The 3 Toughest States To Start A Cannabis Business

Starting a cannabis business varies greatly from state to state. More than half of Americans have access to legal cannabis in some form, but state-by-state legalization means that starting a cannabis business in Oregon isn’t the same as in Massachusetts.

Today legislation, fees, and delays make it a challenge for businesses to succeed, but don’t mistake tough regulations for a lack of opportunity. High fees and strict licensing requirements mean less competition.

Here’s what you need to know about the toughest states to start a cannabis business.

You Cannot Start A Cannabis Business In Most Places

There are many states where you cannot start a cannabis business in the first place.

For example, you cannot even buy medical marijuana in Idaho, Nebraska, Kansas, South Dakota, Tennessee, and Virginia, to name a few.

In others, the market is too regulated or small for businesses to succeed.

Medical CBD is legal in Mississippi, but you can only buy it from one of two government-run operations. Other states (Wisconsin and North Carolina, for example) have strict guidelines on who and how you can gain access to cannabis. Vermont and Maine have legalized recreational use cannabis, but do not have systems for cannabis retail set in place yet.

The following three states pose unique challenges to those looking to enter the cannabis market, and I’ll outline what makes each one so difficult.

Massachusetts: Local Bans and Delays

With Massachusetts legalization in 2018, the Bay State became the first east coast state to legalize recreational marijuana sales. But that legalization was only the first hurdle.

For starters, would-be entrepreneurs are very limited in where they can open a business in Massachusetts. Like California, Massachusetts allows local governments to decide whether or not they will allow cannabis retail. From a cannabis business’ perspective, this means either not being able to conduct business or navigating both state and local laws.

Right now, 80 counties and towns have banned the sale of recreational cannabis and 110 have prohibitively strict regulations. That leaves about half the state open to cannabis sales.

Additionally, there have been significant Massachusetts licensing delays. Though Massachusetts voted in favor of legalization in 2016, it took until late June and early July 2018 for the Massachusetts Cannabis Control Commission to issue the first production and dispensary licenses.

For small businesses, this has made it difficult to compete. The longer a state delays licensing and the first day of sales, the more rent businesses have to pay in one of the country’s most competitive real estate markets without making a single sale.

Additionally, licensing fees are expensive. A cultivator’s annual fees range from under $2,000 for the smallest available application to $25,000 for largest businesses.

Cannabis dispensaries pay $1,500 per application and $30,000 to submit their Management and Operations Profile.

This doesn’t mean that Massachusetts isn’t a blossoming marijuana market, the Massachusetts marijuana market is valued at $1.8 billion, but it does limit who can participate.

Ohio: Some Of The Highest Fees In The Country

Ohio legalized medical marijuana in 2016 and planned for fully operational dispensaries in September of 2018. But by February of 2019, only four of the state’s 56 licensed dispensaries were open for business.

Obtaining a license is also highly competitive. Out of 650 dispensary licensing applications, only 56 were chosen. The first Ohio medical marijuana dispensary license was issued in December of 2018.

And all these applicants had to pay some of the highest fees in the country. To submit an application, cannabis businesses in Ohio must pay a non-refundable $20,000 application fee.

On top of that, large grower applications that are accepted must pay a first time fee of $180,000, plus an annual licensing renewal fee is $200,000. For smaller cannabis businesses, annual fees are $20,000.

Dispensaries fees are also steep. If your dispensary application is accepted in Ohio, you have to pay $70,000 per year to maintain it, according to the Ohio Medical Marijuana program.

Not only was licensing postponed, but Ohio’s medical marijuana patient registry was delayed, too. It wasn’t until early December 2018 that patients could begin registering with the government. This means that the state’s medical marijuana market is new and small.