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Running a business in the cannabis industry


Brenden
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Where I live, cannabis is legal recreationally, so it's like alcohol or cigarettes here. There are rules you have to follow, but they're pretty basic. Anyway, with the US legalizing it more and more, I can see it eventually being legalized federally one day and we won't have to worry about it anymore. But of course, the states still have their own rules and laws, so if they say it's illegal, you can't do much about it in that state. 

Anyway, that's not what this is about. Do you know anyone who runs a dispensary for cannabis? How much does it cost to run a dispensary? How much are they making yearly? What are some rules they have to follow? 

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I do know some people that run recreational cannabis shops. There are a ton of regulations at the state level about all kinds of aspects of the business. It is a bit of a pain to learn everything you need to know but once you get going it runs just like any other business. 

The thing is though when the product was new recreationally the margins were high. As more and more competition hit the market the margins quickly compressed. It is no more like selling beer and wine which do not carry very great margins for retailers. 

I would say you likely would want about a quarter of a million dollars or more to get started depending on location. A lot of the licenses that states are handing out there are only so many in a county so over time just the license starts to become more and more valuable. It is going to be hard to get traditional loans and you will be looking for private money if you do not have the capital laying around since banks or the SBA still will not lend on this due to federal laws. 

The people I know running them though have been successful and their businesses became profitable within a couple of years. They are slowly starting to bring on higher margin items as the local laws allow it to help with the net profit line. 

It definitely is a grind like any other enterprise is. If you can get in early in a state then you can make a ton of money just by holding a license or setting something up ready to go. As time goes on though that license cost is just going to get higher and higher. The owners I personally know are all netting over $100k a year so it does spit out cash :). 

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My husband wanted to invest in cannabis stock back in 2010 I want to say. He ended up changing his mind because he is not a fan of how it is abused for recreational use. Kicks him self in the butt all the time now because had he invested, we would have a lot more money right now. 

I do know it is a good investment since it is still not 100% legal but is heading that way. I think it comes down to what state you live in. Some places have hefty fines and inspection fees that have to be preformed on a regular basis to ensure the weed isn't laced and what not.

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