In 2017, overall cannabis sales in the United States at the retail level to soar by 31.5%, hitting $5.7 billion on the back of continued growth in existing recreational cannabis markets. In fact, rec sales are expected to surpass medical next year for the first time ever.

Profit margins in the retail side of the cannabis industry are more modest than for other types of cannabis business due in part to the fact that average startup costs for dispensaries are higher than other sectors of the marijuana business. Median operational costs for retailers are also the highest in the industry, at around $600,000 annually.

Luxury jewelry - 3017$
High-End athletic wear - 1936$
Recreational cannabis store - 1773$
Medical cannabis dispensary - 1143$
Boutique shoe store - 887$
Pharmacy - 241$

Cannabis retail business conditions differ from state to state and if you have planned to set up your own retail business, then you must comply with the laws of your particular state. Licensing requirements will also depend on on the type of business you wish to start. Someone who operates a grow house will require a completely different type of license than someone who owns a cannabis shop.


The initial capital to start a retail cannabis business depends on many factors, including location, premises size, your goals and objectives. For example, your goal is to reach the annual revenue more than $1 mln or under $100,000 is also appropriate. For these two goals there will be different initial CAPEX and OPEX:

 $100,000 Scenario

  • $5,000 Application fee (depends on state, one-time application and annual license fees typically range anywhere from $5,000 to $50,000 for retailers and tend to be much higher for cultivation licenses)
  • $18,000 for six months rent
  • $20,000 for a space improvements
  • Deals with growers, often costing nothing more that a percentage of the sale from their product, for dispensaries it will be approximately 33%
  • $400 for display cases
  • $50 office supplies
  • $150 for security system
  • $75 for a sign
  • $300 for product bottles and $31 for jars to store the products (again, thrift shops)
  • $50 on labels (all white)
  • plus salaries for manager and guard

= approximately $50,000-$65,000 start-up expenses

$1 mln Scenario

  • $50,000 Legal Fees & Licensing & Insurances
  • $250,000 Building renting (includes security deposit)
  • $70,000 Inventory, packaging supplies
  • $2,500 Website design and development, hosting
  • $70,000 Marketing Campaign
  • $100,000 Space improvements including finishing/painting, kitchen, office space, bathrooms, etc.
  • $20,000 Security system including multiple camera feeds and metal/weapons detectors
  • $50,000 Furniture, Display Counters, Refrigerators, Freezers, Multiple POS/ Cash Registers, Registration Computer, Commercial Label Printer, Storage Hardware and Shelving, etc.
  • $7,000 Computer Software (Accounting Software, Payroll Software, CRM Software, Microsoft Office, QuickBooks Pro, etc.)
  • plus salaries for director, managers and guards

= approximately $750,000-$1,000,000 start-up expenses

Average sales per square foot for a recreational marijuana store is $1,773 and $1,143 for a medical marijuana dispensary. More established operations boast 40-50% profit margins, while newer shops may only see 20% due to their lack of strategic partnerships and vendor relations.

Sample of a revenue model:
Revenue = $1,000,000 (100%)
-Direct Costs = $350,000 (35% if you mix own product line and vendors, 55% if case of only vendors product line)
Gross Profit = $650,000 (65%)
– Operating Expenses = $300,000 (30%)
Operating Income = $350,000 (35%)

Table of Contents

  • Project Scope

  • US Market

  • Target Market

  • State Cannabis Laws

  • Start-up Summary

  • Financial Projections

  • Mission/Vision/Goal

  • Objectives 

  • Products & Services 

  • Key Customers

  • Market Overview

  • Target Market

  • State Cannabis Laws

  • Competition

  • Competitive Advantages

  • Revenue Benchmarks

  • Cannabis Sector Projections and Perspectives

  • SWOT Analyses

  • Online Advertising Obstacles

  • Alternative Online Advertising Options

  • Marketing Plan

  • Cannabis Directories

  • Launching Strategy

  • Sales Forecast 

  • Location/Facilities

  • Equipment

  • Project Plan

  • Physical Security Plan

  • Video Surveillance

  • Packaging and Labeling

  • Tracking Solution

  • Profit & Loss Forecast

  • Cash Flow Statement

  • Balance Sheet

  • Main Ratios

  • Sensitivity Analyses

  • Income Statements, monthly

  • Cash Flow Statements, monthly

  • Statistics

Should you have any questions, please do not hesitate to contact us.

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