The cannabis industry has exploded over the recent years, with more and more states legalizing the use of recreational marijuana. Dispensaries are becoming a common sight in these locations as more people jump into the opportunity to sell cannabis to the public. The green rush as it’s known by has developed various types of business opportunities available for entrepreneurs interested in expanding this niche. The industry itself is anticipated to continue rising as more places legalize the usage of cannabis, and some are predicting that by 2025 the industry will be worth hundreds of billions in revenue.
Plenty of entrepreneurs are attempting to start their own dispensary business. With the way the cannabis industry is growing, it is not a real surprise, so many of them are jumping at the chance. However, most of them have never really looked into how much one of these dispensaries makes each year. Fortunately, we are going to attempt to answer this question throughout this article.
Various factors go into owning a dispensary, just like any other business. The amount of stock that needs to be carried, the number of customers who visit on a daily, the average sale amount, and plenty of other things that need to be considered when it comes to being a dispensary owner.
To discover the average dispensary profit margin, we need to dive deep into some data. With Covid-19 playing a factor in the sales, 2020 saw an interest increase in people using cannabis as a way to deal with the amount of stress. The data provided here span several years to show how much the industry has grown and how much dispensary owners will be made annually. Furthermore, the location of the dispensary will also impact the amount of revenue a dispensary owner makes each year.
For this article, we will learn how much dispensary owners make.
How profitable is the cannabis industry?
Even with the amount of regulation and challenges entrepreneurs have to deal with in the cannabis industry, nearly 90% of operating dispensaries, wholesalers cultivations, and Infused product companies have reported that they are immensely profitable.
In 2016, people in the United States managed to spend an estimated $6.7 on legal cannabis and nearly $9 billion during 2017. One in five Americans have begun to use some form of legal cannabis, and the numbers are still climbing to this day.
Over more than a quarter of dispensaries managed to generate annual revenues of over $1 million. An additional 15 percent was then reported for yearly revenues between $500,000 and $1 million. The better-established dispensaries were often receiving thousands and even tens of thousands of loyal customers, tested products, professional packaging, and more employees.
These businesses reported annual sales that reached as high as $10 million, while dispensaries established in remote locations were gaining an estimated yearly amount of $3 million. A fair amount of dispensary owners were even reporting having $500,000 or less in annual revenues, with those in the lower end generating somewhere between $100,000 and $250,000 from the sales.
Cannabis on the rise
The pandemic caused a lot of American lives to be impacted heavily. The stress of the situation led to them looking for alternative ways to relieve stress. During 2020, dispensaries sales increased by 40%, five new states legalized the use of cannabis, and The House of Representatives passed measures to decriminalize marijuana. That said, the cannabis industry is expanding and is expected to grow each year.
With cannabis use being higher than ever before due to people stuck at home because of COVID, there are no signs of it slowing down. Dispensaries were deemed an essential business by the U.S. government during the pandemic, making the cannabis industry pandemic-proof.
Since it is being legalized in many states and widely accepted by most people, it’s no longer taboo or looked down upon as it previously was. In reality, because cannabis use has become commonplace and accepted, plenty of businesses sell trendy CNB and hemp products.
Nationwide sales increased
Studies have attributed a massive 67% increase during 2020 happened due to not only the change in public perception but also due to the pandemic. With everyone stuck at home and the constant fear of the shutdowns, people started to purchase cannabis, with numbers reaching nearly $18 billion.
Data provided from the State of The Cannabis Industry 2020 report shows that the number of total sales changes from 2019 and 2020. When most states began to shut down during the summer of 2020, dispensaries continued to see an increase in average order sizes and hence, increased revenue, even as people started to shop less than before.
Even in the state of Massachusetts, where Gov. Charlie Baker forced a statewide shutdown order temporarily stopped every retail operation in April, Cannabis stores are still seeing a 75% annual sales gain over 2019. Retailers that were selling earned an estimated $700 million in cannabis products by the end of 2020, compared to $400 made during 2019.
What saved the industry?
Due to the growing popularity of online shopping and the need to adapt during hard times, many dispensaries changed their businesses strategy. The introduction of online ordering and curbside pickups were some of the most crucial components that allowed many dispensaries to continue operating.
With the legalization of new states came an influx of new consumers and patients. These patients held a pivotal role during the 2020 cannabis boom. However, the primary driving force was an increase in the average purchase size of established customers, who increased the amount they spend on a monthly average by 33%.
Headset and CannaCraft both released data that analyzed the demographics of monthly cannabis sales in California. The information reveals that Gen Z manages to grow over 127% year over year and has become one of the most significant demographic groups for the cannabis industry.
A trend like this reveals that cannabis is becoming a more integral part of life for the younger generation of consumers. However, COVID-19 could also be playing a role since older generations are more hesitant to go to a cannabis store during a pandemic. As great as technology can be, not everyone has a decent grasp of it, especially the older generation.
Nine states boomed
Statistics reveal that nine states more than doubled their 2019 sales totals in 2020. These states are Arkansas, Connecticut, Florida, Illinois, Maine, New Jersey, North Dakota, Ohio, and Pennsylvania.
Florida managed to become the nation for the-largest cannabis marketing during 2020. With a total of $1.3 billion in sales, the medical marijuana state was topped by adult-use states like Washington, Colorado, and California.
The sales data for this year also shows the importance of state regulation when it comes to having patient access and industry success. New York and Florida both have a roughly comparable population, but their medical marijuana markets have changed in radically different paths.
New York has only licensed a total of 38 dispensaries, which is quite low for a state that contains over 20 million people in its region. In comparison, Florida has 300 dispensaries operating to service a similar amount of people. New York has also never allowed dispensaries to sell cannabis flowers. That is unfortunate since flowers are making up around half of the medical marijuana sales in Florida.
How much are dispensaries making?
A question that can be somewhat difficult to answer due to the nature of the industry and the size of the dispensary. First of all, smaller dispensaries are capable of making the same amount as a sizable business is accumulating. A smaller dispensary will not have its own products or the leverage of a clinic that has its own growing business. However, the small clinic does not have the client base a smaller dispensary has at hand.
Another aspect that needs to be kept in mind is that recreational and medical pot items are licensed at the dispensary or not. The medicinal weed sales have also been sizable enough due to the expected repeat of consumers who regularly need their cannabis, as regular consumers are the primary source of income for any profitable company.
Being a business owner of a dispensary can be challenging and it’s better to use national statistics when discussing dispensary profit margins. There has been enough detailed information on how many dispensaries can achieve from some experts in the field.
An article published by Gary Cohen shows that when working out profitability for dispensaries, several factors need to be taken into consideration. The store opening expenses are one of the most critical aspects, and once money has been borrowed to open the shop, the loan’s payoff balance is drawn directly from the end of the month’s revenue receipts.
Another aspect includes salaries for employees, size of the market, inventory costs, utility costs, and competition. The cannabis industry is going fiercely competitive, and for making weed money, a strong marketing campaign is necessary. Cohen’s report revealed that a dispensary owner with more than five million annual revenue receives around $500,000 annual salary.
That means the daily revenue would be around $13,000 for such a size of a dispensary. For smaller businesses, if they are making an estimated annual revenue of one million dollars, they are going to be making at least $27,000 a day. Weed profits are excellent for even small dispensary shops. Even so, just like any other business, not every dispensary is going to be profitable, but most of them do remain profitable. Ensuring that your dispensary is lucrative requires some preparation, promotion, and dedication.
An article written by Anna Johnson on the website Green Entrepreneur reveals some interesting facts about dispensary ownership. These facts showed some great insight into the money dispensaries are making. The article states that over 52% of Americans have used cannabis at least once, and over 60% have advocated for the legalization of marijuana.
An industry that has 60% of the adult market at its clutches can lead to some profitable possibilities and opportunities. If you were an entrepreneur and managed to set everything upright, you could profit immensely from this excellent market. However, there are still some other aspects we need to take into consideration, such as the market.
The average profit margins for a dispensary in the United States are also mentioned in Johansson’s post. A dispensary can generate an average of $974 annual per square foot of dispensary space, according to the information gathered from the Marijuana Business Daily’s 2016 Factbook.
On average, dispensaries can earn almost the same amount as a Whole Foods store does in a single year. Keep in mind, when compared to other businesses, the average supermarket or department store makes somewhere around $180 per square of department space, according to Johansson.
How can we help you?
As mentioned above, opening a dispensary requires preparation and promotion. Having the right equipment in place can ensure you can become profitable. Our platform is the right tool you need to ensure you remain on top of your business. We can boost your margins and help you get more of your customers with only a single touchpoint for conversion, engagement, and retention. Give our platform a try and see the results for yourself!
Conclusion
When it comes to trying to understand how much a dispensary makes a day, there are several factors you need to consider. However, with the proper strategy and equipment in place, your business can earn a significant profit, whether it be daily, weekly, or annually.
The cannabis industry has been aggressively expanding, and while it is a bit turbulent at times, the industry is still moving forwards with no stop in sight. More and more states are deciding to legalize the usage of recreational marijuana, this trend is sure to continue going forward.
All those factors we mentioned before hold a significant role in making a successful cannabis dispensary. It all comes down to coming up with a strategy and making any changes and modifications to those strategies as your business grows. Of course, the most vital piece of all is to have a healthy base of loyal customers who come to your dispensary for their specific needs.
