How profitable is a marijuana dispensary in California?

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Tag Archives: cannabis licensing

How profitable is a marijuana dispensary in California?

How profitable is a marijuana dispensary in California?

Cannabis Dispensary License

In order to calculate how much, on average, a medical marijuana dispensary can earn, you would have to look at the financial records. That depends on how many operating dispensaries there are in any particular area, city, or county, in California, and how much each dispensary earns, on average.

How many dispensaries are there in California?

Through June 30, 2016, 1,023 publicly disclosed medical cannabis sellers registered with the Board of Equalization (BOE) filed returns and remitted sales and use tax to the BOE. There certainly were more than that operating without filing taxes or registering themselves.

How much in sales taxes does the BOE collect from medical marijuana businesses?

Through June 30, 2016, $575,021,347 taxable sales of marijuana were reported to the BOE, and $50,507,006 was remitted in sales and use tax.

Calculation of marijuana sales and profit

That means that each marijuana dispensary license brought in an average of $562,093.  Net profit would be lower, including staff salary and product and building or rent costs.

After taxes, the profit to each dispensary would be $512,722.  Still a healthy profit for a retail business of any kind.

Future prospects of Marijuana and Cannabis Product Sales

As there is more competition in the market, more dispensaries should each take in less, if the demand remains the same.  However, there are substantially more retail customers for marijuana than just the previous medical marijuana patients.  That, plus new products, including edibles, means substantial upside on the demand part of the equation.

Cannabis cultivation licenses, laboratory testing licenses, and the CBD/THC infused products/concentrates sectors are particularly lucrative, with 29% of wholesale growers and 27% of infused companies saying that they are “very profitable.

For retail operations, the cannabis dispensary business makes more money than average for retail businesses.  According to the 2016 Marijuana Factbook, a store that sells either medical or recreational cannabis or marijuana of any type earns on average $974 per square foot in revenue, topping Whole Foods, whose 431 stores earn an average of $930 per square foot.

So how profitable is a marijuana dispensary in California? Cannabis sales are expected to skyrocket to nearly $23 billion in 2020, nearly triple from this year, according to ArcView Market Research and New Frontier, a data analytics company that focuses on the industry.

Given that, a tripling of net profits from current amounts could mean that each dispensary in California could be making over one billion dollars per year, making it a very profitable retail business indeed.

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