How to Open a Dispensary in Montana – 2024 Guide

Required Documentation for a License

The following documents are required for a dispensary license application in Montana:

• Documentation of Montana Residency
• Documentation of Date of Birth
• Consent to Fingerprint
• Documentation of Property Ownership or Property Owner Permission
• Business Organization Chart
• Business Structure Form
• Source of Funding Verification
• Building Inspection Report
• Fire Inspection Report
• City and County Approval

Visit the Montana Department of Revenue website to learn more about each of these documents and relevant forms.

Timelines for Obtaining a License

While the Montana cannabis authorities haven’t specified a period for getting a cannabis dispensary license, on average it takes several months between initial application and final license issuance.

The timelines can vary according to several factors, such as the completeness of the application, the efficiency of the licensing process, and any potential delays in background checks or site inspections.

Please note that new applications for cultivators, dispensaries, and manufacturers will not be accepted until July 1, 2025. Meanwhile, renewal applications for cannabis business licenses are available 75 days before expiration. Applications must be submitted 60 days before expiration to allow for necessary inspection and processing.

Financing and Business Plan for a Dispensary

The crucial step in getting a cannabis dispensary license is to develop a business plan, which will be used to secure the necessary financial resources. A solid business plan is one of the most essential tools in an entrepreneur’s toolkit. In general, your cannabis business plan should include the following:

• The physical location of your dispensary
• Funding plan, or the source of your startup and ongoing capital
• Sourcing plan for procuring cannabis products
• Revenue projections
• Estimate or actual number of employees
• Diversity and equity plans
• Marketing plan
• Safety and security plan
• Technology plan
• The insurance company you will be opting for
• Business organization chart
• Business structure form
• Other relevant information you want to document

A well-crafted business plan is essential for the success of your business. It contains all the necessary information to present to potential investors and lenders, outlining the steps you will take to start and expand your business. Agencies like the Small Business Administration (SBA) can help you find funding sources from private companies or banks if you need help getting it.

Overall, while developing your business plan, ensure that you follow Montana dispensary laws and do not include anything that goes against the rules and regulations.

Types of Financing Available

Securing the right financing is a crucial step in opening a dispensary, and aspiring owners in Montana have several options to consider:

• Self-funding
• Traditional business loans
• Private investors
• Cannabis-specific lenders

Risk Management Plan

A risk management plan is crucial for a dispensary to identify and mitigate potential risks and uncertainties. It assesses regulatory compliance, security vulnerabilities, market competition, and operational risks. It also outlines strategies to minimize these risks, such as contingency plans, insurance coverage, robust security measures, and compliance protocols.

A well-developed risk management plan enhances business resilience and safeguards against potential setbacks or liabilities. Here are some key elements that should be included in a risk management plan for opening a dispensary in Montana:

When working on your business, make sure to purchase specialized cannabis insurance, which can safeguard you against potential financial or reputational losses. By investing in cannabis insurance, you demonstrate a commitment to growing your business and show that you prioritize your customers’ interests.

Location Requirements for a Dispensary

As demonstrated by sales figures from April 2023, Montana is a lucrative state for recreational cannabis. However, before starting your cannabis business, it’s essential to consider several factors, including population demographics, proximity to your target customers, accessibility, and zoning regulations.

Every state has different zoning laws to ensure public safety, and Montana is no exception. Choose a location that falls within a jurisdiction that permits medical and recreational cannabis activities.

It’s important to note that, in Montana, dispensaries cannot be situated in any city, town, or county that prohibits medical marijuana use, nor can they be located within 500 feet of any place of worship, school, or post-secondary institution.

Insurance Requirements for a Dispensary in Montana

Opening a dispensary involves inherent risks, such as theft, property damage, product liability, and employee injury. Insurance policies are necessary to protect your dispensary against these risks and ensure your business can recover financially from unexpected events, legal claims, or operational disruptions.

Types of Policies Recommended

• General Liability Insurance
• Product Liability Insurance
• Property Insurance
• Workers’ Compensation Insurance
• Cyber Liability Insurance
• Directors and Officers Liability Insurance

Some licenses may require entrepreneurs to obtain specific insurance, so remember to stay compliant before initiating the application process.

Costs of Opening and Running a Dispensary in Montana

Opening and running a dispensary in Montana incur various costs, including the following;

License and Permit Fees:

The dispensary license fee is $5,000 per location. If you have more than one location, you’ll pay for them separately. Licenses are granted for one-year periods and must be renewed annually which will cost you $5,000 per year per location.

Additionally, applications require a processing fee of 20% of the license fee. This is non-refundable, regardless of the outcome.

Startup Costs:

Startup costs include real estate, security systems, inventory costs, equipment costs, and up-front renovation costs.

It’s tough to quote the exact startup costs for a cannabis business in Montana, but most sources suggest having between $250,000 and $1 million to open a dispensary. Here are some estimated costs to keep in mind:

*This is just a rough estimate of the upfront and first-year costs of a cannabis dispensary in Montana. Every market, location, and business will have its unique startup costs.

Ongoing Costs:

Ongoing costs for running a dispensary typically include rent or mortgage payments, utilities (estimated at $2,000 to $5,000 per month), inventory replenishment, employee wages (averaging $30,000 to $60,000 per year per employee), marketing and advertising expenses (varies widely), insurance premiums, security system maintenance, compliance and licensing fees, and taxes.

Taxes and Fees:

There are two types of taxes placed on marijuana: state and local. Both taxes are applied only at the retail level during end-user purchases. State taxes are established by the Montana Legislature, while local-option taxes can be enacted at the discretion of individual counties.

The state tax rate is 4% for medical marijuana and 20% for adult-use sales.

Local-option tax rates, which are in addition to state taxes, are determined by counties and can be set up to a maximum of 3% on either medical marijuana, adult-use marijuana, or both.