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How to Open a Cannabis Dispensary in Illinois

how to open marijuana dispensaryHow to open a cannabis Dispensary?

Opening a cannabis dispensary is a dream by many fueled by the green rush in cannabis as more and more states legalize. The THC cannabis business is expected to grow from approximately 20 Billion in 2020 to 80 Billion by 2030 as more and more states legalize. Today, we will focus on opening a cannabis dispensary in the emerging market of Illinois.

In 2019, Illinois became the 11th state to legalize recreational cannabis. It was also the first state to achieve this through legislation. There are currently 55 licensed medical cannabis dispensaries in the state, as medical cannabis has been legal from 2014.

Illinois will issue up to 75 new recreational cannabis retail licenses to applicants by May 2020, with applications made available from October 2019. With the revenue generated by cannabis dispensaries in the billions of dollars and rising, these developments present a very lucrative opportunity. However, opening and running a cannabis dispensary is a challenging business venture.

  • Opening a dispensary requires a lot of considerations, compliance with numerous regulations and a significant amount of capital. If you have what it takes, herein is a comprehensive guide on how to open a dispensary in Illinois.
1. Prepare a Business Plan

You will need a business plan if you seek to open a cannabis dispensary in Illinois. There are several aspects that your business plan should cover. These are explained in detail below:

  • Product/Service Description – This entails how you plan to run the cannabis dispensary and the unique aspects about it. Try to be as specific as possible. Include details of the strains of flower you will dispense and where you will source them.
  • Market Research – This section includes the methods you used to identify your target customers and how this data will affect your marketing, operations and pricing. Always use concrete numbers (ideally verified by a third party) rather than estimates.
  • Competitors – Includes details on other businesses that you will compete with, either directly or indirectly. What are their strengths and weakness, and how do you plan to differentiate your business.
  • Leadership Team – This section includes a summary of your qualifications and those of your management team. You may include business development experience in other sectors, leadership skills or customer service.
  • Financials – This section can be quite daunting. It involves formulating a clear and concise budget. You should include a long-term (say 5 years) financial forecast that includes operational expenses, net profit and projected annual revenue.

A revenue forecast is conducted by estimating how much product you think you will sell production costs, retail price and complementary costs (payroll, rent, transport, etc.). You may also include a break-even analysis, with an estimated timeline until profitability.

  • Illinois-specific Requirements – You may include details of covering your security systems, secure product transport, product tracking, waste plans and other state requirements. Note that these may be included in your application.
  • Investor Proposal – Involves how you will value your shares if you present your plan to investors. Consult with a CPA to ensure you are compliant with state and federal regulations.
2. Obtain a Cannabis Retail License

Obtaining a retail cannabis license in Illinois, or any other state can be incredibly difficult and costly. The Illinois Department of Financial and Professional Regulation (DFPR) is tasked with cannabis licensing in Illinois. There are strict requirements for prospective dispensary owners.

Applicants have to undergo a background check, release full tax returns for past years and disclose any past bankruptcy or defaults on student loans, alimony or child support. You must submit a conditional adult-use dispensing organization license application along with a non-refundable $5,000 application fee. Once you receive a permit, there is a $30,000 permit fee for the first 12 months.

Annual permit renewal costs $30,000. You are also required to prove $50,000 in escrow and demonstrate adequate capitalization. Note that there are other extra fees associated with operating a cannabis dispensary.

These include a $25,000 dispensary registration renewal fee and $50(each) dispensing agent renewal, identification card replacement and registration replacement fee. Illinois cannabis dispensary licensure is based on a 250-point system. Below are some of the ways that the points are scored:

  • Security and record-keeping
  • Business plan, financials, floor plan and operations plan
  • Suitability of human resource training plan
  • Cannabis-related knowledge/experience
  • Diversity plan
  • Employment and Labor practices

It is worth noting that you will spend considerable resources on regulation compliance, and you need to plan ahead for this.

Want to Open a Dispensary

3. Find a Suitable Location for Your Dispensary

The 75 recreational cannabis retail licenses to be issued in Illinois have been divided among the 17 Bureau of Labor Statistics (BLS) regions in the state. This has been done to ensure ideal geographical dispersion of the cannabis dispensaries. What this means is that your dispensary has to be located within the BLS region detailed on your licensure application.

Once your license has been approved, you will only have 6 months (180 days) to select a physical location for your cannabis dispensary storefront. The location has to meet certain requirements. They are detailed below:

  • Has to be suitable for access by the public
  • Must have a layout that facilitates safe dispensation of cannabis
  • Has to be sufficient in size, lighting, power allocation, product handling and storage
  • Must have adequate parking and handicapped-accessible entry and exit spaces.
  • Should not be located within 1,000 feet of another cannabis dispensary, school, residential zone or place of worship.

Given these requirements, developing a complaint dispensary can cost anywhere from $300,000 to 1 million depending on size, layout and complexity. It is also essential to ensure that the owner of the property where your dispensary will be located is okay with the business venture. Some property owners may not support a cannabis-related business due to federal illegality, potential liabilities or pressure from law enforcement.

4. Obtain Your Product

According to Illinois law, a cannabis dispensary is required to provide an assortment of products from different cannabis cultivating establishments. The inventory available for sale at your dispensary from a single cultivator must not exceed 40 % of your total inventory. This ensures that your customers have sufficient variety. It also discourages growers from exclusively stocking their products once they establish dispensaries.

Some states require that dispensaries grow their cannabis. Luckily, this is not the case for Illinois. However, you can set your eyes on establishing a cultivation facility when your dispensary kicks off. It is good practice to source your cannabis in different forms. Different clients will prefer different product such as edibles, concentrates, dabs or oils.

5. Market Your Cannabis Dispensary

Market entails determining what sets your business apart and how you let this be known to the consumer base. However, marketing a cannabis dispensary has its nuances that you must be familiar with. In Illinois, you cannot engage in marketing that is misleading or false, promotes overuse of cannabis, includes images of the leaf or bud or shows actual consumption of the product.

You may also not make medicinal or therapeutic claims about your product or use images that can appeal to minors (cartoons, pets or toys). Also, you cannot advertise your dispensary on radio, television or a public transit vehicle. The best marketing platforms for cannabis dispensaries include websites, social media, mobile apps (Leafly and Weed Maps), magazines and loyalty/referral programs.


With the right motivation and access to necessary resources, this guide can help you successfully start a profitable cannabis dispensary in Illinois. It is important to note that this process takes time even when you have the resources. Given the licensure steps, finding a suitable location and developing your storefront to meet the state requirements, it may take well over a year. The cannabis industry is heavily regulated and getting help from industry, and business experts is recommendable.

Want to Open a Dispensary

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