Best States to Open a Dispensary

1- California

The cannabis industry has grown rapidly in California, one of the most prosperous legal US states. When thinking about opening a cannabis dispensary, this state ought to be your top choice. CannabizTeam reports that since recreational marijuana use became legal in 2016, California has led all other states in cannabis revenue, bringing in $4.4 billion in 2020 alone, an increase of 57% from 2019.

Moreover, the market opportunity is excellent as California has the largest population in the US. The average price per gram in California is almost $12, but it is subject to an excise tax of 15% an ounce. The application fee is also quite affordable, being the nation’s average.

While starting a business in California can be expensive, it is a highly populated area with the right demographic to sell cannabis. Real estate can be expensive in this state, whether buying or renting, and the cost of living is high, which will also increase the cost of payroll, according to CannabizTeam.

Due to tough competition, it is vital to have a perfect business model an innovative product to make a splash in California. Undoubtedly, creating the right business strategy in advance with the top digital marketing approaches is almost guaranteed success in this state.

2- Colorado

In Colorado, recreational marijuana use was made legal in 2012. As of June 2020, there were 2,709 licensed marijuana businesses registered there. Taxes, licenses, and other fees contributed $387 million in overall revenue in 2020, compared to $67 million in 2014. Like California, this state has the ideal population to sell cannabis products.

The market conditions are excellent, and many resources are available to help you get started. Additionally, the tax climate is favorable, and the demand for cannabis products is relatively high. As per CannabizTeam, the application fees are comparatively affordable and getting the necessary licenses are not complicated, making Colorado an attractive place to start a cannabis business.

Moreover, It is essential to consider that Colorado’s price per gram is low, suggesting that the state may suffer from over-saturation and intense competition. To make it enormous, you need to be more creative come out with innovative cannabis product ideas to differentiate yourself from the competition.

3- Michigan

Michigan has the potential for profit because of its low tax rates, which makes it a good location for your marijuana dispensary. Michigan charges a 10% retail excise tax and a 6% state sales tax compared to many other states. The legal environment is favorable, and there are plenty of opportunities for market entry.

With nearly 30 million people, North America is the world’s largest consumer market, making it a lucrative opportunity for enterprising businesses. And Michigan is second on our list in terms of population number. Cannabis was legalized in Michigan in 2018, and the industry has been booming since then. There are currently over 200 dispensaries functioning in the state, which is expected to grow.

However, given that Michigan currently has about 500 retail dispensaries, you should be cautious due to market saturation. Although there is still a high demand for the product, prices are declining due to the nearly daily opening of new dispensaries. The low tax rate on cannabis makes it easy to compete with other states with higher taxes.

4- Oregon

The first US state to decriminalize possession of small amounts of cannabis was Oregon in 1973. Oregon is one of the easiest states to open a dispensary. The legal environment is favorable, and there are plenty of opportunities for market entry. Additionally, the tax climate is good, and there is a strong demand for cannabis products.

Moving ahead to the present, Oregon is still a viable choice and one of the cheapest states to open a dispensary. Licensing fees for a dispensary are also reasonable here. It is much lower than any other state’s dispensary license application fees. While the cost of cannabis in Oregon is among the lowest in the country, it is not subject to an excise tax either.

According to Oregon law, dispensaries must be at least 1,000 feet away from the closest daycare or school when locating their business. You should also factor in the costs of stocking your store, setting up a security and surveillance system, paying employees, and other operational costs.

Applications for every hemp business type are open, so it is currently possible to apply for a cannabis business license at a low cost. Considering all the key points to start a business, it is possible to state that this is the cheapest state to open a dispensary. In other words, a favorable business environment helped Oregon appear in first place on our list.

5- Washington

In November 2012, voters in Washington State approved Initiative 502, making it one of the first two states to legalize cannabis for adult use. But unlike most states that have legalized marijuana, Washington still considers it illegal for adults to covertly grow a few plants at home.

Washington is also known as America’s biggest cannabis state. This is one of the main reasons why so many to-be cannabis businessmen consider this state. All cannabis products are in high demand, from oils creams to edibles, concentrates, and flowers.

The Washington state cannabis market generated $1.8 billion in revenue in 2020, up 21% from 2019. The market continues to grow despite the number of already existing companies. But it is necessary to keep track of the latest news if you choose this state. At the same time, Washington has the highest excise tax rate nationwide. It doesn’t prevent numerous applicants from waiting to open a business here.

6- Nevada

The best thing about Nevada is Las Vegas, and cannabis is quite popular around that area. The state legalized the recreational use of marijuana in 2016, and both sales and excise taxes are still relatively low, so it is a great area to start your business without worrying about fierce competition.

This state is often associated with gambling and tourism. However, it also has a lot to offer those interested in the cannabis industry. The legal environment is quite favorable, with a low tax rate. The application fee is also quite affordable. The market opportunity is quite good as the state has a population of over three million people. Considering a favorable tax policy, it is undoubtedly an excellent place for development.

But according to this state law, businesses can only sell cannabis products that do not exceed specific amounts, so review all the rules before you begin your venture. As the market is already quite saturated, finding a niche here might be challenging. Still, if you are determined enough, Nevada can become a great state for your cannabis business.

7- Massachusetts

The state’s most prominent attraction for new dispensary business owners is its easy application process, with many applications approved in less than 90 days. Massachusetts is a very appealing state to start a new cannabis business in, despite having been in the recreational cannabis industry longer than some other states. This is due to its reasonable tax percentage and business-friendly attitude towards licensing.

As per data from the Cannabis Control Commission, this state has a lot to offer to those interested in the cannabis industry. In 2016, Massachusetts legalized marijuana for recreational use, and its first recreational dispensaries opened their doors in 2018. Retailers reported $2.87 billion in sales between November 5, 2018, and April 10, 2022, which is three and a half years after the first marijuana shop opened.

Being a business person in Massachusetts is quite expensive. The license fee will cost you $10,000. It is understandably a significant sum. However, compared to some other states like Illinois and Hawaii, with $200,000 and $100,000, respectively, Massachusetts becomes a much more affordable option. At the same time, it is considered one of the easiest states to open a dispensary in terms of legal regulations.

8- Arizona

Arizona, which only recently legalized recreational cannabis use in November 2020, immediately shifted how it distributed recreational licenses and is now positioned to develop into a lucrative cannabis market as more cannabis businesses start up. The cannabis market here is anticipated to grow in popularity and profitability in the years ahead as more cannabis firms begin operations.

But it is a bit difficult to get applications approved since this state just recently started accepting dispensary applications, but only from those who applied back in December of 2021.

CBD sales in Arizona grew by 50 percent in the last couple of years. The cannabis industry is massive here, with plenty of great business opportunities. It is necessary to mention that the market welcomes new businesses. The reason for it is the state’s large population, with only a few businesses currently operating there. In other words, the demand exceeds the supply.

9- New York

While New York can certainly be a high-priced area to invest in a business, it is one of the most recent states on the scene regarding the recreational cannabis market. They have passed one of the country’s most progressive frameworks for legalization.

New York state has individual regulations concerning the dispensary license cost that should be considered at the budgeting stage. Also, It has implemented one of the most advanced approaches to legalization nationwide

New York is a densely populated state chalked full of cannabis consumers has a population of over 19 million people, making it one of the largest potential markets in the country. That’s why it’ll be quite easy to build a successful cannabis business. Many experts predict the state may be one of the hottest cannabis markets in the United States.

10- New Jersey

New Jersey may earn approximately $1 billion in annual cannabis sales by 2024, according to experts. With demand expected to outpace supply, the state is an excellent location to start a cannabis company in cultivation or extraction.

The application fee for a retail license here is $400, and an additional payment of $1,600 is required if the application is approved. However, the market opportunity is perfect as the state has a population of over nine million people. The legal environment for the marijuana business is also quite favorable, with a low tax rate.

Small companies can access the necessary services, particularly those with five or fewer employees. Considering all the factors, New Jersey is definitely a state worth considering for you if you are interested in the cannabis business industry. It is a perfect opportunity for everyone to compete in the market.

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