Marijuana has become accessible for the majority of citizens for medicinal purposes, as well as for recreational use in several states in Nation. The increased demand for marijuana products has led many bold entrepreneurs to invest in this profitable industry by opening their own dispensaries.

This is not an easy industry to navigate. There are many laws, taxes, and other issues that threaten to destroy a dispensaries business efforts. Your geographic location will determine which type of dispensary you are legally allowed to start up.

If you are in a state that allows for medical and recreational marijuana, you will need to evaluate the differences between medical marijuana vs recreational dispensary sales. These differences may affect the unique goals of your business. The following informational guide will allow for potential business owners to make an informed decisions. We will explore the laws and licenses required for each type of sale and what you need to do to get started.

Medical Marijuana vs Recreational Marijuana

Difference Between Starting a Medical Dispensary vs Recreational Dispensary

Marijuana has been used for centuries to help alleviate the burden caused by chronic conditions and illnesses. It was not until 1996 that cannabis use became legal for qualified patients in California. There are now 36 states that allow patients to become certified to purchase medicinal marijuana products.

Qualifying conditions vary but typically include:

  •       Cancers
  •       Chronic Pain
  •       Epilepsy
  •       Alzheimer’s
  •       Glaucoma
  •       HIV
  •       PTSD
  •       Severe Anxiety

Both types of marijuana users purchase the same cannabis products. Recreational sales are often made for medicinal reasons as well when a customer neglects to maintain their certification status.

CBD and THC are the two compounds that have been shown to be the most effective in marijuana. Both recreational and medical consumers develop a preference for the varying amounts of each compound that can be found in different products.

Products will equal amounts of THC and CBD have been shown to be the most effective for managing one’s health ailments. Some patients do not enjoy the euphoria that results from THC and opt for products containing only CBD.

Acquire Legal and Financial Assistance

Should I get a financial advisor for a dispensary business

The first thing that an individual who is interested in starting any marijuana-related business venture must do is contact a lawyer. Marijuana is still an illegal substance on a federal level, meaning that you must ensure that all laws are followed regarding your business sales, manufacturing, transport, etc.

You should also contact a financial advisor or accountant to help ensure that laws are followed, and sales are legitimately recorded. Record keeping is critical because many banks will not serve those in the marijuana industry. The IRS is aware of this issue and dispensaries should always be prepared for an audit.

Seek the aid of an attorney and accountant who are experienced and specialize in marijuana businesses. This is important because of the unique and industry-specific laws and financial challenges that dispensaries face.


best state for a marijuana dispensary

Which type of marijuana you can sell is legally determined by which state you choose to open a business. There are now several states that allow for the sale of both medical and recreational marijuana, including:

  •       Maine
  •       Massachusetts
  •       Nevada
  •       Michigan
  •       California
  •       Alaska
  •       Oregon
  •       Colorado
  •       Washington
  •       Illinois
  •       New Jersey
  •       Vermont
  •       Arizona

Medical marijuana programs now exist in 36 out of 50 states, providing patients with relief from chronic pain, illnesses, and/or injuries.


costs associated with opening a dispensary

Taxes are excessive for both marijuana businesses and consumers in the majority of locations. There are exceptions. For example, in Delaware, there is no sales tax, and they do not charge medical marijuana patients additional fees for their purchase.

Overall medical marijuana is cheaper to purchase and is taxed at a lesser rate than recreational sales.

Although both medical and recreational are allowed in several states, the tax laws do differ depending on which type of cannabis sale is made. This is different in each state. Some states do not charge a sales tax on medical marijuana but do charge a special fee, called an excise tax, on purchases.

Some states, including Connecticut, charge medical purchases with a sales tax of 6.35%, but no additional fees.

In California, medical patients are spared the state sales tax but are still subject to the state’s 15% excise tax.

Recreational marijuana purchases often suffer from excessive taxing, including the cost of the sale, the state sales tax, and the special excise fee. In California, recreational sales are subjected to local and state tax regulations. This means that customers experience a minimum 23% tax rate on their purchases. This could range up to nearly 40% depending on a business’s specific location in the state.

As you can see this is a very complicated ordeal with a vast range of legal stipulations. This is why it is critical that you seek a qualified and experienced cannabis lawyer and accountant.

Develop a Plan

Business plan for a dispensary

You must develop a thorough business plan if you are serious about opening either type of dispensary. The marijuana industry has excessive startup costs that must be accounted for, including the expense of licensing, leasing, products, transportation, employees, etc. Many businesses are not prepared for these fees and die very shortly after opening, resulting in major financial losses.

Paybotic Payment Solutions

Difference Between Starting a Medical Dispensary vs Recreational Dispensary

Cannabis dispensaries must be prepared for the numerous barriers that exist in the industry. One of the major barriers that dispensaries experience is the lack of available financial solutions. If you opening a dispensary, or have an established business, you need to offer customers payments options that fit their lifestyles.

Dispensaries choose Paybotic for their financial solutions that were specifically developed for the marijuana industry. Reach out today for more information about payment solutions that meet the need of your business ventures.


Post date: 10/6/2021
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