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The cannabis industry has seen tremendous growth in recent years. This is because many countries around the world have passed laws to authorize its use. If you’ve been planning to open up a medical marijuana dispensary, then this is the sign that you’ve been waiting for. 

However, running a cannabis dispensary takes more than knowing how to run a business. While the legal landscape seems to be more friendly than before, it isn’t quite smooth sailing yet. More challenges are creeping in from all directions, slowing the growth of the legal cannabis industry

Here are some of the potential obstacles that you should expect when opening a medical marijuana dispensary: 

Marijuana Legal Constraints 

Owning a dispensary comes with hefty regulations, which vary from one country to another. For instance, marijuana is considered illegal at the federal level in the US. This is because the Federal Controlled Substance Act classifies medical cannabis as a Schedule 1 drug. According to this act, medical hemp can only be suggested and not prescribed. This makes hemp usage a huge risk at the recreational level.

And when it comes to medical pot distribution, the law is still cloudy. It’s therefore difficult for dispensary operators to know how to avoid legal risks. In this case, make sure to update yourself on the ever-changing laws. You can also hire an attorney who practices cannabis law to avoid fines and stay out of jail. 

Banking and Financial Issues 

When opening a marijuana dispensary, you should expect banking and financial obstacles. Statistics show that there are less than 500 banks and 200 credit institutions globally working with cannabis businesses. As stated above, cannabis is still illegal at the federal level, limiting your ability to partner with banking institutions. 

Many financial institutions are skeptical about working with cannabis businesses due to legal scrutiny. Some fear being charged with money laundering. This makes it hard for cannabis dispensaries to open bank accounts or even take loans. In this case, you should seek help from legal and financial experts to avoid penalties while staying compliant

High Taxes 

High Taxes 

Legal marijuana businesses pay insane tax rates in most parts of the world. In the US, for example, dispensaries pay taxes on gross income. This means that they are not allowed credits or deductions for business expenses. Consequently, the federal tax rate could go as high as 90 percent.

The main force behind this issue is that most marijuana businesses cannot perform electronic transactions. It’s because financial institutions are skeptical about working with cannabis businesses. This means that they can solely operate and pay tax in cash, something that the IRS is still trying to handle.

Marketing and Advertising Restrictions

It’s almost impossible for dispensary operators to advertise their businesses. Unlike other industries, you cannot buy Facebook ads or any other digital ads out there. 

In addition, you cannot advertise your cannabis business on traditional channels like TV, radio, billboards, and others. Although you can market your brand through word of mouth or networking, it might not cut it. As a result, dispensary operators are only left with banner ads on cannabis publications as the main solution. The business requires more creative advertising strategies to be a success. 

License Expenses

A cannabis licenses are expensive and hard to obtain. While costs vary from state to state, the final amount you’ll pay can take a toll on your pocket. For example, dispensary application fees can cost anywhere from $1.000 to $5,000, generally, while annual and registration fees can climb up to $20,000. The money paid for the license application covers the receipt, assessment, decision making, and notification processes. 

The worst part is that you can manage to raise the fee and still not get the license. Its application comes with lots of requirements, depending on the state, city, and county that you operate in. 

For example, most states in the US require dispensary operators to register their businesses if their trade name is different from the legal name. However, you can overcome this obstacle easily. All you need to do is register your real name with the state by filling the “Doing Business As” (DBA) form. DBAs are also known as “assumed names,” “fictitious names,” “trade names,” or “business names” in various states.


Despite all the strict rules surrounding the pot industry, more brands are emerging every day. As a result, competition has become steeper. Older brands in the market have also started acquiring smaller operators. These industries include but are not limited to the pharmaceuticals, alcohol, and tobacco businesses. They aim to buy small brands and sell pot on a large scale, affecting start-up marijuana dispensaries.

Taking this point further, non-cannabis companies such as Coca-Cola are slowly moving into the hemp business. Although there is still hope for novice dispensaries, such huge brands cannot compete with newcomers in the industry. 

Dispensary Competition

Despite the Challenges, You Can Still Do It

The most important thing to note when starting a cannabis dispensary is that you’ll face lots of obstacles before you finally take your feet off the ground. 

This is why you should have a business plan to help you run a successful operation. You can strategize in many ways, as listed below:

  • Seek legal help from a qualified attorney.
  • Invest in the right technology.
  • Use inventory management, retail control, and customer management systems. There are lots of platforms dedicated specifically to the hemp business. You just need to find the right ones.

The Bottom Line 

Though the cannabis industry is facing various challenges, experts believe that its growth is inevitable. The product is becoming more acceptable in the society, especially for medical uses. As a new operator, you can take your chances in the industry. But first, ensure that you familiarize yourself with all the laws regarding the cannabis industry. Also, keep yourself updated with the ever-changing technology to gain a competitive edge over other businesses.