Paradise Valley, MT. Looks like a great place for a dispensary to us!
Before we get started with our guide on how to open a dispensary in Montana, let’s take a look at the viability and opportunities of the cannabis market in the state. No point in opening a store in Montana if it’s too hard or won’t make you any money, right?
Good news: cannabis is legal in Montana, it’s relatively easy to start a dispensary there, and the market has lots of potential. So let’s dive in.
Dispensary Laws in Montana
Medical marijuana has been legal in Montana since a successful ballot initiative in 2004, though on a restrictive basis until around 2016-7, when further ballot initiatives and bills were passed that opened up the market. MMJ currently carries a 2% sales tax.
Recreational marijuana was legalized by a ballot initiative in November 2020. It allows consumers over age 21 to possess up to 1 ounce of usable marijuana with no more than 8 grams in concentrate form, and to purchase up to 5 oz of usable marijuana per month. The state tax for recreational sales will be 20%.
The exact regulations for the recreational marijuana program still need to be established. The state needs to develop these regulations by October 1, 2021, and begin accepting applications for recreational dispensaries from existing medical marijuana providers in good standing on the same day and approve these applications within 30 days. Only existing medical marijuana businesses will be allowed to apply for recreational licenses through the first 12 months of the program.
Under the current rules, to operate a dispensary in Montana, you need at least three licenses: a canopy license, a cultivation location license, and a dispensary license. Montana requires medical marijuana dispensaries to cultivate all of their own products. You will also need a separate manufacturing license if you want to produce marijuana concentrates.
Canopy license tiers are as follows:
|Tier||Canopy||Minimum Cultivation Space||No. of Registered Premises||Fee|
|Micro Tier||250 square feet||–||1||$500|
|Tier 1||1,000 square feet||500 square feet||1||$1,000|
|Tier 2||2,500 square feet||1,100 square feet||2||$2,500|
|Tier 3||5,000 square feet||2,600 square feet||3||$5,000|
|Tier 4||7,500 square feet||5,100 square feet||4||$7,500|
|Tier 5||10,000 square feet||7,750 square feet||5||$10,000|
|Tier 6||13,000 square feet||10,250 square feet||5||$13,000|
|Tier 7||15,000 square feet||13,250 square feet||5||$15,000|
|Tier 8||17,500 square feet||15,250 square feet||5||$17,500|
|Tier 9||20,000 square feet||17,775 square feet||6||$20,000|
The separate cultivation location license will cost you $500 per location.
MMJ dispensary license fees are as follows:
Recreational cannabis dispensaries will be allowed to sell cannabis products cultivated by other businesses, though these products may still only account for 50% of total annual sales. Recreational licensing tiers will be identical to medical marijuana tiers for tiers one through nine, though it will also add one additional tier (tier 10) that allows a canopy of up to 30,000 square feet at 7 registered premises.
Recreational cannabis companies will be allowed to outsource manufacturing to a contractor as long as the manufacturing company has at least a tier 1 canopy license.
Finally, medical marijuana licenses cannot be sold, though you can sell your MMJ business. Recreational owners will be able to sell both their licenses and businesses.
The Cannabis Market in Montana
With a population of 1 million people (out of which 70% are above 21) to cater to, Montana presents a rather lucrative option for opening a weed dispensary.
Sales of medical marijuana in Montana in 2019 were estimated to be between $66 million and $80 million by the Marijuana Business Daily. The same publication estimated that the MMJ market would expand to $155 million by 2024 without factoring in recreational legalization.
A fiscal analysis of the recreational cannabis ballot initiative by the state budget office, based on data from other states and Montana’s adult population, estimated that recreational cannabis would bring in about $90 million in the first full year of sales (2023, with 2022 being incomplete due to incomplete data from the other states in the analysis).
A more optimistic University of Montana study, meanwhile, projected that recreational sales would bring in $217.2 million in the first year and $234 million by 2024.
As of October 2020, there were 368 total dispensaries in the state, compared to just 50 in early 2017.
Your competitors in the space will include:
- Bloom Montana
- Paradise Organics
- Glacier Green Cross
- High Altitude Gardens
- Lil Amsterdam USA
- Beaverhead Blue Ribbon Botanicals and more.
How to Open a Dispensary in Montana
Now, let’s move on to how you can establish your weed dispensary in Montana.
Step 1: Establishing Your Business
Just like any other business you have to start by registering as an official business entity.
The Montana Small Business Development Center has a helpful guide on how to get set up as a legal business in the state. Steps include:
- Selecting a name, company structure, and registering with the state
- Applying for licenses with your local city and/or county, as needed
- Obtaining an Employer Identification Number (EIN) from the IRS
- Registering your trademarks and patents
If you don’t have any experience in starting or running a cannabis business, you should bring in someone that does know what they’re doing at this early stage so you get off on the right foot.
Search for experienced cannabis entrepreneurs, consultants, and employees. Look on Google, LinkedIn, Leafwire, Indeed, etc. or ask around. The Montana Cannabis Industry Association might be able to help you find people and make connections as well.
Step 2: Planning
Unlike some other states, Montana doesn’t really require you to put together a comprehensive business or operations plan as part as the application process. Still, it’s a good idea to do so, and having one will help you get the funding you need in step #3 and beyond.
Your business plan should include:
- Your business’s vision and mission
- Financial plan
- Product plan (including quality control and assurance)
- Operational plans (hours, job descriptions, # of employees, etc.)
- Security plan
- Compliance plan
- Marketing plan
Montana does require you to put together formal plans for 1) producing your marijuana and 2) protecting your products and your business before you start operating, so you might as well put those together at this point as well.
Step 3: Get Funding
Due to federal laws it can be difficult to get funding via traditional avenues like banks and mainstream investment firms. You can try your luck with investment firms that specialize in funding cannabis startups, or by asking family and friends.
The fact that you have to grow, process, package, and stock 50-100% of the products you sell at your dispensary will add to your upfront costs. You’ll have to get an entire seed-to-sale, vertically-integrated operation up and going from scratch.
At the same time, the Montana market isn’t dominated by big companies like other state markets are. Plus, the application process is pretty inexpensive and simple, and regulations aren’t as strict as in other states. So don’t get discourage if you don’t have huge cash reserves at the start, because you might not need it.
Step 4: Find a Home
Before you get a license you need to rent or buy a storefront, which needs to be approved by city authorities (and your landlord, if you have one).
The state of Montana dictates that these premises can’t be within 500 feet of any:
- Church, synagogue, mosque, or other place of worship
- School or postsecondary school, other than commercially operated schools
The state will inspect the property before approving your license.
Beyond that, just use your common sense when deciding where to locate your dispensary. Look for areas with the highest number of register medical marijuana patients and the least amount of existing dispensaries.
Step 5: Get a License or Two
Getting a dispensary license in Montana is pretty easy, at least compared to the process in more heavily regulated states. To get one you just have to:
- Submit fingerprints and a completed background check
- Provide proof of at least 3 years of state residency (example: 3 years of tax returns)
- If you’re renting your property, you need to provide proof of your landlord’s approval
- Register and submit a canopy application here
Once your Provider application is approved, you can then:
- Apply for a separate cultivation and dispensary licenses in the same portal
- Complete METRC Level 1 Training
All of your employees will need individual licenses as well.
Step 6: Setting Everything Up
Now that you’re street legal, it’s time to get set up. This is a little trickier for dispensaries in Montana since you have to get an entire seed-to-sale pipeline in place from the start. It may be at least a couple months before you’re ready to sell anything to the public.
If you’re new to the game, you’ll want to get help to set up your growing and processing operations to start with. Find someone experienced in cultivation, either a consultant or full-time employee.
Look for construction companies and interior designers to help with your store’s look and feel.
Step 7: Launch
Once ready, open your dispensary’s doors to customers!
Remember, Montana prohibits marketing marijuana products under the Montana Code 2019, Part 3, Section 50-46-341. You can have a website but no prices or active solicitation is permitted.
How GeekTek Can Help
Your friends at GeekTek, an IT company with extensive experience in the cannabis industry and a proud NCIA and CCIA member, can help you with setting up your cultivation, processing, and retail operations. We can design, install, and manage all your tech for you, including POS stations, surveillance systems, seed-to-sale tracking systems, label and packaging systems, and back office networks.
Reach out to us at any time for help with setting up your tech at your Montana cannabis dispensary.