District Of Cannabis: Got $200,000 To Open A Dispensary?

According to an article in the Washington City Paper, it appears that citizens who want to open a medical cannabis center in the nation’s capital will have to possess some reasonably deep pockets, and plenty of patience–while bona fide patients who need cannabis suffer waiting for government bureaucracies through at least January 2011 to figure out how to allow the dispensing of cannabis, while at the same time banning home cultivation.

Pot Shop 101: How Much to Start Up a D.C. Marijuana Dispensary?

Posted by Chris Schott,

Rabbi Jeffrey Kahn and wife Stephanie Kahn have a simple plan for bankrolling their controversial proposed medical-marijuana facility on Blair Road NW. “We plan on financing this from our personal life savings,” he says.

How much are we talking? Well, that’s a bit, um, hazy at the moment.

The biggest expense will likely be the price of the herbal remedy itself, according to Stephen DeAngelo, executive director of Harborside Health Center in Oakland, Calif., which both Rabbi Kahn and fellow aspiring dispensary operators with the nonprofit District of Columbia Patients’ Cooperative have toured in preparation for creating their own facilities. DeAngelo tells City Desk, “Out of every dollar we take in, about 62 percent of that goes to paying for the actual medicine. The balance of that goes towards paying our rent, our payroll, our insurance—all the other typical expenses that a business has.”

While not a single legal pot plant is yet in production in the District, thus making the budgeting process quite difficult for would-be sellers, we can safely assume that all other costs aren’t even the half of it. That said, Mayor Adrian Fenty‘s proposed medical-marijuana regulations at least provide specifics about some of the other start-up costs:

  • The annual fee for a medical marijuana dispensary registration shall be ten thousand dollars ($10,000) + an initial application processing fee of five thousand dollars ($5,000)

If you plan on growing your own, tack on an additional ten grand:

  • The annual fee for a cultivation center registration shall be five thousand dollars ($5,000) + an initial application processing fee of five thousand dollars ($5,000)

Next, you’ll need to register all your corporate partners…

  • The annual fee for each director, officer, member, incorporator, or agent registration shall be two hundred dollars ($200)

And every “bud-tender” on staff:

  • The annual fee for an employee registration shall be seventy five dollars ($75)
  • The annual fee for a Manager’s license shall be one hundred and fifty dollars ($150)

You may also need a permit for moving the medicine between manufacturing and distributing facilities:

  • The fee for a transport permit shall be twenty-five dollars ($25)

Not included in the regs: your necessary certificate of occupancy ($33 application fee).

Then there’s the whole matter of rent. According to real estate analysts Delta Associates, the average retail rent in D.C. (as of the end of 2009) is about $35 per square foot annually. For a modest 1,500-square-foot dispensary, such as the one the Kahns are proposing, that works out to roughly $4,375 each month, or $52,500 for the whole year. (Add on an additional month’s rent for the probable security deposit.)

Next up, payroll. The proposed regs specify that each dispensary “shall be staffed with at least two persons during its hours of operation,” with those hours of operation being anytime between 7 a.m. to 9 p.m. seven days a week. Let’s say you open on a more limited basis, from 9 a.m. to 7 p.m. A dispensary employing two staffers at all times (minimum wage: $8.25 per hour) would thus run up at least $1,155 in weekly payroll (or, $60,060 annually).

Then there’s security to think about. The Kahns, for instance, are planning to hire an off-duty cop to monitor the premises, beginning from a half hour before opening until a half hour after closing. A police officer working “reimburseable detail,” as it’s called, runs about $55 an hour—roughly three times the price of your average security guard. Let’s say you go the cheaper route ($18 per hour); that’s $1,386 per week (or, $72,072 annually).

Already, we’re looking at well over $200,000, without even factoring in the cost of the required video cameras and alarm system, insurance, a good licensing lawyer—and, most importantly, the pot itself. If we accept DeAngelo’s 62-percent figure on the cost of product, then we’re talking around half a million dollars (if my math is correct).

In its own financial impact statement, the District predicted the average cost of marijuana sold at dispensaries at about $350 per ounce. Therefore, a dispensary would need to sell about 1,429 ounces of herb annually to cover its basic costs.  That’s about 119 ounces per month. Patients, meanwhile, are limited to just two ounces per month, and the District expects to register only 300 patients citywide in the first year. Which means dispensary owners may need to dip into their own inventory to make the math look right.


46 thoughts

  1. To think all of this could be alleviated if we just allowed people to grow their own. I guess common sense doesn’t exist in D.C.

  2. It is an effort to insure that the black market can raise the prices of their marijuana by driving the price of medical marijuana up so much that they don’t force the cartels to drop their prices.
    At least the patients can still buy the generic medical marijuana from the same dealer the have been getting it from.

  3. By making legal medicinal marijuana unworkable in real world settings, i can only conclude that the lawmakers are 100% against the patients and are catering to the black market/criminal enterprises. Way to fail DC.

  4. It’s highway robbery! I agree with clagooding in the second comment posted here. I think, the only two ways to put the violent cartels out of business while getting around lawmakers’ efforts to make marijuana (medical, or not) too expensive to grow, distribute, sell and purchase aree:

    1. Keep it on the black market,

    2. For people to play Johnny Apple Seed by scattering pot seeds all over the place so they grow abundantly and return to the wild.

    Most lawmakers take good ideas, use them to write laws that differ slightly, or greatly from what the public majority requested. When they pass and enforce those laws people tend to regret wanting them in the first place. Our society needs to find ways to discourage political office holders from continuing this practice.

  5. Looks like another method of “keeping out the undesirables”. The will of the citizens be damned! I’m not even curious as to how long it will take Michelle from the DEA to start picking them off for being out of compliance.

  6. Leave it to the political capital to load it up with tons of red tape. Sounds pointless to make it legal in the first place with those kinda restrictions.

  7. Lost in all this overbearing commercial zealotry is the simple fact that this is a non-toxic, non-addictive plant that anyone could easily and abundantly grow in their backyard. These costly restrictions and controls are unnecessary for public safety. It’s all about generating money for officialdom.

    After legalization, this kind of nonsense will fade as the plant becomes abundantly available from a variety of sources and the many imaginary negative consequences of that availability are replaced with the development of the multitude of medical, industrial, nutritional and spiritual benefits that naturally flow from liberated cannabis.

  8. Why people still support this government is beyond me. It is so obviously there to support the agenda of only a handful. This story is all-too-typical.

  9. Typical bureaucratic bs right there! Everyone wants there cut of the money while making it almost impossible for the business to operate. The idea is to make it so people will purchase there pot legally from the business not continue to seek out the cheap affordable black market weed.

  10. sure…just another ploy to discourage its use..it will never end..our government sucks plain an simple..

  11. That just sounds crazy, one would have thought that legalizing would reduce the price. I can’t believve those fee’s, and you can expext those figures to go higher before it is all said and done.

  12. just legalize it and free enterprise will do the rest. And when the yard gets too thick to walk through the weedeater will take care of the rest.

  13. Is the federal government trying to bankrupt freedom?
    No wonder small businesses could not survive and the economy is eating up on itself. United States citizens may end up working at corporate sweat shops just to compete with China or become slaves working at a prison facility under heavy guard.
    The is the world of prohibition.
    Please vote so that this will not happen.

  14. Allowing politicians access to the public’s money is exactly like allowing pedophiles to run kindergartens. In both situations, they just can’t seem to control themselves. I wonder how long American citizens will tolerate this Unconstitutional insanity. Too bad the majority of American citizens are little more than at least marginally willing slaves.

  15. These expenses are rational, the best way to go about opening a dispensary is to also be a cultivator it cuts your bottom line in half. through seeds and cloning you can supply your own medicine. That is the more difficult way to do it but you should be permitted to grow if you are a collective which saves money. The security system is needed for any business and ghonestly is not that expensive as for the fees associated save some money and work it yourself, if it is a couple opening then they should be the ones working the counter. When it become legal here in PA I plan on opening a dispensary as well as cultivating.

  16. looks like they wanna make it only for big corporations to be able to grow and sell “while banning home grows”—WTF—–almost every medical state is trying differant things to screw up the mmj– even if ca passes prop 19 this nov. it leaves open the option for dry counties or cities. many places are working over city ordinances and state laws to severly restrict grow ops or medical mj clinics distrubiting mmj–i want to sell my house and move to a mmj state but how do i know that after buying a house and moving in that they wont pass some crap that makes me illegal even with a “green card from the state” i dont have deep pockets but still need my meds and cant afford the prescription garbage anymore that makes me unfunctionable

    why cant they just let the patiants grow their own if capable of it? there would still be many folks who cant or wont grow their own so the state will still make plenty of money off of them–hell sell home grow permits for 1000.00 per year with the stipulation that the appropiate inspector comes once a year to inspect the electrical supply for the grow– since we all know folks who will probably burn down their house,apt. building, and such by skimping on electrical safety or plain ignorance of using electricity

  17. for crying out loud, it’s just bud… we do not even have these stiff regulations for alcohol and tobacco which actually KILLS people and destroys lives and families…

    grow the fuck up, UNEDUCATED DEGENERATES…

  18. They can start out legalization this way, because the high price means fewer people for them to control and keep and eye on. Over time, their whole high priced system is going to have to drastically reduce prices, especially for those who want to grow their own.

  19. Expenses such as this will force Marijuana facilities to raise prices & ultimately may even push marijuana back onto the black
    market … then again i don’t own a dispensary so i don’t know if the cost are worth it . I do know liquor licenses are just or can be even more
    expensive . Being a business man i say it’s just the cost of doing business .
    Speaking of forcing , many of us especially N.O.R.M.L. knows all too well the true reason why people are in Drug rehabilitation for so called
    ” Marijuana crimes “. They are forced there by Judges & not that they are addicted .
    A similar case in point ; A Sacramento man , Matthew Palazzolo ( 25 yrs.) who was caught selling Marijuana recently at a Casino in Nevada was sentenced by District Judge Dave Gamble to write a paper stating that Marijuana led him to more powerful narcotics . Judge Gamble disagreed with California’s medical Masrijuana Laws and called the
    Law… …..” nonsensical character ” . He gave him 90 days to complete the essay . He could of made him say that Cola made him go onto more powerful drugs since Cola contains the drug Caffeine & this would of made just as much sense since Marijuana just like Cola ( and Cigarettes which contain nicotine ) does not neccessarily lead to more powerful drugs .
    Going from cigarettes ( which is addictive ) to Cola ( i also find addictive )& then onto Heroin would of made more sense .

    Reported by , the TRUTH DOCTOR c/o Gardnerville Record – Courier .

  20. Really sounds like an overabundance of fees that need to be paid.. Do pharmacies that carry currently legal prescription drugs have to pay this kind of money to open up shop? Does a liquor store owner have to spend anywhere near 15000 dollars to get a license to sell alcohol? What about those 5000 dollar ‘processing fees’ does the prospective business owner get reimbursed for that when they are given the thumbs up? What happens if they don’t get the license? Are they out that $5000? Where is the original stock going to come from? They certainly can’t drive cross country to get it and sending it through the mail would be a federal crime.. Also, where is this ridiculous price estimate coming from? If they’re going to charge the same prices as street dealers and then insist on putting a patient through all this red tape in order to get ahold of their medicine, they’d probably be better off buying it from Shady Sam on the street corner even after the dispensaries open.. The hypocrisy of this government is appalling.

  21. Fiorina has now widened her lead to five points over current California Senator Barbara Boxer, who is against Proposition 19 , at 47 to 42. One month ago it was 47 to 45. Among females and males, Fiorina’s support has changed very little. Her support is also mostly the same among young and old, white, and Hispanics as last month. Boxer’s support has decreased slightly with men, independents, and young voters .

    Change is coming .

    If they are oppossed to ( example – Boxer , Feinstein , Whitman ) then vote for the party who is pro – cannabis . Jerry Brown,has said he will sign to make Prop. 19 Law . Whitman will not .

    Just say NO to Whitman

  22. i, live in mn. and am disabled. my question is what the does this have to do to help the disabled people of mn.?

  23. “In its own financial impact statement, the District predicted the average cost of marijuana sold at dispensaries at about $350 per ounce. Therefore, a dispensary would need to sell about 1,429 ounces of herb annually to cover its basic costs. That’s about 119 ounces per month. Patients, meanwhile, are limited to just two ounces per month, and the District expects to register only 300 patients citywide in the first year.”
    This alone creates potential for a failed system from the getgo. Coupled with the overly beaurocratic and oppressive fees to be imposed, I forsee a collapse of this particular incarnation of Medi-Can.

  24. Well…what did you expect???
    NORML is the one calling for $600 per ounce legal marijuana in MA.The govt now knows it has the reform groups on their side.

    [Editor’s note: NORML has never called for $600 ounces of cannabis in Massachusetts or any other state! NORML strongly favors affordable, high-quality, low-taxed cannabis products for adult consumers. Cannabis should never cost consumers more than: Production costs, plus reasonable ‘vice’ tax, plus a small profit margin.]

  25. It’s the one good thing about cannabis prohibition…It hasn’t kept people from growing it, and the internet has opened the doors for genetics to pour into the house down your street, soon enough it’ll be in my garden with the tomatoes.

  26. typical goverment garbage im fed up with everything the goverment does, i wish i could sue them and make them give me all my tax money back for the last 20 years or prove how it was spent.Smokers unite and stand strong!

  27. you sure this isn’t the start of a fictional book in titled “How to screw up another good idea by government”..WOW..

  28. Here is the video of Keith Stroup telling Massachusetts legislators that legal marijuana would cost the producer about $35 per ounce to grow and suggesting that the state charge “300,400 or 500 dollars per ounce”…

    [Editor’s note: Who’re you, Andrew Breitbart? Despite the editing, thanks for making NORML’s point that the organization supports low cost cannabis, which is exactly what Keith Stroup testified in favor of. The fact that he acknowledges cannabis under PROHIBITION pricing obscenely fetches $300-$600 an ounce is not an endorsement of paying $300-$600 an ounce.

    BTW, the discussion in the MA legislature was purely speculative as government does not set the price of retail products, that is largely left to free market or prohibition forces. Government can tax products and services, but if it sets the taxes too high, another so-called black market will emerge.

    Again, no cannabis consumer in America wants to pay $300-$600 for dried vegetable matter and you’re wrong to claim that NORML supports such.]

  29. sounds like more of the Karl Rove type of tactics to me… wouldn’t doubt if there are some strong political-corporate-pharmaceutical reasons for wanting to keep cannabis inaccessible.

    Nonetheless, the truth always eventually bears itself out, and some day we’ll look back on this and laugh in disbelief.

  30. Crazier and crazier! This is the kind of shit we have to go through just to get cannabis to sick people? This is insane! The people voted for a lot more than what they are getting (I guess that’s true in all elections or initiatives). Now ill people will have to wait till the end of 2011? Total bullshit. We need a diaper change in Washington as it’s full and needs “changing”… it’s stinking up the country.

  31. As much as I admire celebrities who go to Africa and other far-off lands, maybe they could take some of their money that is earned thanks to cannabis consumers who view their movies, TV shows, buy their CD’s, etc., and help those in our own back yard?? If ever there was a worthy cause for philanthropy, this would be it.

  32. This entire article just makes me cringe.  Not because of your writing, but because of the fact you have to write in the first place. It’s ridiculous – The fact that a natural plant, native to mother earth has been outlawed is crazy!! On one hand, one of our most useful crops that does not require pesticides or fertilizers to grow in abundance… On the other an excellent source of medicine and a recreational drug that has much less to answer for than alcohol. Why do we just accept this as a nation? We do we just sit around like a bunch of pussies accepting it?

    Hemp could seriously save us half of our daily strife.  If you ask me the time is nigh to ensure that Hemp is legalized.  Im all for pot too. I saw a great trailer of a documentary that’s coming out in theatres soon with Woody Harrelson featured the other day – he gets arrested in Kentucky for planting Hemp seeds!!  What a ridiculous waste of police time and our tax payers money. Ultimately we are getting both ends of it here….

    Check this movie trailer out and offer this film some support within your communities so we can get rid of the madness (as in this celebrity age it’s going to take something like this to make an impression):

  33. Unfortunately, the calculus for expenses has been mischaracterized. AFAIK, Washington, D.C.’s minimum wage is not the Federal $8.25/hour — it is $10.00/hour. So instead of an annual expense for 2 full-time staffers of $60,060, it would be $72,800. And I rather doubt that 2 full time staffers would be quite enough.

    Granted, that is but a pittance compared to the aggregate annual expense, but I wonder how many other “actual” expenses have been understated. I would be inclined to take whatever total has been forecast, and add 25% to that.

    It is good to see the law change (finally) in Washington, D.C. But imagine — with either the DEA chief’s, Attorney General’s, or the President’s signature, cannabis could be shifted from Schedule 1 to Schedule 2 or 3 classification, potentially decriminalizing it — a change that a DEA judge recommended as far back as 2006, after a NORML lawsuit.

  34. dear all people of the united states of america,in one word VOTE!!!!!!

  35. 41. REV.rebelrouser

    I don’t know – is Lingle still Governor. She should be the first to be flushed down the dumper.

  36. From the perspective of a businessman, 119 ounces per month is almost 8 pounds per month. With 1,500 sqft of space to grow, producing 8lbs a month shouldn’t be very difficult. It takes about 250sqft to produce 8lbs with a 3 month turnaround. With four 250sqft spaces, the correct lighting, and a good gardener, producing 10lbs a month is no problem.

    119 ounces per month @ $350 an ounce comes out to $41,650 per month in sales. Multiply that by 12 = $499,800. Thats a half million dollars a year at 8lbs per month

    What the hell is everyone so upset about? It’s going to be legal to grow and the government is going to get its cut one way or another.

    When you look at other business, this profit margin is outragious. You could make your intial investment back in the first year and see a quarter million dollar profit in the second year. And that only with 8 pounds per month.

    This is a better deal than we have right now. Embrace it and spend your profits lobbing the government to change the exsisting laws.

    This isn’t as bad of a deal as everyone makes it out to be.

  37. Just wanted to chime in here. I’m a dispensary owner in California and have alot of friends who’ve opened up in the newer states. Alot of people are trying to get into the business and not knowing where to start. I too would like to see medical cannabis widely accessible have a free newsletter with free tips and tricks on how to get one open. The more we flex our rights, the more the feds will legalize access. Its a fun business also. It just shouldn’t be made so damned hard to get into. My free newsletter for any that are interested is at Start A Dispensary.

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