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How to Write an Effective Dispensary Business

Plan
Business Plan, no doubt, is the defining document you will ever create for your
marijuana dispensary business. There are a lot of enthusiasts out there who want
to get in the action and start their own dispensaries. If you dont know much
about the laws and regulations governing marijuana usage in your state of
residence, it would do you good to check out the official website of the Health
department belonging to your state government. You can ask any of your
questions to their representatives and get all the answers you need. This is the
best way of getting to know the laws and regulations of your particulars state,
especially because marijuana laws keep changing regularly across the country
and its not possible for us to keep up with these laws every now and then. That
said, there are some things that hardly ever change, and drawing a good
business plan is surely one of them. To begin with, to state the importance of
putting in place a great business plan, it would be essential to let you know that
without a good business plan, your dispensary licence will never be accepted.
Importance of a sound dispensary business plan

The very first thing one has to keep in mind while even thinking of starting a
marijuana dispensary business (or any business for that matter!) is the future.
Any successful business person will tell you how important it is to stay a step
ahead of the clock. You need to know the trends in your niche. You need to be
able to forestall future losses or even better, build profits from good speculations
of market trends. Thus, having a good idea of your market, your customers, your
competitors, and your supervisors is the underlying stepping stone to the
success of your dispensary business. And where does one get all this
information? Market research is the only way you can learn about the little
secrets of your market and customer base. To let your investors and official
licensors know that you are serious about this endeavor; you need to put this
knowledge across successfully. You need to be able to drive home the point that
you are not a casual sheep in the herd, but you are a serious businessman and
you can run your marijuana dispensary with responsibility and care while abiding
by all the applicable laws, rules and stipulations set by the state as well as
federal government.
Your marijuana dispensary business, just like any other business, wont find
investors or licensing officials unless you convince them through a good business
plan. As much important it is to know what you need to in order to come up with a

perfect dispensary business plan, its equally important to know where one can
go wrong while drawing up a business plan. That is why we thought that we
should summarize the points for the same.
Mistakes dispensary enthusiasts often make

Hasty models
Many marijuana dispensary enthusiasts draw up business plans without devoting
enough time for ideas or research. This often results into a half cooked plan
which is no good for anyone. Thus, it is a rule of thumbs that weeks, sometimes
months, need to be devoted to carry out research and brainstorm ideas for your
dispensary business plan to be a success.
Lack of understanding of market
Many people who apply for marijuana dispensary licences show very little
understanding of the business and market. Very few of those actually understand
the gravity and sensitivity of this business. Medical marijuana dispensaries need
to be and must be run in highly professional manners, just like any other
pharmacy or even hospitals. This lack of understanding is often visible through
the business plans drawn out by such dilettantes. So, before you even begin to
start writing your marijuana dispensary business plan, take some time to
research the market and also how you touch lives of patients who seek palliative
care through medical marijuana. This is a noble endeavor and should be treated
like one.
Unconvincing use of language
While writing a business plan, the language used has to be persuasive and
confident. Many people dont heed this fact and the resultant business plan,
however sound in technique, ends up reading like an essay. Hence, the use of
language in your business has to be confident, convincing and should reflect the
fact that you have put in lots of hours for market research and business
understanding. Experienced investors or officials can easily tell apart a good plan
from a bad one, so its always good to be on the safer side.

So, in essence, you need to devote time, efforts, energy and even your own
money to carry out solid research before writing a dispensary business plan. This
investment of time and money will definitely not go in vain, as this will come in
extremely handy when you actually begin to run your business.
Nobody can put value on knowledge, and good business plans underline that
sentiment.

What should the structure of my dispensary business plan be?

There is not definitive structure for an ideal business plan. People generally
tweak and turn things around to suit their needs. That said, there is a certain
skeleton model that is normally considered to be of standard. It is supposed to
cover every major aspect of your marijuana dispensary business down the
stream. This standard structure is described here.
Business Plan Structure

Following structure is often followed by the best business plans.


Confidentiality Agreement

1.
2.
3.

Table of Contents
Executive Summary
Business Summary
Start up summary

4.
5.
6.

Products and Services


Market Analysis Summary
Strategy and Execution Summary
Sales Forecast

Milestones
7. Management Summary
8. Financial Plan
Start up funding
Projected profit and loss
9. References
Notes

A brief description of each of these heads is given below.

* Confidentiality Agreement

At the start (and preferably at the close, too) of every business plan, no matter
what the business is, there is a confidentiality agreement located. A
confidentiality agreement is a piece of semi-legal agreement that legally binds
the potential reader of your dispensary business plan not to disclose, reveal,
copy, disperse or use ANY information, business strategies, trade secrets or facts

and figures central to your business idea. This is particularly important as your
business plan is your own intellectual property and there has to be in place
proper protection to pre-empt the use of your property in unpermitted ways.
A typical marijuana dispensary business plan confidentiality agreement main
body reads something like this:
The reader/readers of this business plan agrees/agree not to disclose any information
contained within this business plan, without the proper written consent of
_______________, _______________ and _________________.
The said information is deemed sensitive and important for the mentioned business and
hence this business plan be returned immediately to the undersigned owners of this
business plan.
Signatures
Date
Place

You can of course modify the content of this confidentiality agreement according
to your needs and a proper legal counsel provided by competent attorneys.
1. Table of Contents
The name says it all. A proper table of contents is necessary for easy navigation
through your business plan.
2. Executive Summary
Executive summary of a business plan, often derided by many people as
management-speak, is of importance as a reader gets to take a glimpse of
whats contained insider your marijuana dispensary business plan just by reading
a few points. This means that if you want to pursue your reader to go on and
read the plan right to the last page, you MUST have a great executive summary.
So what exactly should one write under the head executive summary? Well, to
put it very simply, business plan executive summary should contain the essence
of whats to come. The gist of your business idea and structure explained neatly,
in no-uncertain terms and more importantly, in short, should be the nature of
content under executive summary.
3. Business Summary
This is where the actual body of your business plan will start. Business summary
should include the core of your business. This would ideally start
with how and why you wanted to get started with the marijuana dispensary
business idea. This should include an honest, but also an ideal, answer of what
you exactly want to achieve by entering this business field, other than merely
driving profits. Many modern investors look for a little social facet to invest in. For

example, an encouraging association with a promising local charity would


provide for a great business value, not to mention the social service you would
be able to achieve through this tie up. Such little points, that not only increase the
transparency of your business but also help you contribute to much larger goals
in whatever capacity are often overlooked by start-ups and many investors,
especially in this day and age, definitely prefer a start-up thats socially aware
along with making a successful business.
The business summary should have the details about following content (it can
have more points, of course, depending upon your ideas)
The name of the company
Business inception idea
The names of the owners/partners/associates
The proposed location of the headquarters of the business
The proposed locations for the potential branches/expansion themes
The proposed area of operation (important for legal reasons)
The proposed business structure

The sub-header in this section mentions start-up summary. The start up


summary, at its core, is a listing of all the assets, investments, revenue streams
(if any) and debts of your start up business. Most commonly this would include
money you have put up yourself by the date of the submission of the dispensary
business plan.
A typical start up summary table may look like this.

Start up Expenses ($)

Expense stream 1

Expense stream 2

Expense stream 3

Total start up expenses

Start up Assets($)

Asset 1

Asset 2

Asset 3

Total start up assets

TOTAL REQUIREMENTS($)

4. Products and Services

A methodical list of ALL of your products and services is to be provided under the
heading Products and Services. This list should be exhaustive and
comprehensive and should leave no product or service unaccounted for.
The content under Products and Services should contain the following points.
All the products along with unit prices
All the services along with unit prices
Customer centric product variations
Regional product variations (if any)
Membership services (if any)
Membership discounts (if any)
Exclusive services
Miscellaneous

5. Market Analysis Summary

As mentioned countless number of times earlier, a lot of market research should


be at your disposal before you even begin to write your marijuana dispensary
business plan.
Every business plan that puts in significant resources (time, money and efforts)
to carry out extensive market analysis has a head start over many others who
dont. The underlying principle of sales is that you have to be aware who your
customers are. You have to be able to target the section of population that make
up your customer base. Having identified this section of society, you will be able
to better understand their changing needs, changing expectations and feedback.
Thats precisely why, a lot of research would go into writing this particular section
of
your
marijuana
dispensary
business
plan.
In the section Market Analysis Summary, you should be able to answer the
following questions satisfactorily in order to convince the readers
(investors/officials) that you are a responsible and committed business person.
Who is your recurring customer?
Here, you should be able to identify the bulk of your customer base. This group
of customers will ideally be recurring customers with frequent needs for your
products and services. These are the customers you dont want to lose out on
because these customers will contribute the most to your sales in the long run. A
proper demographic analysis that identifies targets and explains the concerned
customer base from the given population is important to decide the further plan of
action for your dispensary business.
Who are your local and off-base competitors?
Another important part of market analysis involves the identification of your
existing as well as potential competitors. As a marijuana dispensary owner, you
can expect to face good competition in your area of operation from the local as
well as off-base (online) competitors. Having identified your competitors, you can
estimate the percentage of market share you are likely to get to yourself. This will
help in taking a closer look at that section of the market thats actually yours for
the taking , instead of wasting resources on the market share thats already been
take up by existing competitors.
What plans do you have in mind for the next five years?
You will have to come up with well thought out plans for expansion and growth of
your dispensary business for the near future, typically for the next five years. This

will determine what path you want to go down as a dispensary owner. The prior
assessments of demographics will certainly influence this answer.
A typical market analysis summary can look like this.

Potential

Year

Year

Year

Year

Year

Growth

Customers

Sa
mpl
e
size

Region 1

Region 2

Region 3

Region 4

Region 5

Total

6. Strategy and Execution Summary


In this part of your dispensary business plan, focus will be shifted on the ideas
again. You need to chalk out detailed analysis of strategies that you might have
in pushing the sales further down the line. This would involve marketing,
promotions; advertising, executing preset strategies to perfection.

The point of this heading is to give the reader an insight into how you are
planning to continually improve the performance of your company by staying up
to date with the changing needs of the market and your niche i.e. medical
marijuana.

There are a number of factors that can be incorporated into strategy and
execution methods. The most important of these will be how you are going to
push your services and products into the target market and how you plan to stay
ahead of the competition. This means a detailed analysis of marketing exercises
and promotional events. The mode of marketing will vary from one businessman
to the other, and so keeping it simple, it will suffice to say that your strategies for
increasing profits through increased sales will all go down in this part of the
business proposal that you plan to write.
There are two major sub headings in this part of the proposal. They are
explained below.
Sales Forecast

With a detailed research of market, competition and target customer base at your
disposal you can draw out good marketing strategies. With good marketing
strategies, you can safely predict future sales in the nearby future (ideally 3-5
years). While forecasting your sales, it is important to keep the moderation of the
numbers. Its generally advisable not to be too easy on yourself, while its
important not to sound too bashful of the future sales. A right balance in
forecasting sales can give you and your readers a fair idea about the money
making potential of your dispensary business.
Milestones

In management of a business, milestones play a huge role. Milestones are


nothing but a measurable, a directly palpable result that can ensure that the
things are moving in the right direction. While operating the business, things
need to be kept simple and short term goals often achieve that effect to a good
degree. Reaching a milestone is a testament to the fact of the normalcy of
operations. Milestones can be both financial and strategic. Milestones can be
monitored easily by setting up a quarterly or bi-quarterly basis for the
assessment. Many businesses often offer added incentives for the managers of
various sections of the business to reach the milestones prior to the deadlines,
without compromising on the quality of the work completed.
For example, in your marijuana dispensary business, you can set up a short term
milestone of two months for achieving a particular sales figure. Milestones often
motivate the employees and favourable results can be achieved through this
medium.
7. Management Summary

The management summary of your business plan will lay out the structure of
your marijuana dispensary business. Choosing the most suitable business
structure is very important and more can be read about it in the previous article
on our blog. You can check it out here.
Management summary will describe at length the hierarchy structure of your
business. This will determine the number of employees you have or need to have
in order to run efficiently and profitably. This will also help you determine if there
are any management lapses that need to be taken care of, in terms of employee
numbers or managerial positions.
8. Financial Plan
All the previous sections of the business plan are ultimately aimed at the
attractiveness of this section. The financial plan of your business will tell the
investors/officials whether you have a solid business or business idea in going
forward. The current stream of revenue and/or assets as well as the current
stream of expenditures or losses will decide if the business is financially
profitable or not.
Start up funding
This will include the initial injection of funds you might have received from other
investors/banks. Often mistaken for capital, this is a recurring stream of
investment, rather than the zero-revenue capital.
Projected profits and losses
This sub heading will carry the numbers for projected profits and losses for the
next few (typically 3) financial years.

It is a general practice to mention the projected profits and losses prior to taxes,
depreciation, amortization and interests.
Thus, in conclusion, it can be clearly observed that a lot goes into the making of
a marijuana dispensary business plan. So, hasty preparations of business plans
must be avoided at all costs in order not to end up with a discouraging business
plan that no investors will be keen to look twice at.
However, if you follow the guidelines mentioned above, your marijuana dispensary
business plan will have a solid foundation and it will be attractive for the investors
as well as officials.

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