District Of Cannabis: Got $200,000 To Open A Dispensary?

  • by Allen St. Pierre, Former NORML Executive Director August 21, 2010

    According to an article in the Washington City Paper, it appears that citizens who want to open a medical cannabis center in the nation’s capital will have to possess some reasonably deep pockets, and plenty of patience–while bona fide patients who need cannabis suffer waiting for government bureaucracies through at least January 2011 to figure out how to allow the dispensing of cannabis, while at the same time banning home cultivation.

    Pot Shop 101: How Much to Start Up a D.C. Marijuana Dispensary?

    Posted by Chris Schott,

    Rabbi Jeffrey Kahn and wife Stephanie Kahn have a simple plan for bankrolling their controversial proposed medical-marijuana facility on Blair Road NW. “We plan on financing this from our personal life savings,” he says.

    How much are we talking? Well, that’s a bit, um, hazy at the moment.

    The biggest expense will likely be the price of the herbal remedy itself, according to Stephen DeAngelo, executive director of Harborside Health Center in Oakland, Calif., which both Rabbi Kahn and fellow aspiring dispensary operators with the nonprofit District of Columbia Patients’ Cooperative have toured in preparation for creating their own facilities. DeAngelo tells City Desk, “Out of every dollar we take in, about 62 percent of that goes to paying for the actual medicine. The balance of that goes towards paying our rent, our payroll, our insurance—all the other typical expenses that a business has.”

    While not a single legal pot plant is yet in production in the District, thus making the budgeting process quite difficult for would-be sellers, we can safely assume that all other costs aren’t even the half of it. That said, Mayor Adrian Fenty‘s proposed medical-marijuana regulations at least provide specifics about some of the other start-up costs:

    • The annual fee for a medical marijuana dispensary registration shall be ten thousand dollars ($10,000) + an initial application processing fee of five thousand dollars ($5,000)

    If you plan on growing your own, tack on an additional ten grand:

    • The annual fee for a cultivation center registration shall be five thousand dollars ($5,000) + an initial application processing fee of five thousand dollars ($5,000)

    Next, you’ll need to register all your corporate partners…

    • The annual fee for each director, officer, member, incorporator, or agent registration shall be two hundred dollars ($200)

    And every “bud-tender” on staff:

    • The annual fee for an employee registration shall be seventy five dollars ($75)
    • The annual fee for a Manager’s license shall be one hundred and fifty dollars ($150)

    You may also need a permit for moving the medicine between manufacturing and distributing facilities:

    • The fee for a transport permit shall be twenty-five dollars ($25)

    Not included in the regs: your necessary certificate of occupancy ($33 application fee).

    Then there’s the whole matter of rent. According to real estate analysts Delta Associates, the average retail rent in D.C. (as of the end of 2009) is about $35 per square foot annually. For a modest 1,500-square-foot dispensary, such as the one the Kahns are proposing, that works out to roughly $4,375 each month, or $52,500 for the whole year. (Add on an additional month’s rent for the probable security deposit.)

    Next up, payroll. The proposed regs specify that each dispensary “shall be staffed with at least two persons during its hours of operation,” with those hours of operation being anytime between 7 a.m. to 9 p.m. seven days a week. Let’s say you open on a more limited basis, from 9 a.m. to 7 p.m. A dispensary employing two staffers at all times (minimum wage: $8.25 per hour) would thus run up at least $1,155 in weekly payroll (or, $60,060 annually).

    Then there’s security to think about. The Kahns, for instance, are planning to hire an off-duty cop to monitor the premises, beginning from a half hour before opening until a half hour after closing. A police officer working “reimburseable detail,” as it’s called, runs about $55 an hour—roughly three times the price of your average security guard. Let’s say you go the cheaper route ($18 per hour); that’s $1,386 per week (or, $72,072 annually).

    Already, we’re looking at well over $200,000, without even factoring in the cost of the required video cameras and alarm system, insurance, a good licensing lawyer—and, most importantly, the pot itself. If we accept DeAngelo’s 62-percent figure on the cost of product, then we’re talking around half a million dollars (if my math is correct).

    In its own financial impact statement, the District predicted the average cost of marijuana sold at dispensaries at about $350 per ounce. Therefore, a dispensary would need to sell about 1,429 ounces of herb annually to cover its basic costs.  That’s about 119 ounces per month. Patients, meanwhile, are limited to just two ounces per month, and the District expects to register only 300 patients citywide in the first year. Which means dispensary owners may need to dip into their own inventory to make the math look right.

    46 responses to “District Of Cannabis: Got $200,000 To Open A Dispensary?”

    1. DB says:

      To think all of this could be alleviated if we just allowed people to grow their own. I guess common sense doesn’t exist in D.C.

    2. claygooding says:

      It is an effort to insure that the black market can raise the prices of their marijuana by driving the price of medical marijuana up so much that they don’t force the cartels to drop their prices.
      At least the patients can still buy the generic medical marijuana from the same dealer the have been getting it from.

    3. […] full post on NORML Blog, Marijuana Law Reform Share and […]

    4. Darrell says:

      It’s like the old song;”If you got the money honey,I got the time”.

    5. Z32TEUFELHUNDEN300ZX says:

      By making legal medicinal marijuana unworkable in real world settings, i can only conclude that the lawmakers are 100% against the patients and are catering to the black market/criminal enterprises. Way to fail DC.

    6. Head of the Class says:

      It’s highway robbery! I agree with clagooding in the second comment posted here. I think, the only two ways to put the violent cartels out of business while getting around lawmakers’ efforts to make marijuana (medical, or not) too expensive to grow, distribute, sell and purchase aree:

      1. Keep it on the black market,

      2. For people to play Johnny Apple Seed by scattering pot seeds all over the place so they grow abundantly and return to the wild.

      Most lawmakers take good ideas, use them to write laws that differ slightly, or greatly from what the public majority requested. When they pass and enforce those laws people tend to regret wanting them in the first place. Our society needs to find ways to discourage political office holders from continuing this practice.

    7. rcnvnc says:

      Looks like another method of “keeping out the undesirables”. The will of the citizens be damned! I’m not even curious as to how long it will take Michelle from the DEA to start picking them off for being out of compliance.

    8. somedood says:

      Leave it to the political capital to load it up with tons of red tape. Sounds pointless to make it legal in the first place with those kinda restrictions.

    9. Bradson says:

      Lost in all this overbearing commercial zealotry is the simple fact that this is a non-toxic, non-addictive plant that anyone could easily and abundantly grow in their backyard. These costly restrictions and controls are unnecessary for public safety. It’s all about generating money for officialdom.

      After legalization, this kind of nonsense will fade as the plant becomes abundantly available from a variety of sources and the many imaginary negative consequences of that availability are replaced with the development of the multitude of medical, industrial, nutritional and spiritual benefits that naturally flow from liberated cannabis.

    10. Fat Rick says:

      Why people still support this government is beyond me. It is so obviously there to support the agenda of only a handful. This story is all-too-typical.