How to Open a Dispensary in Pennsylvania

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How to Open a Dispensary in Pennsylvania in 2024

To open a cannabis dispensary in Pennsylvania, a permit must be obtained from the Commonwealth’s Department of Health. It is also important to contact the local authority in the municipality where the proposed dispensary will be located and inquire about their zoning requirements for cannabis businesses. During the permit application process, Pennsylvania requires prospective licensees to provide business plans, security plans, and proof of compliance with zoning requirements.

Why Open a Dispensary in Pennsylvania?

According to a July 2022 Office of Medical Marijuana Report, there were 749,642 patients and caregivers registered in the Pennsylvania Medical Marijuana Program, with over 21 million dispensing events since 2018. As of September 2023, this number has increased steadily to 942,231 patients and caregivers, with 34.4 million dispensing events since dispensing activities began in February 2018. The reports also show that the total medical cannabis sales rose from $5.7 billion in September 2022 to $8 billion in July 2023.

Dispensaries around the state sold 36.2 million products between May 2022 and July 2023. The continuous rise in the number of registered patients, revenue, and products sold indicates a robust cannabis market in Pennsylvania and the reason to consider opening a dispensary. This will only get better if recreational cannabis is legalized in the state.

Types of Dispensary Licenses in Pennsylvania

Pennsylvania issues a dispensary permit as its dispensary license. This permit allows a dispensary to sell medical marijuana, cannabis products, and paraphernalia to registered medical patients and caregivers.

How to Get a Pennsylvania Dispensary License

The prerequisites for opening a medical cannabis dispensary in Pennsylvania include the following:

• Prospective dispensary owners must have been residents in Pennsylvania for at least the last two years
• They must already have some experience in the cannabis industry

To obtain a Pennsylvania dispensary permit, an applicant, at a minimum, must do the following:

• Fill out the Medical Dispensary Permit Application Form online
• Provide the required information and documentation during the application
• Submit the completed application with an initial non-refundable $5,000 application fee, a $30,000 permit fee, and proof of at least $150,000 in capital

If the application fails, the permit fee is refundable. Successful applicants must complete a two-hour training course. The Pennsylvania Department of Health reviews applications and issues permits for dispensaries. Permits are typically issued in Pennsylvania after two phases of applications and reviews. The state’s Medical Marijuana Program aimed to issue 50 cannabis dispensary permits. As of 2023, all 50 permits have been issued, 27 in Phase I (2017) and 23 in Phase II (2018). The Office of Medical Marijuana is currently not accepting applications for dispensary permits.

Information and Documents Required for a Dispensary License in Pennsylvania

• Information about all owners, backers, and employees, including full names, dates of birth, home addresses, social security numbers, and email addresses
• Proof of residency in Pennsylvania for at least two years
• Site plan and security plan showing municipality zoning regulations compliance
• A diversity plan
• Proof of funds/financial plan
• Copies of background checks for all employees
• Any other documentation required by the Department of Health during the application process

What Plans Do You Need to Open a Dispensary in Pennsylvania?

Several plans are required to apply for a medical cannabis dispensary permit and open a dispensary in Pennsylvania. These include business, site, and security plans. A business plan helps to plan, set, and optimize the appropriate strategies and goals for the dispensary.

A Pennsylvania dispensary’s business plan should include the following:

• An executive summary showing an overview of the company with a mission and vision statement and descriptions of the goods and services to be delivered
• Organizational structure showing all owners, backers, operators, and employees with their duties and responsibilities
• Marketing analysis and strategy plans, including sales strategies and set goals
• Operation plans outlining the day-to-day operations at the dispensary
• Financial plans showing sources and costs of products, cash flow projections, and revenue projections

Security plans for a Pennsylvania dispensary must contain information detailing the following:

• Proper coverage of all entrances and exits with security doors, windows, and skylights
• Access control systems
• Silent and audible alarm systems that operate 24 hours with human-focused notification systems for improved response times
• Video surveillance via high-definition cameras and monitors installed across the dispensary facility
• Cloud video storage for storing footage
• Armed/unarmed guards as required
• Inventory management and point-of-sale software
• Secure transport system for transporting products to customers or cash to the bank
• Standard Operating Procedures (SOP) for security and safety of staff and customers

Are there Municipal Requirements for Opening a Cannabis Dispensary in Pennsylvania?

Yes, Pennsylvania allows municipalities to adopt zoning rules for cannabis dispensaries opening within their borders. The Medical Marijuana Act requires that dispensaries adhere to the same municipal zoning and land use requirements as other commercial facilities in the same zoning district. Prospective dispensary owners are advised to contact the municipalities directly and inquire about their zoning regulations for cannabis dispensaries.

How Long Does It Take to Get a Pennsylvania Dispensary License?

It usually takes about 120 days to get a dispensary license in Pennsylvania. This is the average time the Department of Health uses to review and approve dispensary permit applications.

Where Can You Locate a Cannabis Dispensary in Pennsylvania?

Per Section 802(a) of the Pennsylvania Medical Marijuana Act, a medical cannabis dispensary must meet the following location requirements:

• A dispensary may not operate on the same site as a facility used for growing and processing medical marijuana
• A dispensary may not be located within 1,000 feet of the property line of a public, private, or parochial school or a daycare center
• A medical cannabis dispensary may not be located in the same office with a practitioner or another doctor/physician

A dispensary may be able to get a waiver of prohibition to amend these restrictions. To obtain this waiver, the dispensary must provide clear and convincing evidence that the amendment is necessary to provide adequate service and access to patients visiting the dispensary.

Can Licensees Have More Than One Dispensary Location in Pennsylvania?

Yes. Each Pennsylvania-licensed medical cannabis dispensary is allowed to operate in three separate locations. However, each dispensing location will require a separate application and application fees.

How Much Does It Cost to Open a Marijuana Dispensary in Pennsylvania?

The cost of opening a medical cannabis dispensary in Pennsylvania depends on several factors, including size, location, product, and staff size. The following are the costs to consider when opening a cannabis dispensary in Pennsylvania:

• Rent or lease of a retail dispensary space: This can be estimated at between $3,000 and $10,000 per month
• Property upgrades and renovations: It may cost between $50,000 and $250,000 to bring the facility to standards, depending on the size and required upgrades
• Insurance costs: This cost will depend on how many insurance policies are acquired and their respective premiums
• License application fee: A non-refundable $5,000 dispensary permit application fee
• Licensing/Permit fee: The permit fee is $30,000 but is refundable if the application is denied
• Inventory costs: This depends on the size of the inventory. The wholesale price of cannabis in Pennsylvania is between $4,000 and $6,000 per pound
• Operational costs: Between $120,000 and $150,000 yearly
• Staff expenses: It is recommended to start with about 5 staff, plus a manager. The average salary for working in a dispensary in Pennsylvania is between $19 and $20/hr. Total employee salaries can be estimated to be approximately $300,000 yearly, depending on the number of employees
• Taxes: This will depend on the amount of product sold

Generally, the average capital required to open a dispensary in Pennsylvania is between $750,000 and about $2 million.

Do You Need an Insurance Policy for a Cannabis Dispensary in Pennsylvania?

Yes. Medical marijuana dispensaries operating in Pennsylvania are required by law to have an appropriate amount of insurance coverage. Insuring a dispensary will protect the facility and its employees from certain risks, including accidents, robberies, and vandalism. Some forms of insurance recommended for dispensaries licensed in Pennsylvania include the following:

• Comprehensive liability insurance: This form of insurance policy protects businesses from common risks such as lawsuits, accidents on the property, and equipment damage
• Workers compensation insurance: This form of insurance will cover any dispensary workers’ expenses, bills, compensation, and wages should they become injured or ill as a result of the job
• Product liability insurance: This policy will come into play if the dispensary’s products harm customers. It will cover any lawsuit, settlement, legal fee, or judgment involving the dispensary or its employees
• Commercial property insurance: This insurance policy covers the dispensary from physical property damage. This protects the contents of dispensary buildings, such as equipment, furniture, records, and documents, from incidents such as robberies, vandalism, and fires
• Commercial vehicle insurance: This policy covers any vehicles the dispensary and its employees use to transport any product or for other business-related purposes

Different factors will determine the size of insurance premiums for different insurance policies for a dispensary. For example, the size of the dispensary’s workers’ payroll will determine the premium for a worker’s compensation insurance policy.

How to Get a Grant to Open a Dispensary in Pennsylvania

Below are several ways of securing funds to open a cannabis dispensary in Pennsylvania:

• Self-funding: This requires funding the cannabis dispensary using personal sources of income and savings. It remains one of the most popular forms of funding
• Family and friends loans: Friends and family may be willing to fund a dispensary with free or low-interest loans
• Home equity loan: Prospective dispensary owners may take loans from banks or individuals using a home or property as collateral
• Commercial property loan: This is used specifically to finance the real estate needed for a dispensary, including land, office space, storage, or warehouses
• Equity funding: Dispensary owners can obtain funds to start their business by offering shares in the business in exchange for capital
• Inventory financing: This type of financing is used to cover the cost of the dispensary’s inventory, including products and equipment. The inventory serves as collateral
• Cannabis financing companies: Dispensary owners can reach out to financial institutions that specialize in lending to cannabis businesses
• Crowdfunding: Prospective dispensary owners can use crowdfunding platforms to attract potential investors to fund the business. They can offer these investors gifts or shares in the business as incentives

Does Pennsylvania Have a Social Equity Program for Cannabis Dispensaries?

Pennsylvania does not have a social equity program for cannabis dispensaries. However, the Commonwealth encourages the participation of diverse groups in its medical cannabis market. Each applicant will be required to include a diversity plan in their permit application to show their plans to adhere to the diversity goals of Pennsylvania’s laws. In Pennsylvania, dispensary permit applications are evaluated using a points-based system. Applicants’ diversity plans account for 10% of the total points in their applications.

Does Pennsylvania Tax Marijuana Dispensaries?

No. Pennsylvania-licensed medical marijuana dispensaries do not pay taxes to the Pennsylvania Department of Revenue. Medical cannabis sales are not subject to tax in the Commonwealth.