Cannabis was legalized in New York in 2021, and now the market is starting to fully open up for all types of cannabusinesses across the state. Despite a rocky start to rolling out new licenses, it’s almost time for the general public to dip their toes in and start their own dispensaries.
New York’s legal cannabis market is projected to be worth $4.2 billion by 2027, making it the country’s second-largest recreational cannabis state. It won’t be long before cannabis businesses have hundreds of locations across New York.
Curious about how to open a New York dispensary? Here are five things you need to do to get ready for your blossoming cannabusiness.
Conduct Market Research & Choose a Location
Since many cannabusinesses will be opening up in New York in the next few years, you need to ensure that yours is set up for success from the start. The best way to secure success is by selecting a high-demand area with minimal competition. You can identify lucrative locations by exploring different neighborhoods and conducting market research.
Visit prospective spots in person, instead of just looking at them on a map. You’ll get a much better sense of the feel of the area, the type of people walking through, the surrounding businesses, and more. And if feasible, talking to residents and local business owners will help you to really understand the market.
It is also important to be mindful of the New York zoning laws before securing a location. According to statewide zoning restrictions, a cannabis dispensary can’t be on the same road or within 500 feet of a school and 200 feet from a house of worship. Cities may have additional restrictions to limit the number of cannabis dispensaries in a certain location. Do your research before you get married to a location that won’t work out for logistical reasons.
Apply for a License
You’ll need a license to open a cannabusiness in the state of New York. However, as of October 2023, the path to applying and receiving a cannabis license in the state is a little up in the air.
When applications for the first licenses opened up, New York legislators wanted to ensure that people who were negatively impacted by the state’s previous criminalization of cannabis could apply first. This included people who were convicted of a cannabis offense in New York or were affected by a loved one’s conviction.
Now, starting on October 4, 2023, New York will start accepting license applications from a much broader pool of entrepreneurs. Applications are open to everyone over the age of 21 who does not already have three licenses. This is exciting news for many aspiring cannabusiness owners who were not eligible the first time around.
However, these licenses may not be issued as soon as prospective owners hope. When the state legalized cannabis, its goal was to award half of the retail licenses to people with previous cannabis convictions, racial minorities, women, and veterans disabled during service. Several veterans have filed a lawsuit stating that veterans were unfairly passed over for the early licenses. The judge in the case ordered that the state wait to award any new dispensary licenses until the case continues.
Keep an eye on the New York Office of Cannabis Management’s website for updates on the next round of licensing applications.
Secure Funding for Your Cannabusiness
Opening a dispensary in New York will be expensive. While profits will likely be high once you open, you need to find a way to secure the funding needed to get your cannabusiness operational — which experts say could cost between $500,000 to $2 million.
This figure accounts for a variety of expenses for your cannabusiness, including:
- Licensing and application fees
- Lawyers and consultants
- Real estate
- Dispensary design and construction
- Business equipment
- Surveillance and security system
- Marketing and advertising
- Products and inventory
Many cannabis entrepreneurs take out loans to cover these up-front costs, either from credit unions or cannabis-friendly banks. Some are able to partner with others or enlist investors to start their businesses. However, you should do your due diligence and research before taking on a loan or going into business with an investor. Unfortunately, there has been some predatory lending occurring in the market because of the inability to lend from large banks. Make sure that you do this research before you get too far in the process of creating your cannabusiness.
Understand Cannabis Laws & Regulations in New York
There are hundreds of laws and regulations that apply to cannabusinesses in New York. While this can feel overwhelming, it’s important to follow them carefully, especially when you’re setting up your dispensary.
There are some regulations that apply to your customers that you’ll need to adhere to, including:
- Customers must be over the age of 21
- Customers can only buy 3 ounces of cannabis flower per day
- Customers can only buy 24 grams of cannabis concentrates per day
Others regulations apply to your business location, including:
- Installing a 24-hour commercial-grade security system
- Installing a perimeter alarm
- Conducting video surveillance in every part of the store with cannabis products
- Products cannot be visible from outside of the store
- Maintaining minimum staffing levels (depends on business plan submitted with application)
- Training staff on local ordinances, laws, and cannabis safety
It’s vital to take these rules seriously from the beginning. Neglecting even a single law could result in your dispensary getting shut down. You can consult an extensive overview of the New York cannabis laws and regulations here.
Invest in the Right Team
You need to hire a team of high-quality employees who will help your business succeed from the very first day. Your budtenders can make or break your entire business model, so you need to vet them carefully and train them well.
Your budtenders will be interacting directly with clients. They’ll answer their questions, suggest products, and upsell items. Hire these employees carefully, and make sure they’re happy in their positions by offering great pay and benefits.
To streamline training, create training manuals and SOPs (standard operating procedures) so that every employee is trained in the same way. This will limit mistakes and increase efficiency and customer satisfaction.
Final Thoughts on Launching Your New York Cannabusiness
Cannabis is expected to become a booming industry in New York. If you’ve always dreamed of opening a cannabusiness, now’s your chance to get in as early as possible and make your impact on the market!