Are you thinking of getting into cannabis retail? If so, you’ve likely already started mulling how much it costs to open a cannabis dispensary in Canada. The market outlook is good — BNNBloomberg predicts sales to hit $8.8 billion by 2027 — but today you’ll need patience and deep pockets to carve out a piece of this pie.
In many cases, it makes sense to think of it much like opening a restaurant. The most considerable costs associated with a new cannabis store include licensing, location (rental or real estate), renovations, consulting and professional fees, inventory, and employee salaries.
Cannabis Retail: How Much Money Do You Need to Get Started?
After a bit of internet sleuthing, you’ll find a lot of conflicting information about startup costs. Some sources suggest you can make it with as little as $150,000, while others strongly recommend having at least a million ready to invest.
Realistically, much of this variation comes down to the specifics of your business. For example, the cost to rent a commercial space in downtown Vancouver will be astronomically more than a small space in a rural Ontario town.
The location also influences your target clientele, affecting the cost of renovations and interior design needs. Once again, an urban consumer likely expects a certain level of aesthetics when shopping at a downtown location, while a rural storefront can take a much simpler approach.
What does starting a new cannabis retail business cost in 2022? You will need a bare minimum of $500,000 to open a new cannabis retail location. And, if you plan to operate in any major city, you can expect that cost to skyrocket to well over a million.
Overwhelmed? Let’s break it down into more manageable chunks.
Licensing costs vary depending on province and municipality but typically range from $5,000 to $15,000. Check with your provincial and municipal regulator for exact costs, but here are a few examples:
- Retail Operator Licence (2-year renewal): $6,000
- Retail Store Authorization (2 year renewal): $4,000
- Cannabis Retail Manager Licence (2 year renewal): $750
- Application fee: $7,500
- First-year licensing fee: $1,500
- Annual renewal fee: $1,500
- Licensing fee (One time): $2,500
- Licence renewal fee: $13,500
Location (Rent or Real Estate)
New cannabis dispensaries in Canada need to account for the cost of leasing a commercial space. As with all aspects of real estate, this is a highly variable cost depending on where you plan on opening.
High-density, high-demand urban areas will cost significantly more than rural settings. Inventory availability will also impact affordability.
The Canadian Government reported that the average rent for commercial spaces increased in most key markets at the end of 2021, including Edmonton, Winnipeg, Montreal, Halifax, Quebec, and Vancouver.
In any of these markets (and likely in most other major Canadian cities), you’ll need to budget a minimum of $100,000 to $150,000 annually for rent or lease.
Speaking of your location, you will need to budget for renovations. There is a large spectrum here, from simple DIY options to over-the-top designs — but cannabis consumers have come to expect a high standard when they shop for weed.
Nobody wants to roll into a dark, gloomy head shop these days. Consumers expect their cannabis retail experience to feel like shopping for high-end sneakers or premium wines. These design expectations come with a steeper price tag.
If you plan on doing a lot of the renovation yourself and are working with a not-too-shabby space to start with, you can expect a budget of between $50,000 to $100,000. However, big, blockbuster urban spaces can expect renovations to cost well over $250,000.
Consulting and Other Professional Fees
Unless you are well-versed in the licensing and application process, you will need to employ a few industry professionals to help guide you through the process. This may include a cannabis retail consultant, a lawyer, and perhaps even a financial advisor.
The price tag for these services is often unavailable online, but you can expect professional fees to add up quickly. Plan to have a cannabis-savvy lawyer on retainer for at least $25,000 and a similar amount on contract with a cannabis consultant.
Yes, consultants are expensive, but if this is your first foray into opening a cannabis dispensary, they are often well worth the investment. A consultant with a good track record will have navigated through the application and licensing process several times over — and will apply that expertise to fast track your opening.
No matter what type of customer service business you are building, labour will always be your single largest ongoing expense.
According to Glassdoor, the annual salary for a budtender in Canada in 2022 is roughly $36,000. The yearly salary of a store supervisor is about $49,000. Don’t forget to calculate how much personal time you plan on investing and your starting salary.
For smaller operations, with a team of five staff members, you should budget at least $200,000 for the initial year of salaries. It’s easy to see why staffing becomes one of the most costly aspects of your annual budget
Are You Getting Ready to Enter the Green Rush?
Before you seek any investment, you need to determine realistic numbers. What does it costs to open a cannabis dispensary in Canada? And while the environment has matured slightly since 2018, it doesn’t mean it’s impossible to get in on the action.
With patience, the right location, and a robust business plan, you too can open up your dream cannabis retail space. As you envision the layout, the service, and the business model, we’d love to help.
TechPOS offers a comprehensive suite of services for cannabis retail in Canada, including a compliance-ready cannabis POS system, intelligent digital signage, e-commerce support, and express checkout options.
Find out how to make your opening day easy with TechPOS.