State-legal marijuana has given rise to a whole new industry poised to make a ton of money for a very long time. Among the many ways to profit from marijuana is opening a pot dispensary. A dispensary is the marijuana equivalent of your local liquor store (for recreational pot) or pharmacy (for medical cannabis).

Are you hoping to open your own pot dispensary at some point? If so, you probably already know of the potential to make good money. But there are other things you need to know as well. Just as with any other business, operating a dispensary isn’t without its downsides. It is not without its risks.

Start-Up Can Be Costly

The first thing to know is that getting a new dispensary up and running can be costly. The owners of Pure Utah, one of more than a dozen Utah cannabis dispensaries, know this first hand. They spent quite a bit of money getting their dispensary up and running a couple of years ago.

The say that typical start-up costs include:

  • licensing fees
  • lease payments
  • security deposits
  • equipment and supplies
  • payroll and related costs.

Payroll can be a real killer, especially if you are opening a medical marijuana dispensary in a state like Utah. Why? Because most states with legal medical marijuana programs require that pharmacies employ at least one licensed pharmacist. Pharmacists are trained medical professionals with fairly high salary demands. They do not come cheaply.

A License Is Required

Next up, you cannot just lease a storefront and open a dispensary without jumping through legal hoops. You’re going to need a state license. Lawmakers have only approved licenses for 15 Utah dispensaries. Yet in Oklahoma, there are thousands of active licenses. It varies by state. By the way, license fees are charged annually.

You’ll Need Retail Space

Obviously, it is impossible to operate a dispensary without the space in which to set up shop. Note that retail space is expensive. It’s also hard to find if you’re looking in the most desirable locations. The more desirable a location is, the higher the demand for retail space. That means low supply and high rental prices.

Do not forget the zoning issue, either. Nearly every municipality in the country regulates business through zoning laws. You may not be able to set up a dispensary just anywhere in your town. Your choice of locations could very well be determined by zoning.

You’ll Need Liability Insurance

The expenses continue to mount as evidenced by the fact that you will need liability insurance. A liability policy protects you against losses in the event someone sues you or your business. And guess what? Liability insurance isn’t cheap, either. Chances are you’ll have to fork up either the entire premium for the first year or a significant down payment.

Your Business Will Be Regulated

The last but probably most important, your pot dispensary will be heavily regulated at some level. At minimum, you will face state regulations controlling what you can sell and to whom you can sell it. Choosing to open a medical cannabis dispensary means being subject to an even larger number of restrictions.

You might also be subject to local regulations as well. Many states with legalized marijuana programs allow municipalities a certain measure of control over dispensaries located within their borders. Municipalities are known to exercise that control to varying degrees.

No doubt there is money to be made operating a pot dispensary. But turning a start-up into a profitable venture takes time, work, and a significant investment. Know what you’re getting yourself into before you get started.