How to Open a Dispensary: The Current State of Marijuana Regulations

Ten years ago, it would have been unthinkable to many Americans, but marijuana is currently legal to sell in 28 states and Washington, D.C.* Some allow for medicinal sales, while a growing number permit recreational sales and use. Each year brings more states into this group.

States that do allow retail sales are seeing big business opportunities and millions in additional tax proceeds. It is expected in coming years that more and more states follow this revenue stream as reports continue to come in.

While marijuana sales and consumption has remained illegal on the federal level, the federal government has mostly not intervened in states that allow legal marijuana businesses. However, its ambiguous legal status creates unique challenges and an uncertain future.

State Dispensary Regulations

The states that currently allow public sales (see the list below) have each taken their own approach, creating some confusion among potential business owners and investors hoping to break into the industry.

For example, neither California nor Nevada place restrictions on out-of-state applicants other than they must be 21 years or older and not be a convicted felon. In Colorado, however, an individual must be a state resident for a minimum two years just to apply.

Most of these states restrict the number of licenses it allows in any given year. Illinois typically issues around 75 annually, and the competition is heavy.

Local Laws & Permits

In Chicago, the mayor’s office has banned most cannabis sales downtown and has split the rest of the city into zones where business will be divided.  Boston, meanwhile, has opened up the process citywide.

Most cities also restrict the way that marijuana sales are advertised on storefronts and signage. Because of the existing federal laws, false steps in this area, could even land dispensary operators in jail.

On the local level, cities want the tax revenue that marijuana dispensaries can bring, but don’t want it to look like a Grateful Dead festival has moved in next door to local shops and businesses. Be prepared to clear every piece of structural advertising with local architectural review boards, remembering that these bodies tend to be more conservative than others on the state and federal level.

And remember, cannabis remains a schedule 1 drug enforced by the FBI, DEA, and other federal agencies, so while you may follow every requirement at the city or township level, it is still a crime to sell on the federal level.

So to avoid conflicts there:

  • Never violate copyright of other companies within signage or products.
  • Never play into the fears that detractors have.
  • And, most importantly, never market to minors.

For the best results, lean toward squashing the negative stigmas that surround the cannabis industry. Following the standard procedures and common business practices of more “accepted” businesses will go a long way in building a successful brand, making state and local regulators comfortable, and preventing pushback from the community.

Marijuana Dispensary Permits

As additional states legalize marijuana and regulate the industry, it may prompt more conclusive federal action. In the meantime, it is critical to properly follow all state and local regulations, so you do not run afoul of federal law. Current federal penalties include a fine and up to one year in prison for giving or selling any amount of marijuana to another individual.

As part of the permitting process, you will need to build your team and prove that you are ready to proceed once approved. That means vetting operators, vendors, business partners, and others. It also means readying a proposal for the local zoning board. Your operation must fit the look and feel of the neighborhood where you will set up shop.

Perhaps most importantly, it also means securing a Certificate of Occupancy. A Certificate of Occupancy is evidence that a building complies with the plans and specifications that have been submitted to – and approved by – the local authorities. It complements the building permit. Whether a grower or seller, you must comply with all of the building and health codes.

In the state of Washington, for example, marijuana production and processing facilities are classified as an F-1 Occupancy due to the nature of the activities. Conversions of existing buildings or the establishment of new ones must conform to the F-1 standard, which include adequate fire flow and fire access, and may require sprinklers and fire alarms depending upon their size and location. Marijuana production and/or processing in greenhouses may be exempt from an F-1 occupancy provided that the use is seasonal and passive.

Express Permits, with permit experience in all 48 continental U.S. States and portions of Canada, can help you navigate this process and move you faster toward opening a storefront. We can help you investigate the state and local permitting needs and provide direction to ensure your applications are favorable to the local regulators, including architectural review boards and departments of building and housing.

A State-by-State Review of Marijuana Dispensary Permit Regulations

* These 13 states are expected to legalize marijuana use by Dec. 31, 2020.

  • Arkansas
  • Connecticut
  • Delaware
  • Florida
  • Maryland
  • Michigan
  • Minnesota
  • New Hampshire
  • New Jersey
  • New York
  • Ohio
  • Rhode Island
  • Virginia

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