With the advent of legal recreational marijuana use in Oregon in 2015, there’s been an ever-growing interest in capitalizing on the industry and opening a dispensary.
But with the legalization came hefty regulations on growers and sellers, meaning there are a lot of hoops to jump through and boxes to tick before you can ever open your doors to legally sell cannabis.
In this guide, we’ll give you everything you need to know about opening and advertising your new marijuana dispensary in Oregon:
Develop a Business Plan
The real beginning of your cannabis dispensary business comes with the development of your official business plan.
Research & Planning
At this stage, you’re gathering as much information as you can about the recreational marijuana industry, where you might find suppliers of product to sell to your customers, and where you can locate your storefront.
It may be beneficial to team up with a couple of other people with some experience in the business world to help split up the workload and bring in some diverse perspectives.
This process will require a lot of time looking at the cannabis industry as a whole and in your local area. Be prepared to spend hours researching your competitors and talking with people throughout the industry.
Your business plan will look similar in structure to that of a start-up outside the cannabis industry, but with information specific to your proposed business.
This business plan will be presented over and over again, first to investors and other stakeholders, then to the body that issues dispensary licenses, so be sure it is as clearly written and complete as possible.
Some things your business plan should cover include:
- Executive summary: This is a concise, well-written summary of your business. It should be designed to draw the reader in to learn more about your venture, and include your business name and location, the products you plan to offer, and your mission or vision statement.
- Company description: This section should cover a high-level view of who you are, how you operate, and what your business goals are. Include information regarding your business’s legal structure, the needs or demands your business will supply, an overview of your customers and suppliers, and a summary of your short- and long-term business goals.
- Products: Clearly describe what you sell, focusing on the benefits to your customers. Include as many details as you have at this stage about your suppliers, how much your products are expected to cost, and the net revenue you expect from sales. Adding pictures or diagrams helps readers better visualize what you’re describing in this section, so consider adding some.
- Market analysis: This is the place to show off how much research you’ve done into the industry and the potential challenges you may face as a dispensary. Include information on your target customer base, a description of the industry and its outlook, marketing data on the industry, and a detailed comparison of your main competitors that includes their strengths and weaknesses.
- Strategy and implementation: Summarize your plan for sales and marketing, including how you plan to promote your business, sources of labor and number of employees, and data on your operating hours and facilities.
- Organization and management team: Here’s where you’ll include your organizational structure with department descriptions, information about the owners, profiles of your planned management team, and a list of any advisors you may have, including board members, attorneys, or accountants.
- Financial plan and projections: For the most accurate projections of your business’s financial future, it may be best to prepare this section with a professional accountant. You’ll include any income statements or balance sheets for businesses you currently own (if you do), realistic cash flow and balance sheet information for your new business, and an analysis of this financial data.
If creating your business plan is intimidating to you, reach out to some of the business and professional organizations around Oregon, or hire a consultant. This is an important piece in getting your business off the ground and shouldn’t be skimped on.
As with any business, opening a cannabis dispensary isn’t an inexpensive venture. You’ve got to secure and prepare your store, hire employees, pay for a license, and buy your initial stock of product, among other things.
Because many banks and credit unions are federally regulated and insured, and marijuana is still illegal on the federal level, they can’t help you finance your new business.
You can, however, work with individual investors, both within Oregon and outside the state, to secure startup capital to fund your venture and keep it financially secure on an ongoing basis. With installment-based financing such as loans being difficult to source in the cannabis industry, you will want to be sure you have a solid stream of liquid assets and financial backing.
Daily Financial Considerations
The federal regulations regarding marijuana don’t only make it difficult to get the financing to get your business off the ground, but it also makes day-to-day operations more tricky.
Many banks, credit unions, and credit card companies won’t allow the processing of transactions from a marijuana-related business, so your customers can’t use plastic when purchasing goods. This means cannabis businesses rely heavily on cash and have to keep a pretty ample store of bills in order to transact daily business.
All of this cash must be safely stored on-site and transported without the security measures that a bank typically provides.
One retailer in Colorado, for example, spends between $12,000 and $14,000 per month just transporting all the cash they make!
In Oregon, the banks and credit unions have been changing regulations, and a bill introduced in the House earlier this year would create a self-contained, state-chartered banking system specifically for the cannabis industry.
At present, though, the added cost of safely storing and transporting any cash needs to be accounted for in your business plans and financial projections.
Choose a Location
Once you’ve crafted your business plan and have secured financing for your business, it’s time to choose your physical location.
You want to find somewhere that’s not already saturated with recreational dispensaries and that is close enough to people’s homes and offices that you can reasonably expect walk-in traffic.
However, as you’re looking at real estate listings and touring facilities, keep in mind that you cannot locate your dispensary within 1,000 feet of a public or private school, or in an area zoned exclusively for residential use.
Depending on where you’re planning to locate your dispensary, this task may be easier said than done, and you may find yourself spending hours talking with a real estate agent and touring facilities.
While consuming recreational and medical cannabis may be legal for everyone over 21 in Oregon, growing and selling it without the proper licenses and safeguards isn’t. In order to open a cannabis dispensary in Oregon, you must understand and carefully follow all applicable laws and regulations.
Like any regulations, those governing recreational marijuana are extensive and attempt to cover every possible angle.
The recreational cannabis industry is regulated by the Oregon Liquor Control Commission (OLCC), and the entire set of regulations spans 89 printed pages.
Don’t worry – We’ll break down the basics for you:
There are a variety of license types available from the OLCC, ranging from Producer to Certificate for Research.
As a cannabis dispensary, you’ll need a Retail license, which allows you to sell processed and leaf product directly to consumers. Only licensed retailers may sell product to consumers.
If you want to sell marijuana to both recreational customers and medical cardholders, you’ll need a Dispensary license as well.
License Application & Fees
A Retail license is going to cost you $4,750 per year if your business is approved. And, if you want to sell medical cannabis also, that’s another $4,750 per year.
You also have to fill out an application with OLCC that includes all pertinent information for yourself, any other license applicants for your business, and anyone that has a “financial interest” in your dispensary.
This application must also include a variety of information about the plans for your business, including:
- A Land Use Compatibility Statement
- A Business Operating plan
- Floor plan of your proposed facility
- Proof of right to occupy the premises (deed, lease, etc.)
- A $250 processing fee
The remainder of your licensing fee is due once your application has been approved and the OLCC is ready to issue your license.
The application fee, however, is non-refundable regardless of whether you get approved for a license or not, so be sure to dot your I’s and cross your T’s. Getting the help of a lawyer can save you the hassle of a denied application.
Other Related Fees
Once your application is approved, the licensing costs continue.
You’ll have to pay $100 to get your labeling approved to make sure it doesn’t break any rules such as appealing to children or featuring cartoon characters.
Then, there’s another $100 to get your product packaging approved.
And any time you change your labeling or packaging, there’s another $25 fee to get it reviewed.
If you decide to move facilities to get a better location or because your business is growing and needs more room, you must pay $1,000 for the OLCC to review your new location. If your request is denied, there’s no refund.
Changing your business structure or ownership means a $1,000 fee, too.
Each of your employees must have a permit to sell, which costs $100 per year. While the burden of paying that fee legally falls to the employees, many retailers reimburse their employees when they pay these fees.
And that’s all just for recreational licensing!
To be licensed for medical, you have to submit an application to the Oregon Medical Marijuana Program (OMMP) with a $500 application fee and a $3,500 registration fee.
Do I Need a Lawyer?
While it’s not required to hire an attorney when setting up your cannabis dispensary in Oregon, it’s highly recommended that you at least consult with one.
You could sort through all the requirements and learn everything you need to know, but you’ll have to do this in addition to hiring and training licensed staff, managing inventory, implementing and maintaining security, renting or buying a building, setting up utilities, and all the other tasks that must be completed.
Hiring a specialist to help you navigate all the legal requirements is well worth your money.
The document that details all the requirements to get marijuana business license is 89 pages of legalese. If you want to do it alone, be prepared for a ton of reading to familiarize yourself with a very nuanced law.
Your application for a dispensary license must include a security plan or you will not be approved. And if you ever want to change your security plan, you have to notify the OLCC first.
Many of the security regulations required by OLCC are very strict (and for good reason).
The marijuana industry presents with a lot of unique security concerns, including a higher-than-normal store of cash that must be transported. Best practice is to hire a cannabis security team to implement security measures that keep your operation both protected and compliant with regulations.
The OLCC can withdraw their approval of your security plan if there is even just one theft or other instance that results in loss of cannabis items.
If this happens, you are required to update your security procedures within a very specific time period or you will be in violation of the law. This will result in having your license suspended for 10 days, given a fine of $1,650, or both.
Racking up four violations within a 2-year period can get your license completely revoked.
To meet the strict security requirements set forth by the OLCC, you have to:
- Provide adequate safeguards against theft of marijuana product and client records
- Install commercial-grade locks on every external door and gate
- Securely lock all points of entry and exit when the business is closed
- Keep all keys or key codes with authorized personnel only
- Store marijuana items in a safe or vault after hours
- Maintain an electronic back-up system for all electronic records
- Keep video recordings and archived records that aren’t stored electronically in a locked storage area
- Install a fully operational security alarm system
- Have a fully operational video surveillance recording system working 24 hours per day
Let’s take a look at some other important security measures you must have in place before you open your business:
Product Safety Plan
Because people will be ingesting, in one form or another, your products, you must have strict control over where you’re getting product and what ingredients may be included.
This means only sourcing products from specific, trusted suppliers and being able to trace the production and transfer of the product at all times.
In addition, your products must be safely stored to avoid contamination and spoil, and safely packaged and labeled.
Protecting the personal, sensitive data about the patients and customers you serve at your dispensary is essential.
This means you need to have exceptional data security on all your computers and servers, as well as locked access to any paper records you may keep. If you’re a medical dispensary, you also must comply with federal HIPAA regulations regarding all patient data.
Because marijuana moves around a lot – from grower to processor, processor to dispensary, and dispensary to customer – there are multiple points where thieves can gain access to product.
The worst part of the need for strict protection of cannabis product? There’s little to no recourse for thieves.
Marijuana products have a significant black market with nearly 100 percent of retail value. The products can be sold easily and nearly untraceably, so it’s easy for thieves to get away with selling stolen marijuana. You’re also unlikely to recover any product or prosecute because stolen product can change hands quickly.
And if you do pursue criminal penalties, you’re one step closer to potentially losing your license due to excess security breaches.
To combat this, you must have very strict control of inventory at all times when you’re open, and it must be very well-protected when your dispensary is closed.
Fire Safety Plan
One spark and your business can literally go up in flames, causing you an immense financial loss.
And you can’t rely on traditional fire prevention measures such as sprinklers in certain areas of your shop because water-damaged product won’t be able to be sold.
Having a modern fire safety plan that utilizes the latest in fire suppression technology is essential to helping diminish your possible losses in case of a fire.
Flood Safety Plan
A flood, like a fire, can quickly destroy thousands or millions of dollars in product.
To protect yourself from this problem, a comprehensive flood prevention and response plan must be developed and enacted. Prevention measures such as installing water sensors that will alert you and your security company if small amounts of water are detected can be the difference between a major financial loss and a minor one.
Your business’s impact on the environment doesn’t have to be a big one.
Minimize your carbon footprint and waste while maximizing sustainability with a comprehensive environmental plan. This plan should cover everything from packaging of goods to processing and keeping of paper, assigning staff members to head up sustainability efforts to disposal of waste.
Patient/Customer Education Plan
While cannabis isn’t a dangerous drug, first-time users can find certain strains, dosages, and types of cannabis very potent.
You and your staff must be trained on proper patient and customer education, helping people find the dosages and strains that are right for them without going overboard. Not having such a process in place, or having untrained employees advising customers, can open your dispensary up to liability and potential legal action if you aren’t careful.
Hire & Vet Staff
Outside theft is more rare than you may think, though it does happen.
Most outside theft is “smash and grab,” where criminals smash through a door or window of an empty facility and take whatever they can carry.
However, this type of loss is less likely to happen than internal theft.
Some employees may take a little off the top for themselves (no one gets hurt, right?), while others may be heavy-handed when supplying product.
Carefully vetting your staff, including with background checks if necessary, and training them is crucial to minimizing loss from internal sources.
Waivers & Exceptions
All these strict requirements can cause an undue financial burden on start-up dispensaries.
OLCC does allow waivers with a written appeal under certain circumstances. It’s your burden to provide an alternate safeguard to waive a security requirement.
Because the marijuana industry has a whole host of unique security issues not found in typical retail or other businesses, it isn’t recommended to try getting around the requirements.
Protect yourself and your business by doing everything in your power to comply fully with all the OLCC’s security measures. The penalties for security breaches are so high it isn’t worth the risk. Do not cheap out on security.
If you still want to see if the OLCC will waive a security requirement, you must:
- Give a reason why you want a waiver (unnecessary, undue financial burden, etc.)
- Describe an alternative safeguard in lieu of the requirement you want to waive
- Explain how and why the alternative safeguard accomplishes the goals of the original rule.
Market Your Business
Now that you’ve gotten all the big things taken care of and your business is on its way to launch, it’s time to start thinking about how to market and advertise your cannabis dispensary to attract customers.
Because of federal bans on marijuana, some types of marketing and advertising aren’t allowed. For example, you cannot use Google Ads for paid search results when marketing your dispensary.
Making sure your online presence is on point and bringing in potential customers is incredibly time-consuming, especially if you’re trying to do all your own promotion on top of developing and running your business.
Be sure to include advertising staff or agency costs in your business plan to give you the best opportunity for widespread exposure and better traction with your market.
Here are some things you need to know about marketing your cannabis dispensary online:
It’s not enough for your website to be pretty and splashy; it has to also be easy for users to navigate and follow the rules.
When you’re working on the design of your website, be sure it’s compliant for those with disabilities. Also, put in place appropriate measures to comply with the law, such as age restriction.
Having people visit your website organically from the search engines is like the Holy Grail of online marketing. People were searching for something you offer, they found you, and they’re more likely to buy from you.
Search engine optimization (SEO) is important for your website since you cannot leverage paid ads. With great, focused content and the right mixture of keywords to bring in searchers, you can get a lot of bang for your buck with SEO.
Using social media to organically get the word out about your business is powerful. People want to visit the places their friends like, and if users are sharing great reviews, photos, and other information about your business, you’re more likely to get traction with their friends and followers.
Make sure you’ve got profiles on all the major platforms – Facebook, Instagram, and Twitter are great for cannabis dispensaries – and that your messaging is clear and targeted to your specific audience.
Run Your Dispensary
You’ve jumped through all the legal and regulatory hoops, you’ve got your store set up, and you’re bringing in some customers thanks to your online presence.
Don’t just sit back and relax now! Continue to evaluate your target market, checking in with your customers for ways you can improve your offerings and their experience.
Having a spirit of always looking for a better, more efficient, more profitable way to run your marijuana dispensary will help you change as market demands change, giving you the best opportunity for market longevity.