The Hidden Costs Of The Cannabis Business

Cannabis business owners have many more costs than your typical startup

There’s a common perception that the cannabis business is the modern-day gold rush — that there’s plenty of money to be made by anyone willing to work hard enough.

But in this case, the prospectors had better come equipped with deep-pocketed investors or plenty of cash. Because of cannabis’ mixed legal status (legal in some form in two-thirds of the states but illegal at the federal level) the cannabis business comes with lots of built-in costs that other startups don’t have to grapple with.

First are the capital requirements imposed on dispensaries, which can run from $150,000 to $250,000, depending on the state. Application fees for obtaining a license to sell cannabis can be as high as $200,000, which may or may not be refundable if the application is denied. In Pennsylvania, there’s an application fee of $200,000, and potential licensees must provide proof of assets of $2 million, $500,000 of which must be cash in the applicant’s bank account. That doesn’t even include the cost of the various required state and local permits.

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