HempStaff How To: Apply For a Dispensary License in a New Cannabis Market

HempStaff How To: Apply For a Dispensary License in a New Cannabis Market

Prospective dispensary owners face many challenges before they even get licensed.

February 12, 2018

Last week, we took a close look at how new dispensary owners can attract top talent from more established state-legal marijuana markets. Now, we’ll consider the challenges faced by prospective dispensary owners in states that are just now pitching an open application process to new businesses.

Long before the doors open on day one, the path toward licensure is knotted with complicated state application forms and the idiosyncrasies of the cannabis industry. Each state does things a little differently, so HempStaff tailors its hands-on training sessions and hourly consultations to the would-be dispensary owners’ particular state requirements.

James Yagielo, co-founder of HempStaff, says that a common trend is for applicants to line up their money before their industry expertise. And that’s fine, he points out, but it behooves the successful prospect to get experienced talent on the company roster as soon as possible.

“They call us up, and they have all the funds they need,” Yagielo explains. “They have the desire to get into the industry, and some of them may have the connections at the state level to get into the industry—but what they don’t have is any cannabis knowledge.

“We advise them to locate a potential employee and sign a contract with a retainer bonus for your manager.  While you may lose the retainer if you do not get a license, there is a major plus side to show the state you have your manager that has legal experience with cannabis in another state and can present a resume and their name on the application.”

State agencies are interested in the depth of knowledge behind each application, in the assurance that this business will carry state regulated mandates to fruition with each transaction. These are not simple one-off questionnaires, of course; as the cannabis industry hones its professional standards, dispensary license applications have grown more specific and more nuanced.

To help navigate the process, HempStaff connects interested parties with its fleet of hourly consultants.

“Some of these applications are so in-depth,” Yagielo says. “They want to know what type of security system you’re going to use, how often you’re going to delete the tape, where you’re going to store your product—down to the very minute details. Unless you’ve worked in a dispensary before, you’re not going to know [how to answer those questions]. We have consultants out there who aren’t really looking for a job, but they’ll do side work for [an] hourly fee for us. We get [our consultants] in contact with [dispensary applicants] and help them fill out the questions on the application, help explain any questions they may have on how to set everything up. In some cases, we’ve even found people have agreed to go work for them once they get the license—if they get the license. In that case, we ask that they put down a retainer. Because those people then are basically in limbo until the licenses are given out.”

If it sounds like there are a lot of moving parts to the application process, that’s because there are. The industry itself is changing to meet consumer demand and business trends each day and with each passing regulation. The key to getting into the industry is to know the industry deeply.

“Many owners are quite shocked at the in-depth questions about how their facility will be designed—down to where security cameras and a panic button will be placed,” Yagielo says. “If you have never worked in a dispensary before, these questions are very difficult to answer correctly.”

Once you’ve gathered your industry expertise and state-specific understanding of the regulatory framework, then it’s wise to return to Yagielo’s original point: You’ve got to have the money for these applications and, if you win one, for the license itself. State licensing fees can vary wildly; in Louisiana, for example, the annual licensing fee is $150. Elsewhere, like in New Jersey, the annual licensing fee is $20,000. In states where the costs are lower, of course, the number of applicants will tend to increase—and so will the sense of competition.

One last note is warranted, simply because there’s a high degree of risk in this industry: “Just like all cannabis businesses, the risk is the fact that it is federal illegal,” Yagielo says. “With the current [attorney general] rescinding the Cole Memo recently, it poses an even greater risk.  However, for new medical markets, we think you will see this coming: If it happens, as they will almost certainly target recreational markets before medical markets. This other risk for applying is the loss of your application fee; in states with lower application fees there can be 10 times the number of applicants as there are licenses, so if you are not in the top 10 percent of applications you may not get a license.”

It’s a complicated road, to be sure, as the cannabis industry matures at a rapid rate. But there are experts blazing the trails and helping states craft efficient avenues to success.

HempStaff’s next training sessions will be held in Detroit (Feb. 24); Baltimore (March 10); and Little Rock, Ark., (March 17). See a full list of training sessions and all registration information at hempstaff.com.

Read Part 1 here

Read Part 2 here

Top photo courtesy of HempStaff