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Starting a Medical Marijuana Dispensary

Welcome back to our simple, step-by-step tutorial on how to open a medical marijuana dispensary. Last week we talked about planning, eligibility, licensing and cost. This week we we’ll discuss some ideas for finding the products you need and getting customers in the door.

Find Your Products

Finding products to supply your marijuana dispensary is relatively easy if you live in a state with a robust medical marijuana program in place.

In California and Washington, for example, patients and caregivers are permitted to cultivate a certain amount of medical marijuana for personal use. They are also allowed to form growing collectives which are not defined by law. These collective marijuana farms can take excess product and donate it to other dispensaries at designated access points.

Both states also allow medical marijuana cooperatives, which operate like nonprofit businesses under state law. Each person who comes to the co-op with a medical marijuana card signs up as a member. This, in turn gives the co-op the right to grow a certain amount of marijuana on their behalf. Many of these co-ops are now huge operations that both sell their own products and market them to other dispensaries. 

In addition to co-ops and collectives, both California and Colorado host a number of wholesale marijuana dealers who sell everything from leaf marijuana to oils and dabs. One Denver-based operation, the Green Solution, even offers custom processing of your raw product and armored transport for delivery to customers outside the Denver area. Also in Colorado, Cannabase is a free online marketplace that connects dispensaries with growers, processors and wholesalers throughout the state. And over in California, Wholesale MMJ sells wholesale cannabis products to collectives and cooperatives online.

Plan Your Advertising Strategy

A strong advertising strategy is especially important for a new dispensary — particularly in competitive markets like California and Colorado. The first questions you’ll need to ask yourself are: How am I going to get my marijuana dispensary noticed, and how am I going to get customers in the door?

Start by thinking about your value proposition or what makes your business different from everyone else. For example, do you want to position yourself as a “boutique” marketplace that caters to a more mature clientele? Or do you want to attract medical marijuana users who gravitate towards certain products, such as oils, edibles or dabs? Or perhaps you want to be like WalMart or Amazon, and compete solely on price?

Knowing where you “fit” in the medical marijuana landscape will help you devise an advertising strategy that works.

While you’re brainstorming, remember to keep city and county ordinances in mind. Some locations allow door-to-door delivery of medical marijuana, while others require that customers pick up their products at the shop. These laws will be particularly important if you decide to market some or all of your products online.

To help customers find your dispensary, make sure you’re on Weed Maps and Leafly. These online apps use Google’s geolocation service to connect potential clients with your dispensary. They also offer a wealth of up-to-date information on new and popular products and medical marijuana news.

To Ship or Not to Ship?

If you’re thinking about delivering your product to customers who can’t come to the shop, keep in mind that the U.S. Postal Service is a federal agency. So it’s best to avoid shipping cannabis, even to a local address, via the U.S.mail. If you do mail packages locally in a state where cannabis is legal, follow the advice of 420Evaluations online and “wrap it, and wrap it well.” And never mail marijuana interstate. Although the likelihood of getting caught is small, you could be charged with trafficking in a controlled substance and face a five-year prison sentence (for 50 grams or less) and a $250,000 fine if you are.  And if you ship more than 100 kilograms and get nabbed by the feds, you could face up to 40 years in prison and millions of dollars in fines.

Learn More

Well, that’s it for our quick-and-dirty how-to on breaking into the medical marijuana business. And while there’s obviously much more for you to learn, we hope that we’ve steered you in the right direction as you think about whether the medical marijuana industry is right for you. Check back often for more news and information on MMJ. And if you’re thinking of opening a dispensary soon, give us a call so we can go over the insurance coverage and risk management strategies you’ll need. Or if you’re too busy to call, reach out to us online and we’ll get back to you right away.

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Floyd Arthur

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