Researching how to open a dispensary in New York can be a daunting task but don’t despair! The good news is that you don’t have to wait until apps are released or until you know exactly how to how to start a recreational dispensary in New York to begin working towards your goals. In fact, you shouldn’t wait to start forming your business and assembling a team around your unique value proposition and brand. You can do many things NOW to ensure you are ready when applications are released. Here are the 6 most essential steps you need to take now.
How To Open A Dispensary In New York:
Step 1. Choose License Type:
In order to open a dispensary in New York, you will need to apply for and win a cannabis business license. A system for licensure in NY is currently being created, although hemp farmers are already eligible to apply for conditional cultivation licenses. Those wishing to open a recreational use dispensary will need to choose between two license options:
Adult-use Retail Dispensary License :
An Adult-use Retail Dispensary license permits more than just the acquisition, possession, and sale of cannabis and cannabis products to customers from a brick and-mortar retail location. It also permits the delivery of cannabis from the retail location to the cannabis consumer, which can bring in more revenue and increase sales.
However, retail licensees are prohibited from vertical integration – or owning and interest in cultivation, lab, extraction, and manufacturing licenses held by themselves or another licensee. In short, you can own up to three retail marijuana dispensary licenses, but you may not concurrently own interest in a processing, cultivation, or distribution license in NY state.
Adult-use Micro-business License:
An Adult-use Microbusiness license is a little different and allows for vertical integration. A Microbusiness licensee is permitted to cultivate, process, distribute, deliver, and dispense cannabis. Basically an all-in-one license type but on a smaller scale. Keep in mind that microbusiness retail locations may only sell their own brand of cannabis. They also may not hold interest in any other license types. The size, scope, and eligibility criteria for this type of license are still being determined, although the law states that these licenses shall promote social and economic equity applicants.
Step 2: Form And Register Your Business in New York
Once you’ve decided on the type of license you will be applying for you will need to form and register your business with the state. This process includes building your team, determining ownership percentages for the initial cap table, and getting your business formation documents in order.
There are several business types to choose from:
- Sole Proproitorship
- LLC or Limited Liability Company
- Corporation
- Partnership
For detailed, step-by-step instructions on forming and registering your business with the state of NY, visit the New York state government’s website and follow the instructions on how to Form An Entity. Once the documents have been executed by all members you will be ready to register the business with the State of New York. It is important to keep in mind that if you are applying for social equity status that the team you form and register meets the required percentages of ownership. (See Step 3.)
Step 3. Check Your Status and Eligibility :
While researching how to open a dispensary in NY, you might think that only social equity applicants can apply for licenses. That is not true! Anyone can apply for a cannabis business license in NY, however, there are special laws put in place to assist people who are deemed eligible for social equity status. You may qualify for social equity status and not realize it, so be sure to read this next section carefully.
Social Equity In New York:
The state of New York defines social equity status as:
- Individuals from communities disproportionately impacted by the enforcement of cannabis prohibition
- Minority-owned businesses
- Minority and women-owned businesses
- Distressed farmers
- Service-disabled veterans.
To qualify, the company must be at least 51% owned by social equity applicants.
Extra Priority:
Extra priority will be given to an applicant who:
- Is a member of a community disproportionately impacted by the enforcement of cannabis prohibition.
- Has an income lower than 80% of the median income of the county in which the applicant resides.
- Was either: (a) convicted of a cannabis-related offense prior to the effective date of N.Y. Cannabis Law; (b) or had a parent, guardian, child, spouse or dependent; or was a dependent of an individual who was convicted of a cannabis-related offense prior to the effective date of N.Y. Cannabis Law.
Eligibility Criteria:
The first 100 adult-use retail dispensary licenses will have special eligibility requirements:
- You must have a prior cannabis-related offense in the state of NY
- You must be a New York resident
- You must have had at least 10% ownership in a profitable business in the past or owned part of a non-profit organization with people convicted of marijuana-related offenses in New York on its board of officers.
- A majority (51%) of the ownership of the applying company must have been in New York State for 180 days within the last year, or 540 days within the last three years.
What If I Don’t Meet Eligibility Criteria?
Even if you don’t fit the above eligibility criteria, you can still apply for a license. The first 100 licenses will go to applicants with cannabis related convictions. However, New York has promised 50% of all licenses to go to social equity applicants of all types. This also means 50% of the licenses will go to the general applicant pool. You may have to wait a little longer to submit your application documents to the state, but you should not wait to get started on the rest of this list. We will bring you updates as laws are changed and/or released via our social media channels. Follow us on Linked In, Facebook, and Instagram
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Step 4: Develop Your Business Plan
Before you start fundraising for your project, you need to Develop a business plan for a recreational adult-use dispensary. Your business plan will be included in your application to the State, and they will use it to help determine whether or not you are qualified to be a license holder. It is also the place where you can distill your mission and vision into a cohesive message that will differentiate your brand from the competition and attract investors.
If you are asking yourself, “How do I write a business plan for a dispensary?” you wouldn’t be alone. Dispensary business plans contain both standard and more focused, industry specific elements.
Standard Business Plan Elements:
A dispensary business plan should include the standard elements:
- Executive Summary
- Mission
- Vision
- Market Opportunity
- Marketing
- Operations
- Company and Team
- Financial Plan and Projections
Cannabis Industry Business Plan Elements:
Depending on state specifications, your plan may also include:
- Compliance Plans
- Security Plans
- Point Of Sale
- Strategic Execution and Business Development Timelines
- QC (Quality control) and QA (Quality Assurance) plan
- Labor compliance plan
- Workforce and job creation plan
This one’s on us!
Here is a free pdf of a perfect scoring dispensary business plan from a winning application you can use as an example. Click on the image above to download a free cannabis dispensary business plan to use as a template when creating your own.
Step 5: Create Your Perfect Pitch
Once you have your business registered, team built, and business plan developed, it’s time to get the word out. You’ll need enticing visuals of your unique brand to garner interest from potential investors. This is a good time to invest in a marketing company to create a logo and brand guide to help tell your unique story. In addition, you should create a Pitch Deck as well as a One Page Pitch.
What is a Pitch Deck?
A pitch deck walks potential investors through your business plan using your own unique story, value proposition, and branding. It should be visually interesting, persuasive, and show exactly HOW you plan to build your company’s revenue model into a profit-making machine. You will use this as a visual aide while pitching and not as a teleprompter. Keep text to a minimum, focusing on your company’s inspiring brand message and key metrics.
How much you are looking to raise depends on several factors. How much does it cost to open a dispensary in NY? Costs vary, but a good estimate is that you’ll need to raise at least $500,000.
What is a One Page Pitch?
If you only had one page to pitch your company – what would you put on it? Thats a One Page Pitch. It is one page with key metrics like the problem/opportunity, target market, market size, financial projections, key team members, and the amount of investment you are seeking. Handing a potential investor one page to look at with key metrics while you pitch using your deck as a visual is much more digestible than handing them a 35 page business plan. Once they are eager to learn more, you can send them the full plan. We like Liveplan’s one-page pitch and forecasting tools.
Step 6: Get Help
Business is infamous for being tough, and the cannabis industry has its share of regulations and barriers to entry. However, the cannabis community is special and tight knit so there are a lot of people who are willing to lend a hand to new entrepreneurs. Here’s how to find them:
Mentors
A good mentor will tell you about all the mistakes they made so you can avoid them and skip the first 3 years of trial and error and head straight to greasing the gears of a well-oiled machine. Don’t worry if your mentor doesn’t know how to open a dispensary in New York state- at the moment no one does! (Unless they are in medical cannabis).
To find a mentor,
- Make a list of the top 10 people in your network with cannabis business experience
- Ask them out to coffee and tell them about your business.
- Let them know you value their time and experience and ask if they’d take a call from you now and then for advice.
- Then treat them like the gold that they are, because they can save you thousands of dollars and months of wasted energy in one ten-minute conversation.
Don’t abuse it, call too often, or become co-dependent. Remember, they will deliver for you if you remain pleasant, respectful, and make them look good by becoming successful!
Government CHEESE:
Don’t hate, at least not yet. Make friends with leaders in your municipality. Shake hands, kiss babies, and show up at local meetings where you want to operate. Dress nicely. Introduce yourself and ask for help when you need it. The people in your local community will be invaluable to you if you get to know them on a first-name basis. They may even hold the keys to getting municipal support for your application, which can make or break your chances of winning.
Application Accelerators:
Application accelerators and incubators help you through the process of applying for a licesnse. That’s what we do. The CHT Accelerator is unique in that we’ve created software disrupt the 100-150k cannabis consulting racket. We’re homegrown, cannabis-loving entrepreneurs that have been through this game many times and decided to fix a broken process. We’ve partnered with some great folks – Green Flower Education and Justice Cannabis – to bring you the highest quality applications and educational materials.
Getting Started
As you can see, there’s plenty to do right now before the applications are released in New York if you are planning on opening a dispensary. The sooner you get started, the sooner you can relax and focus on what you really want to do – which is open your doors.
Our entire raison d’etre is to make it easy and affordable for you to submit a complete and competitive application. If you’re interested in learning more, sign up for a free trial and poke around our one-of-a-kind software platform. Once inside, you can book a call with us and we can hash out (pun intended) any questions you may have. Or maybe we’ll just chat about your business needs and point you in the right direction, even if its not with us. Either way, don’t hesitate to contact us. We’d love to hear from you.
