Dispensaries are by far the most popular type of cannabis business. With average profits for dispensaries as much as $1.8 million from around $3 million in revenue, according to Statista, it’s little wonder so many cannabis entrepreneurs want to know how to write a dispensary business plan.
Your dispensary business plan is critical to securing financing, getting a license, and establishing the business. It’s your roadmap to success.
But what do you need to include in a business plan for a dispensary, and how do you write it?
That’s what we’re explaining in this guide. We’ll cover the key areas, research, and requirements of a cannabis dispensary business plan.
Find out more below.
When we talk about a cannabis dispensary business plan, it’s not one single thing. Rather, we can split it up into ten key sections:
Starting your report is the executive summary: an overview of your cannabis dispensary business plan. While it comes first, it’s typically the last section you write.
Your executive summary shouldn’t go into too much detail; it’s a description of the main points of your business plan. Try to provide a concise summary of each section, outlining a snapshot of your vision for the business.
An investor, regulator, or prospective business partner should be able to read the executive summary and get a good understanding of the general direction your business is going to take.
The company analysis revolves around a core question: what kind of dispensary are you operating? Are you medical, recreational, or both? Why are you starting this business, and where are you in the process of setting up?
You’ll also want to discuss your company’s legal structure and business model – explaining your choices as you go.
This section achieves two aims: it provides the context of the industry and places your business within that context. Conduct market research about your sector – What’s popular? How big is the industry in your region? Who are the major competitors? Who are the key suppliers?
By the end of this section, the reader should have a clear grip on the industry and why you believe your business could be a success.
Think about it – no one wants to invest in a small market with limited avenues for profit. It’s up to you to prove this is a viable sector with a substantial profit-generating capacity.
Customers are the backbone of the industry – but who are they? Gone are the days when the primary customer was the cannabis-smoking hippy. Following legalization, the market has diversified substantially.
What’s your target market?
Break down the demographics of your market by age, gender, location, income level, and more. By establishing your target market, you can explain why you’ve set up your business in a particular way.
For example, you could target older cannabis users, framing your product around the medicinal benefits. While the market isn’t as large, individuals may have more disposable income to spend, increasing its viability.
Use government statistics to support your argument, and if possible, conduct a survey in the local area.
Unless you’re establishing a dispensary where no one has gone before, you’ll have competition. Evaluating these competitors is a critical part of your business plan.
You’ll want to identify their strengths and weaknesses: Who do they serve? What products do they offer? What is their pricing?
In short, it’s about differentiating yourself in the market; where is your competitive advantage. It could be cheaper products or a superior product line. Maybe you’re going after a different target market or prioritizing customer service.
Frame your marketing plan through the four P’s: Product, Price, Place, and Promotion.
As a dispensary, it’s expected that you’ll sell flower. However, cannabis products are increasingly diversified, including oils, creams, edibles, beverages, patches, tinctures, and vapes. Plus, there’s the accompanying merchandise. Think bongs, t-shirts, posters and artwork, and much more.
Your price and place are somewhat linked. High-end neighborhoods tend to lead to high-end prices and products. You’ll want to locate your dispensary somewhere easily accessible or with high footfall, e.g., a gym or retail area.
Finally, how are you going to promote your product? Here are some options:
Whatever goals you’ve established, now you explain how you’ll meet them. Split into two distinct sections:
2. Management Team
Your management team should have experience running a business – ideally, a cannabis-related business. In the management section, highlight your relevant experience, describe the organization structure, and your proposed personal plan.
If your team lacks experience, consider adding an advisory board. This handful of individuals would act as mentors, guiding your business to maturity.
This five-year financial statement includes a monthly or quarterly breakdown of the first year. You should include:
4. Appendix
You should include full financial projections, location leases, licenses and permits, store design blueprints, and other relevant supporting documentation in the appendix.
That’s how to write a dispensary business plan.
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