How to Write an Effective Dispensary Business Plan

Man Notepad Business Plan Strategy Analysis ConceptBusiness Plan, no doubt, is the defining document you will ever create for your marijuana dispensary business. There are a lot of enthusiasts out there who want to get in the action and start their own dispensaries. If you don’t know much about the laws and regulations governing marijuana usage in your state of residence, it would do you good to check out the official website of the Health department belonging to your state government. You can ask any of your questions to their representatives and get all the answers you need. This is the best way of getting to know the laws and regulations of your particulars state, especially because marijuana laws keep changing regularly across the country and it’s not possible for us to keep up with these laws every now and then. That said, there are some things that hardly ever change, and drawing a good business plan is surely one of them. To begin with, to state the importance of putting in place a great business plan, it would be essential to let you know that without a good business plan, your dispensary licence will never be accepted.

Importance of a sound dispensary business plan

The very first thing one has to keep in mind while even thinking of starting a marijuana dispensary business (or any business for that matter!) is the future. Any successful business person will tell you how important it is to stay a step ahead of the clock. You need to know the trends in your niche. You need to be able to forestall future losses or even better, build profits from good speculations of market trends. Thus, having a good idea of your market, your customers, your competitors, and your supervisors is the underlying stepping stone to the success of your dispensary business. And where does one get all this information? Market research is the only way you can learn about the little secrets of your market and customer base. To let your investors and official licensors know that you are serious about this endeavor; you need to put this knowledge across successfully. You need to be able to drive home the point that you are not a casual sheep in the herd, but you are a serious businessman and you can run your marijuana dispensary with responsibility and care while abiding by all the applicable laws, rules and stipulations set by the state as well as federal government.

Your marijuana dispensary business, just like any other business, won’t find investors or licensing officials unless you convince them through a good business plan. As much important it is to know what you need to in order to come up with a perfect dispensary business plan, it’s equally important to know where one can go wrong while drawing up a business plan.  That is why we thought that we should summarize the points for the same.

Mistakes dispensary enthusiasts often make

  • Hasty models

Many marijuana dispensary enthusiasts draw up business plans without devoting enough time for ideas or research. This often results into a ‘half cooked’ plan which is no good for anyone. Thus, it is a rule of thumbs that weeks, sometimes months, need to be devoted to carry out research and brainstorm ideas for your dispensary business plan to be a success.

  • Lack of understanding of market

Many people who apply for marijuana dispensary licences show very little understanding of the business and market. Very few of those actually understand the gravity and sensitivity of this business. Medical marijuana dispensaries need to be and must be run in highly professional manners, just like any other pharmacy or even hospitals. This lack of understanding is often visible through the business plans drawn out by such dilettantes. So, before you even begin to start writing your marijuana dispensary business plan, take some time to research the market and also how you touch lives of patients who seek palliative care through medical marijuana. This is a noble endeavor and should be treated like one.

  • Unconvincing use of language

While writing a business plan, the language used has to be persuasive and confident. Many people don’t heed this fact and the resultant business plan, however sound in technique, ends up reading like an essay. Hence, the use of language in your business has to be confident, convincing and should reflect the fact that you have put in lots of hours for market research and business understanding. Experienced investors or officials can easily tell apart a good plan from a bad one, so it’s always good to be on the safer side.

So, in essence, you need to devote time, efforts, energy and even your own money to carry out solid research before writing a dispensary business plan. This investment of time and money will definitely not go in vain, as this will come in extremely handy when you actually begin to run your business.

Nobody can put value on knowledge, and good business plans underline that sentiment.

What should the structure of my dispensary business plan be?

There is not definitive structure for an ideal business plan. People generally tweak and turn things around to suit their needs. That said, there is a certain skeleton model that is normally considered to be of standard. It is supposed to cover every major aspect of your marijuana dispensary business down the stream. This standard structure is described here.

Business Plan Structure

Following structure is often followed by the best business plans.

¨Confidentiality Agreement¨

  1. Table of Contents
  1. Executive Summary
  1. Business Summary
  • Start up summary
  1. Products and Services
  1. Market Analysis Summary
  1. Strategy and Execution Summary
  • Sales Forecast
  • Milestones
  1. Management Summary
  1. Financial Plan
  • Start up funding
  • Projected profit and loss
  1. References
  • Notes


A brief description of each of these heads is given below.


* Confidentiality Agreement

At the start (and preferably at the close, too) of every business plan, no matter what the business is, there is a confidentiality agreement located. A confidentiality agreement is a piece of semi-legal agreement that legally binds the potential reader of your dispensary business plan not to disclose, reveal, copy, disperse or use ANY information, business strategies, trade secrets or facts and figures central to your business idea. This is particularly important as your business plan is your own intellectual property and there has to be in place proper protection to pre-empt the use of your property in unpermitted ways.

A typical marijuana dispensary business plan confidentiality agreement main body reads something like this:

The reader/readers of this business plan agrees/agree not to disclose any information contained within this business plan, without the proper written consent of _______________, _______________ and _________________.

The said information is deemed sensitive and important for the mentioned business and hence this business plan be returned immediately to the undersigned owners of this business plan.




You can of course modify the content of this confidentiality agreement according to your needs and a proper legal counsel provided by competent attorneys.

  1. Table of Contents

The name says it all. A proper table of contents is necessary for easy navigation through your business plan.

  1. Executive Summary

Executive summary of a business plan, often derided by many people as management-speak, is of importance as a reader gets to take a glimpse of what’s contained insider your marijuana dispensary business plan just by reading a few points. This means that if you want to pursue your reader to go on and read the plan right to the last page, you MUST have a great executive summary. So what exactly should one write under the head ‘executive summary’? Well, to put it very simply, business plan executive summary should contain the essence of what’s to come. The gist of your business idea and structure explained neatly, in no-uncertain terms and more importantly, in short, should be the nature of content under executive summary.

  1. Business Summary

This is where the actual body of your business plan will start. Business summary should include the core of your business. This would ideally start with how and why you wanted to get started with the marijuana dispensary business idea. This should include an honest, but also an ideal, answer of what you exactly want to achieve by entering this business field, other than merely driving profits. Many modern investors look for a little social facet to invest in. For example, an encouraging association with a promising local charity would provide for a great business value, not to mention the social service you would be able to achieve through this tie up. Such little points, that not only increase the transparency of your business but also help you contribute to much larger goals in whatever capacity are often overlooked by start-ups and many investors, especially in this day and age, definitely prefer a start-up that’s socially aware along with making a successful business.

The business summary should have the details about following content (it can have more points, of course, depending upon your ideas)

  • The name of the company
  • Business inception idea
  • The names of the owners/partners/associates
  • The proposed location of the headquarters of the business
  • The proposed locations for the potential branches/expansion themes
  • The proposed area of operation (important for legal reasons)
  • The proposed business structure

The sub-header in this section mentions start-up summary. The start up summary, at its core, is a listing of all the assets, investments, revenue streams (if any) and debts of your start up business. Most commonly this would include money you have put up yourself by the date of the submission of the dispensary business plan.

A typical start up summary table may look like this.

Start up Expenses ($)
Expense stream 1
Expense stream 2
Expense stream 3
Total start up expenses
Start up Assets($)
Asset 1
Asset 2
Asset 3
Total start up assets
  1. Products and Services

A methodical list of ALL of your products and services is to be provided under the heading ‘Products and Services’. This list should be exhaustive and comprehensive and should leave no product or service unaccounted for.

The content under ‘Products and Services’ should contain the following points.

  • All the products along with unit prices
  • All the services along with unit prices
  • Customer centric product variations
  • Regional product variations (if any)
  • Membership services (if any)
  • Membership discounts (if any)
  • Exclusive services
  • Miscellaneous
  1. Market Analysis Summary

As mentioned countless number of times earlier, a lot of market research should be at your disposal before you even begin to write your marijuana dispensary business plan.

Every business plan that puts in significant resources (time, money and efforts) to carry out extensive market analysis has a head start over many others who don’t. The underlying principle of sales is that you have to be aware who your customers are. You have to be able to target the section of population that make up your customer base. Having identified this section of society, you will be able to better understand their changing needs, changing expectations and feedback. That’s precisely why, a lot of research would go into writing this particular section of your marijuana dispensary business plan.
In the section ‘Market Analysis Summary’, you should be able to answer the following questions satisfactorily in order to convince the readers (investors/officials) that you are a responsible and committed business person.

  • Who is your recurring customer?

Here, you should be able to identify the bulk of your customer base. This group of customers will ideally be recurring customers with frequent needs for your products and services. These are the customers you don’t want to lose out on because these customers will contribute the most to your sales in the long run. A proper demographic analysis that identifies targets and explains the concerned customer base from the given population is important to decide the further plan of action for your dispensary business.

  • Who are your local and off-base competitors?

Another important part of market analysis involves the identification of your existing as well as potential competitors. As a marijuana dispensary owner, you can expect to face good competition in your area of operation from the local as well as off-base (online) competitors. Having identified your competitors, you can estimate the percentage of market share you are likely to get to yourself. This will help in taking a closer look at that section of the market that’s actually yours for the taking , instead of wasting resources on the market share that’s already been take up by existing competitors.

  • What plans do you have in mind for the next five years?

You will have to come up with well thought out plans for expansion and growth of your dispensary business for the near future, typically for the next five years. This will determine what path you want to go down as a dispensary owner. The prior assessments of demographics will certainly influence this answer.

A typical market analysis summary can look like this.

Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth Sample size
Region 1
Region 2
Region 3
Region 4
Region 5
  1. Strategy and Execution Summary

In this part of your dispensary business plan, focus will be shifted on the ideas again. You need to chalk out detailed analysis of strategies that you might have in pushing the sales further down the line. This would involve marketing, promotions; advertising, executing pre set strategies to perfection.

The point of this heading is to give the reader an insight into how you are planning to continually improve the performance of your company by staying up to date with the changing needs of the market and your niche i.e. medical marijuana.

There are a number of factors that can be incorporated into strategy and execution methods. The most important of these will be how you are going to push your services and products into the target market and how you plan to stay ahead of the competition. This means a detailed analysis of marketing exercises and promotional events. The mode of marketing will vary from one businessman to the other, and so keeping it simple, it will suffice to say that your strategies for increasing profits through increased sales will all go down in this part of the business proposal that you plan to write.

There are two major sub headings in this part of the proposal. They are explained below.

  • Sales Forecast

With a detailed research of market, competition and target customer base at your disposal you can draw out good marketing strategies. With good marketing strategies, you can safely predict future sales in the nearby future (ideally 3-5 years). While forecasting your sales, it is important to keep the moderation of the numbers. It’s generally advisable not to be too easy on yourself, while it’s important not to sound too bashful of the future sales. A right balance in forecasting sales can give you and your readers a fair idea about the money making potential of your dispensary business.

  • Milestones

In management of a business, milestones play a huge role. Milestones are nothing but a measurable, a directly palpable result that can ensure that the things are moving in the right direction. While operating the business, things need to be kept simple and short term goals often achieve that effect to a good degree. Reaching a milestone is a testament to the fact of the normalcy of operations. Milestones can be both financial and strategic. Milestones can be monitored easily by setting up a quarterly or bi-quarterly basis for the assessment. Many businesses often offer added incentives for the managers of various sections of the business to reach the milestones prior to the deadlines, without compromising on the quality of the work completed.

For example, in your marijuana dispensary business, you can set up a short term milestone of two months for achieving a particular sales figure. Milestones often motivate the employees and favourable results can be achieved through this medium.

  1. Management Summary

The management summary of your business plan will lay out the structure of your marijuana dispensary business. Choosing the most suitable business structure is very important and more can be read about it in the previous article on our blog. You can check it out here.

Management summary will describe at length the hierarchy structure of your business. This will determine the number of employees you have or need to have in order to run efficiently and profitably. This will also help you determine if there are any management lapses that need to be taken care of, in terms of employee numbers or managerial positions.

  1. Financial Plan

All the previous sections of the business plan are ultimately aimed at the attractiveness of this section. The financial plan of your business will tell the investors/officials whether you have a solid business or business idea in going forward. The current stream of revenue and/or assets as well as the current stream of expenditures or losses will decide if the business is financially profitable or not.

  • Start up funding

This will include the initial injection of funds you might have received from other investors/banks. Often mistaken for capital, this is a recurring stream of investment, rather than the zero-revenue capital.

  • Projected profits and losses

This sub heading will carry the numbers for projected profits and losses for the next few (typically 3) financial years.

It is a general practice to mention the projected profits and losses prior to taxes, depreciation, amortization and interests.

Thus, in conclusion, it can be clearly observed that a lot goes into the making of a marijuana dispensary business plan. So, hasty preparations of business plans must be avoided at all costs in order not to end up with a discouraging business plan that no investors will be keen to look twice at.

However, if you follow the guidelines mentioned above, your marijuana dispensary business plan will have a solid foundation and it will be attractive for the investors as well as officials.

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