With MD’s new adult-use legalization — in effect as of July 1, 2023 — now’s a great time to get in on the action.
This guide is designed to help prospective cannabis entrepreneurs understand the specifics of opening a dispensary, including key details like licensing, financing, real estate, security, staffing, compliance, inventory, tech stack, and more.
Scroll through for a step-by-step process for getting a dispensary open in Maryland, or use the links on the left to jump to what you need.
Before you start, take a moment to review Maryland’s cannabis laws. With new legislation, and the transition from medical marijuana only to adult-use, there are many changing laws that you need to be aware of.
Disclaimer: Always consult your lawyer, accountant, realtor, or other trusted consultants to help you navigate the complexities of opening a cannabis dispensary. The information provided herein is designed to illustrate and educate, but is not to be construed as legal or financial advice.
The first step in your dispensary ownership plan is to get your business affairs in order. This is where you understand your state’s cannabis laws, create your formal business entity, and prepare to submit your application.
Here are the key elements to this stage:
Can dispensaries use banks?
Then you will get tax ID numbers for the business, open a business bank account at a cannabis-friendly bank or credit union, and look into business insurance.
It may be tempting to skip this step, but take the time to document your plan: growth, partners, team, vision, etc.
Your dispensary business plan will go through the regulatory body for Maryland, called the Maryland Cannabis Administration (MCA). You are required to submit your dispensary business plan as part of the application process. The plan must “demonstrate a likelihood of success and sufficient ability and experience on the part of the applicant, and providing for appropriate employee working conditions…”
The MCA also requires a detailed operational plan for the “safe, secure, and effective operation of the business” and a detailed diversity plan.
A good business plan for MD dispensaries should include:
Note: The MCA used to be called the MMCC (Maryland Medical Cannabis Commission), but changed their name after recreational legalization to more accurately reflect.
Your dispensary location is a critical piece of the puzzle, but not an easy one. You’ll need something in a visible location, with ample parking, and enough space.
Every state has specific regulations about where dispensaries can be located. In Maryland, your dispensary must not locate within 500 feet of:
Similarly, your Maryland dispensary cannot be within 1,000 feet of another dispensary under the same title.
And it needs to be a municipality that accepts cannabis businesses. Municipalities in Maryland have the authority to establish their own regulations, so you’ll need to be sure you know all applicable laws.
You don’t need to have a location chosen in order to apply for a dispensary license. The state has said that they may not require an applicant to possess or own property where they plan to operate their cannabis business at the time of application, but it’s good practice to include your location in your business plan, if possible.
Find a local real estate professional who specializes in cannabis real estate to help in your search. And use the public resources available to you, like city zoning and administration offices.
When looking for a location, focus on spaces that align with your business plan, are large enough to meet your needs, are in an appropriate location to serve foot traffic (and/or have enough parking), have opportunities for expansion/growth, and are within your budget. Don’t just look at monthly costs, but also factor in how much it’ll take to renovate or retrofit the space for your business needs. Finally, look at local competition (both existing and planned).
There are many factors that go into finding the perfect location for your dispensary. Take the time necessary to secure the best possible space to help ensure your success.
Now that you have a plan for your cannabis business, you can start to build a more clear budget for your new dispensary.
Your business expenses will generally fit into these categories:
Where will all that money come from? As a cannabis business owner, you have a few options for funding:
Most sources suggest having between $250,000 – $1 million to open a dispensary in Maryland. But that’s not all that helpful. Here’s a closer formula for you to fill in as you know your estimated expenses, but we’ll get you started with some rough estimates based on a single recreational dispensary.
Note: This estimate is for a standard business. Micro businesses have significantly reduced fees.
Application and licensing fees in Maryland = $10,000
Real estate fees = $125,000
Employee salaries = $300,000
Your store size and operating procedures will determine your staffing needs, but plan for around six employees to start, including a manager, several budtenders, and an inventory specialist. This figure includes an average of $20/hour, plus overtime, benefits, etc.
Professional fees and services = $50,000
This may decrease in future years, but to start, expect to pay for legal, financial, insurance, and other professional consulting fees to get your business started.
Security, hardware, and software = $50,000
This covers all network, security, hardware, and software for your business, including computers, TVs, printers, scanners, internet, and other software like POS, ecommerce, payments, etc.
After your initial investment, plan for at least $2,000 per month in recurring software expenses.
Marketing expenses = $100,000
Perhaps the most variable of your costs when opening a cannabis business, this factors in one full-time marketing staff person (or agency costs per year), plus costs for your website, ads, printing, etc. to promote the dispensary.
Cannabis products = $1,500 per pound
Your cost of products for opening day (plus ongoing stocking) will vary greatly based on your store size, number of SKUs, stock on hand, and supplier rates, but plan for an average of $1,500 per pound of cannabis products, including flower, edibles, vape cartridges, tinctures, topicals, lotions, capsules, beverages, prerolls, etc.
GRAND TOTAL = $635,000 (not including cannabis product inventory)
*Disclaimer: This is a rough estimate of the upfront and first-year costs of opening a dispensary in Maryland. It is to be used for informational and illustrative purposes only as every market, location, and business will have unique startup costs.
Update: The dispensary application timeline is as follows:
Since Maryland’s recreational legalization is still so new, there is limited information available on the application process and expectations. Here’s a run-down of what we know.
On the first day of adult-use retail, on July 1, 2023, 94 out of 100 existing medical cannabis dispensaries switched to serve adult-use customers. They were charged a conversion fee in order to transition their licenses and legally sell both medical and recreational cannabis products.
The state published this report of the rules and regulations that may provide more guidance.
July 1, 2023 - Existing Maryland medical cannabis businesses who chose to convert were authorized to cultivate, manufacture, or dispense cannabis or cannabis products for consumers 21 years of age or older.
July-August 2023 - The new Maryland Cannabis Administration (MCA) to conduct outreach, training, and guidance on the application process for individuals interested in obtaining a new cannabis license.
Fall 2023 - Round 1 application window. This 30-day application period is for individuals and businesses interested in applying for a standard or micro cannabis license. In Round 1, MCA may award up to the following number of licenses in each category:
Fall 2023 - MCA reviews application submissions, and conducts outreach to submitted applicants as necessary to complete the review. MCA conducts a lottery for Round 1 applicants and begins to select applicants for award.
January 1, 2024 - MCA begins to notify selected Round 1 applicants of award.
May 2024 or later - MCA announces Round 2 for standard and micro cannabis licenses, including on-site consumption licenses.
The licensing process is still being finalized, but here’s the basics of what to expect:
1. Determine your eligibility. For Round 1, all applicants must qualify as a social equity applicant. A social equity applicant is defined as an applicant that has at least 65% ownership and control held by one or more individuals who:
2. Compile your application materials, including operational plan, business plan, and diversity plan.
3. Submit your application.
4. Pay all necessary fees. For dispensary licenses, it will cost $5,000 to submit the application ($1,000 if you’re submitting a micro business license).
5. You will then wait for approval or further communication from the MCA.
Note: Getting a medical cannabis license in Maryland is a separate process, and may or may not have similar steps to the above.
Dispensary design isn’t just about where your dispensary is, or what it looks like. It’s how your shoppers experience your brand.
Note: According to state law, dispensaries must provide qualified medical marijuana patients (and caregivers) either exclusive access to the premises for at least one hour per day or a dedicated service line for the duration of operating hours. These accommodations will factor into your design.
Maryland also has a few particular requirements that may impact how your dispensary looks and functions:
Maryland state regulations have strict security requirements for licensed dispensaries. You must ensure the safe storage and dispensing of cannabis, while preventing unauthorized access. The comprehensive measures include your physical building, alarm systems, video surveillance, zone division, and access control.
Here’s the basics:
Premises construction and secure room
Lighting and surveillance
Video surveillance
Zone division and access control
Read the Dispensary Security Guide to find out where most dispensaries are at risk, then take action with best practices for both physical security and cybersecurity.
First, create your dispensary org chart. Based on your business plan, location, store design, and vision, what role are you going to play in the day-to-day operations and what additional staff do you need? What is the hierarchy? What benefits will you offer? And do you have the funds to pay your staff appropriately?
As a starting point, you’ll need someone to manage your store, budtenders or cannabis sales associates to serve customers and fulfill orders, someone to greet your shoppers (and secure the entryway), security, and someone to manage inventory and/or compliance. Based on the size and complexity of your business, you might need more or fewer people on your team.
Be sure to understand Maryland laws around hiring and staffing and follow all requirements, both specific to cannabis brands, and general hiring/staffing rules. These could include procuring cannabis employment IDs, age requirements, background checks, and mandating attendance of certification training, payroll taxes, at-will parameters, and more.
How to create a dispensary org chart
At this point, you should understand Maryland cannabis laws and what you need to do to keep your dispensary compliant.
As a reminder, here are the purchase limits for Maryland:
To learn more about Metrc, including how to report to Metrc, the difference between plant and package tags, making sense of Metrc receipts, managing inventory, and more, consult these resources:
Now’s when things really start getting fun: ordering and receiving your product! If you’re not a vertically-integrated company, or only have a dispensary license, you’ll need to find cannabis growers, manufacturers, and/or distributors to supply your store.
As you’re looking for suppliers, here’s a few things to consider:
But Maryland regulations also add a few sourcing considerations:
Once your cannabis products arrive, you must “intake” them into your store in a specific way to remain compliant with Metrc. Before you can bring physical inventory into your store, you must receive and review a manifest. The manifest is created by the supplier — which will either be you or other cannabis companies.
The manifest includes the harvest, weight, unit of measure, cost, etc. of the product.
You must review the manifest, and if everything is correct, accept it. When the package comes in, you'll physically inspect the package, and make sure it’s exactly as ordered.
You then accept it in Metrc, which tells Metrc that you are in legal possession of this inventory.
Note: Don’t forget that all your inventory must be stored in a secure room except while the dispensary is open for business and 1 hour before and 1 hour after being open.
Your technology stack is crucial to success as a cannabis business owner. Some are must-haves for compliance, like your security system and cannabis point-of-sale, while others are vital to a pleasant and seamless customer shopping experience.
Here is a short list of technology solutions to consider for your dispensary:
You don’t need to invest in every cannabis-specific technology solution, but make sure you’re investing in tools that will help you stay compliant, and enable you to better reach and satisfy modern shoppers.
📖 Read the Guide to Cannabis Tech Software for a complete list of top cannabis companies for your dispensary tech stack.
Ok, your store is ready, the team is trained, and technology is purchased and onboarded. Now you need to get the word out that opening day is coming.
Dispensaries notoriously have more challenges with marketing than traditional businesses because of stigma, regulations, and the federal illegality of the cannabis market. But there are still many marketing tactics you can use to promote your new dispensary.
Thinking about other forms of advertising? Maryland defines advertisement as “any form of communication intended to promote the sale of cannabis or cannabis-related products or services, including auditory, visual, digital, or or written matter.”
Cannabis or cannabis-related advertisements in Maryland must not:
Maryland law also has requirements for cannabis-related websites. Here are the basics:
Note: Maryland law also prohibits offering cannabis or cannabis-related products as prizes, premiums, or consideration for lotteries, contents, games of chance, games of skills, or competitions.
Deciding which point of sale system to work with is critical for both your success and sanity in the long run.
Why? Because every POS is different and yours has to work with your business.
Opening a dispensary in Maryland is quite an accomplishment. You’ll be in great company as the state’s recreational marijuana program gains steam.
If you have any remaining questions about opening a dispensary in Maryland, our team of cannabis retail experts would be happy to share what we know and connect you with others if we don’t.
