NEW YORK (MainStreet) Dreaming of making millions of dollars by getting in on the ground floor of the marijuana movement? Securing a dispensary license would be the first step.
"People are calling to check us out and walking in to ask how they can work with us in launching their own dispensary," said Linda Andrews, owner of a medical and recreational dispensary in Denver. "There was a man here today from Norway doing his research."
Because federal laws prevent Andrews from forming partnerships with curious, out of state residents, she tells them to focus on getting a license in their home state or country.
"If you're from a state where marijuana is not yet legal, position yourself now so that you get in on the ground floor when it does become legal," Andrews told MainStreet.
Having launched one of the first medical dispensaries in 2009 called Lodo Wellness Center, Andrews is an expert on the process of launching a dispensary and advises interested parties to expect a lot of red tape and to be patient.
"It's like applying for a liquor license," Andrews said. "You can't have issues with the IRS or a criminal history. There's a background check, lots of paperwork and it's time consuming."
Despite the challenges inherent in launching a dispensary business, Andrews has no regrets.
"I had no idea it would be this big," she said. "Pretty soon marijuana dispensaries will be like having a liquor store on every corner. We've had a ten fold increase in business in that last 15 days on the recreational side of sales. The downside is operating a business that the federal government doesn't approve of."
Medical dispensaries pay 7.12% in city and sales tax and recreational dispensary businesses pay a 21% tax plus a 15% excise tax in Colorado.
"We pay a very high tax rate and we were audited by the IRS," Andrews said. "The government takes a lot of money from us."
The legalization of marijuana has followed a similar trajectory as the Gold Rush of 1849, which started in California and continued to Colorado in 1859. It produced a temporary but dramatic influx of immigrants into the Pike's Peak Country of the Southern Rocky Mountains. The difference with the legalization of marijuana in Colorado is that only state residents are permitted to hold dispensary licenses while panning for gold was largely a free for all.
"Right now recreational licenses are only being offered to those that already have a medical dispensary license but when the state opens it up to the public, there will be an opportunity to get in for most Colorado residents," said Darrin C. Duber-Smith, marketing professor with Metropolitan State University of Denver.
However, the state of Colorado is expected to limit the number of dispensary licenses issued.
Marijuana dispensary laws are different from state to state.
"The dispensation of cannabis is merely decriminalized in California as opposed to being licensed and regulated like in Colorado or Washington," said Jason Thompson, attorney with GFarmaLabs, which aims to be a wholesaler and distributor to dispensaries, processors and producers. "But in Washington, the licensing requirements applicable to recreational dispensaries have yet to be finalized."
--Written by Juliette Fairley for MainStreet