As of April 1, 2021, marijuana was legalized in the state of New York. Governor Cuomo announced that he had signed the use of recreational marijuana into law, and to all New York stoners’ relief, it was not an April Fool’s Day prank. It has also been reported that adult-use marijuana sales might start sometime in 2022. It is projected that tax revenue from the cannabis industry in the state could reach $350 million per annum. Additionally, the recreational marijuana industry is expected to provide New York residents with about 30,000 to 60,000 jobs.
The efforts to legalize cannabis in the state have been around for over 50 years. After the successful passing of the law, adults over 21 years of age can legally possess up to three ounces of their favorite cannabis strain. Also, there will be a state-monitored system that in a couple of years will expand into other sectors. These include legal growing, processing, sales, distribution, and use of cannabis. The tax proceeds collected from the industry are expected to benefit New Yorkers in various ways, including:
- Improving education
- Improving the health sector
- Improving infrastructure
- Helping minorities, especially the youth, suffering from the biased high rates of arrest
- Increasing job creation programs
A breakdown of the 14 percent sales tax on cannabis shows that nine percent will go to the state, four percent to the local government, and one percent to the county government. Also:
- Forty percent will be for a community grants reinvestment fund
- Forty percent will be for education
- Twenty percent will be for a public education and drug treatment fund
Why New York Cannabis Law Is Unique
The new cannabis legislation passed in April is no ordinary marijuana law. This is because it has an exceptional component known as public consumption. You heard that right: This component stipulates that wherever you can use tobacco, you can also use marijuana. This has not been done before. New York is the only state in the US that allows the consumption of marijuana in public places. Needless to say, New Yorkers are over the moon because, in truth, it is a big deal.
Why the Time Is Right for Business
If you are serious about the cannabis industry in New York, this is a good time to hop on. As mentioned above, New Yorkers have been supporting the legalization of cannabis for many years to no avail. The law was supposed to be enacted in 2020, but just like with almost everything else, the coronavirus struck. Now that it is finally legalized, investing in the state’s marijuana industry could be quite rewarding.
Besides adult consumption of cannabis, the law also implements an economic and social equity program. According to the official government site, this is aimed at propelling license applicants who were impacted by marijuana restriction disproportionately. They include cannabis growers, retailers, and distributors, to name just a few. The government aims to award 50 percent of the licenses to the applicants. Distressed farmers and service-disabled veterans will also be part of this group. Moreover, prior marijuana offenses that would be perfectly legal today will be expunged. This will clear many criminal records for New York residents.
In addition to the information above, there are a few more things you need to know about the cannabis market in New York. This article will focus mainly on opening a cannabis dispensary in this state. There are things you need to know that are specific to New York if you want to start a marijuana dispensary.
The application fees for marijuana businesses in New York are not yet clearly defined. More details are expected to be announced as the Office of Cannabis Management (OCM) lays down guidelines for the adult consumption program.
However, the medical program in New York requires two fees: A $10,000 non-refundable application fee and $200,000 for registration. The latter is refundable only if you do not receive a license. Some have speculated that the adult consumption program might follow the same pattern.
So, if you are looking to open a cannabis dispensary in the Great Apple, be on the lookout for these regulations when they are announced. You can email the OCM via email@example.com to get updates and notifications regarding application fees before opening your dispensary. Also, it would be prudent to employ the expertise of a consultant with experience in the cannabis business in New York. When starting your marijuana dispensary business, licensing should be an absolute priority.
Consider Geographical Limitations
Cannabis restrictions based on location exist in most states in the US. Counties have the prerogative to allow, regulate, or restrict marijuana businesses in their locality. This applies to New York, too. So, before paying for a rental space in a certain region in the state, make sure you have done some due diligence. Ensure whether you can legally operate there and if there are any additional fee requirements.
In New York, some counties do not allow adult-use cannabis sales completely. Here is a list of some of them, according to a 2019 study done by Democrat & Chronicle. However, given the rapid growth in the industry, this might be subject to change:
Get Some Capital
Although weed is legal in New York and other states, the federal government still considers it to be an illegal controlled substance. For this reason, generating capital for your cannabis dispensary can be quite difficult. This predicament prohibits banks and other conventional lenders from doing business with cannabis-based entities. As a result, your best chance of generating capital is with private investors. Luckily, the marijuana business can be quite lucrative if done properly. For this reason, there are plenty of private investors who can make your cannabis dispensary dream come true. You only have to prove yourself.
As mentioned above, the cannabis law is making room for underserved communities. Interestingly, investors in the private sector are doing the same thing. There are a lot of marijuana establishments that are focusing on rejuvenating minorities. So, if you are part of this group and have a solid strategy for your cannabis dispensary, you can easily find an investor.
A Brief Breakdown of Costs
As you venture into your new cannabis dispensary business in New York, know this: It does not come cheaply. According to research, you require a minimum of $150,000 and up to two million dollars to start up a weed dispensary. Needless to say, it is nearly impossible to open your dispensary in New York for just $150,000. This is because the cost of living there is very high. You might not necessarily need two million dollars, but you need more quite a lot to start.
Also, a rough estimate of other operational costs that you will incur after launching your dispensary include:
- About $250,000 per annum in staff salaries
- Approximately $100,000 in annual rent
- About $50,000 for retail store-based professional services
- Roughly $50,000 for security, surveillance, dispensary payment systems, and POS systems
- Approximately $50,000 to fund your marketing strategy
It’s also a good idea to set aside more funds for other miscellaneous expenses.
Get the Right Team
As mentioned above, you have to plan for staff salaries. However, your staff must be well educated on matters of cannabis and also familiar with the products you plan to sell. Before opening your dispensary’s doors to the public, ensure your staff is not only customer-friendly but also sharp. You can be assured there will be many prospective customers who have never tried marijuana entering your dispensary. Your budtenders should be able to satisfactorily educate them and recommend a product that suits them.
To ensure your staff is performing optimally, you can keep them knowledgeable by having a solid standard operating procedure (SOP) model. After completing an all-inclusive onboarding training program, they should all follow the SOPs. This ensures your staff has a tangible point of reference and your dispensary has set standards to maintain.
Also, all your competitors are looking for the same thing in budtenders. Budtenders should be passionate, diligent, and knowledgeable. If they are, the average rate of pay is between $12 to $16 an hour in New York, due to the high cost of living. The minimum wage for some cities, such as New York City, is $15 per hour.
Source Your Product
Vertically integrated operations are self-sufficient since they grow and sell their product in their dispensaries. But if this is not your setup, you will have to find your product from suppliers and vendors.
One way to do it is to start by reaching out to your 420-friendly network in New York if you have any. You can join other networks such as LinkedIn if you do not have a network or build a virtual one. It is important to be on the same page with suppliers since they are the backbone of your cannabis dispensary. Without them, you have nothing to offer your customers.
Also, do not rely exclusively on one supplier. Get as many contacts as possible from suppliers to safeguard your business. Although loyalty is an important part of this business, you need to keep your options open. When problems such as inconsistency in product quality, poor communication, messy packaging, and irrational pricing arise, go to plan B. Remember, your customers come first.
Market Your Dispensary
Having gone through the abovementioned steps, it is time to open your cannabis dispensary’s doors to the public. You will, however, have to embark on a comprehensive marketing journey to increase traffic to your dispensary. You should also adopt a cannabis debit processing system to make purchasing easy on your clients.
Marketing cannabis and other related products can be tricky, though. In most cases, advertising marijuana on conventional and social media platforms is prohibited. Again, this can be attributed to the conflicting state and federal laws. Yet this does not mean that it is not doable. You just have to go about it differently. For instance, you cannot post photos of the marijuana itself on Instagram or Facebook. In LinkedIn, you can, though. To get around this, you can post other lifestyle photos on restricted platforms to promote your dispensary’s brand.
Google My Business is one of the more effective ways to attract local traffic to your 420 dispensary. Have you ever typed the name of a company, and a business listing under a map comes up? Those are the listings generated by Google My Business. Not only will this increase your dispensary’s visibility, but it also allows the posting of reviews by your customers. It has been said that people are more likely to purchase from your storefront after reading reviews from other customers.
Maintain Your Dispensary’s Compliance
In the world of cannabis, compliance is arguably the last word you want to hear. Maintaining a compliant marijuana dispensary can be tedious, but it’s crucial. Because of the inharmonious state and federal laws, it is easy to get caught up in a gray area, landing you in trouble. Moreover, laws can vary from county to county.
Though maintaining this compliance can be quite tedious, it keeps your dispensary open for business, safeguards your customers, and separates your brand from the non-compliant players in the industry. One of the best ways to ensure you do not unknowingly become non-compliant is by hiring a marijuana compliance consultant. With the ever-changing laws and regulations, you need someone to keep you well updated. Also, having an attorney is a good idea in the cannabis business.
Just like any other business, being informed is very important. In the cannabis industry, this aspect is amplified. For every step you take when opening a dispensary in New York, always ensure you are aware of the legal implications. Have a good system to track your cannabis payments. The biggest risk your dispensary faces comes from non-adherence to regulations. Once your business is compliant with New York’s marijuana regulations, ensure your staff is cannabis-educated, your dispensary’s visual appeal is top-notch, and your marketing strategy is effective.