to have a paragraph or two on the budding cannabis industry, in case you present it to potential investors unfamiliar with it.
Disclose financial information, including the business model you will be using, estimated startup costs and profit margins, revenues, and liabilities. Finally, include a brief statement of your funding needs.
- MISSION STATEMENT
- BUSINESS AND LOCATION
- CANNABIS INDUSTRY
- FINANCIAL HIGHLIGHTS
Section 2: Company Description
Here you will provide more detailed information about your business, including your value proposition. This is the problem that your business will solve.
For example, let's say your city has several dispensaries, but none of them offer a high-end cannabis retail experience. Your dispensary could solve this problem by opening the city's first upscale cannabis retail business with higher-end cannabis products.
Think about answering questions like:
- What is the market opportunity?
- Who does your business serve?
- What sets your marijuana products apart from the competition?
- What are your future plans for the business?
Finally, your business will need to comply with local and state laws. Here, you should detail the laws that apply to your business, how your business complies with the laws, and the type of business license you need. It is a good idea to meet with a cannabis attorney in your state who can assist with regulatory compliance.
- MARKET OPPORTUNITY
- KEY FEATURES
- FUTURE PLANS
Section 3: Industry Analysis
In this section, you will go into more detail about the research you have done on the industry, competition, and target market.
By now you have probably done plenty of research on the cannabis industry. Detail your findings here. Go well beyond just saying that "The cannabis industry is on fire right now!" Note the market trends and marketing strategies in your area.
You will also need to differentiate your business from other similar businesses. Make sure you can offer a unique and high-quality service to your customer base. Detail the strengths and weaknesses of competing dispensaries in your area and analyze how your business will be better or different.
Identify your ideal customer. Who can your business serve and why? Detail as much as you can about your target customers. You can also create a "persona" for your ideal customer that you can target with your marketing.
Using the example of the high-end dispensary above, you could determine that your ideal customers are professional men and women ages 30 and above who might be using cannabis products for the first time. They are higher income and looking for a "boutique" dispensary experience in an inviting yet sophisticated environment.
1. INDUSTRY OVERVIEW
- MARKET TRENDS
- MARKET NEEDS
- MARKET GROWTH
- FUTURE MARKETS
2. COMPETITOR ANALYSIS
3. DIFFERENTIATING FACTORS
4. TARGET AUDIENCE
Section 4: Operations Plan-Organization and Management
This section explains the nuts and bolts of your business.
First, explain how your business will be legally structured. The most common legal structures are sole proprietorships, partnerships, limited liability companies (LLC), C corps, or S corps. Your cannabis business attorney can help you determine which structure to choose for your business.
Next, create an organizational chart that shows who is in charge of what aspects of the business, and their compensation. Feel free to note each person's experience and education, relative to their respective roles. Include a general hiring plan for personnel and filling management gaps.
- BUSINESS STRUCTURE
- ORGANIZATIONAL STRUCTURE
- MANAGEMENT TEAM
- PERSONNEL PLAN
Section 5: Product Line
Describe what types of cannabis products you will sell at your dispensary in this section. For example, will your product line include vapes, CBD, or edibles? Explain how to use each product and how it benefits your customers.
Explain who grows your cannabis and where you will source other products that your business will sell. Detail what the product life-cycle looks like for each product. Share a pricing structure for each of your products and the labeling requirements of each product.
Next, discuss all relevant intellectual property rights issues.
Finally, if you are researching and developing products, detail that work here.
- PRODUCT OFFERING
- PRODUCT SOURCING
- PRICING STRUCTURE
- PRODUCT LIFE-CYCLE
- INTELLECTUAL PROPERTY
- RESEARCH AND DEVELOPMENT
Section 6: Marketing and Sales
Describe how you will use marketing efforts to attract and retain customers. You may work with a marketing company or handle the marketing efforts on your own. Have a budget for how much you plan to spend on marketing and what types of marketing you plan to do (social media ads, billboards, mailers, commercials, etc.).
Explain how sales happen at the dispensary. Here you may need to go into detail about operating with cash and accepting credit cards (if you can). As you may already know, there are currently banking restrictions in place for cannabis businesses because marijuana is still illegal under federal law.
Finally, discuss your marketing and sales plans on a timeline with target milestones, deadlines, and management responsibilities for the next three-to-five years.
- MARKETING PLAN
- SALES PLAN
- BANKING CONSIDERATIONS
- KEY MILESTONES AND METRICS
Section 7: Funding Request
This is where you will outline your funding needs, if you have any. Clearly explain how much funding your business will require in its first year versus the next three-to-five years and how you will use the funding. Also clarify:
- Whether you want debt or equity
- The terms you'd like applied to the loan or equity
- The length of time your funding request will cover
Finally, make sure to include your strategic financial plans for the future. Keep in mind that banks typically will not fund a cannabusiness. Marijuana is still illegal under federal law. Federal government regulates banks, so banks may risk facing federal charges by working with cannabusinesses. There are exceptions, however. This is another topic on which your cannabis business attorney can advise you.
- FUNDING NEEDS
- TERMS OF FUNDING
Section 8: Financial Projections
If you are requesting funding, use this section to outline how your business will succeed financially. This includes detailing your projected startup costs, sales forecast, expenses, profits and losses, and cash flow. This is a good place to use charts and graphs to tell your financial story.
- REVENUE/SALES FORECAST
- PROJECTED PROFIT/LOSS
- PROJECTED CASH FLOW
- PROJECTED BALANCE SHEET
If potential investors or financial service providers request specific items such as licenses, permits, credit histories, or letters of reference, input them here.
Get Help With Your Business Plan and Beyond
Think of your business plan as being a living, breathing document. It can and should change as you continue to develop your ideas and opportunities. Revisiting your business plan over time can give your business a competitive advantage.
Contact a Cannabis Dispensary Attorney in Your Area
If you haven't already, it would be helpful to meet with an experienced cannabis attorney in your area to learn more about the laws that govern medical and recreational cannabis in your state. This lawyer, like a small business lawyer, also helps with the licensing and permitting processes for marijuana dispensaries. Your attorney can also help with deciding which legal business structure to use and answering any questions you have about protecting intellectual property.
Can I Solve This on My Own or Do I Need an Attorney?
Cannabis is a complex area of law. Start by learning what you need to form and operate a cannabis business:
Then, protect your rights by calling a business lawyer familiar with cannabis laws. Many attorneys offer free consultations.
DIY Forms for Cannabis Business
Restrictive federal laws and ever-changing state laws make the marijuana industry a dynamic environment for cannabis business owners. Before you open a cannabis business, make sure it is legal in your state, and follow your state laws. Once you decide on an LLC, S-corp, or C-corp business, you can register your business entity online using DIY business formation forms.