Best States to Open a Dispensary in 2023

As future cannabis entrepreneurs, you might have heard about the booming niche statistics. According to the Cannabis Business Times, BDSA states that the global cannabis sales forecast is $57 billion by 2026; specifically, the growth is expected to be about $42 billion in the USA. Moreover, cannabis sales in the States in 2022 have increased by about 7% compared to the previous year. The significant fact is that mainly new businesses in the cannabis markets will be critical sales growth drivers till 2026. So, once you’ve come to the idea of becoming a dispensary owner, you must consider many nuances and also find cannabis investors if needed before starting.

If you’re looking to open a cannabis dispensary, you’ll want to consider a few questions before deciding:

  • Where will be the best state to open up shop?
  • What are the market conditions like in that state?
  • How easy is it to start in the cannabis industry there and become a dispensary owner?

We’ve compiled a list of the best states to open a dispensary in 2023 based on several key metrics. Keep reading for more information!

Metrics To Consider When Selecting a State

Let’s first define the metrics that should be used to choose the relevant state when planning to open a cannabis business. There are several variables to regard in this fast-paced, evolving sector. We’ve chosen several essential factors when opening a business and strongly influencing its development, expansion, and success. Think about all those meaningful points in advance to be in the know what must be noticed to effortlessly find the easiest state to open a dispensary further on.

  • Legal Environment. Is the state’s legal framework conducive to a dispensary business? Does it allow for dispensaries to operate legally and without fear of persecution? Indeed, this is the first and foremost thing to consider. It relates almost to all new cannabis businesses in the niche.
  • Ease of Market Entry. How easy is it to obtain the licenses and permits necessary to open a dispensary in the state? Is there a lengthy, complicated process involved? Are there restrictions on who can apply for a license? It might seem that entry into the market in a state where cannabis is legal will be problem-free. However, there are still numerous issues in cannabis business development that can complicate this process or even make it impossible.
  • Market Entry Costs. What are the startup costs associated with obtaining the licenses and permits necessary to open a dispensary in the state? Are they expensive or affordable? Each state has individual regulations concerning the dispensary license cost that should be considered at the budgeting stage. The cost to open a dispensary starts at around $250 and may go as high as $1 million.
  • Tax Climate. What is the tax climate like in the state for dispensaries? Are taxes high or low? Does the state offer any tax breaks or incentives for businesses in the cannabis industry? The tax climate is essential when choosing a state for your dispensary business and becoming one among the newbie cannabis entrepreneurs.
  • Market Opportunity. What is the potential for growth in the state’s cannabis market? Is the market already saturated, or is there room for new businesses to enter and prosper? Evidently, you’ll want to choose a state with a substantial market opportunity and higher potential sales to start your cannabis business quickly and succeed with it in the future. So, it is essential to consider the price of the product itself. The price ranges from $6 to over $10 per gram.

You will find the collected information on each state to open the cannabis businesses in the following table:

State Application fee $ per ounce Excise tax
Oregon $250 210.75 17%
Colorado $5,000 241.74 15%
Michigan $6,000 290 10%
Alaska $5,000 298 20%
California $6,000 257 15%
Massachusetts $1,500 341 10.75%
Washington $250 232.90 37%
Vermont $2,500 346 14%
Nevada $5,000 270 15%
Maine $10- 250 288 10%
Arizona $5,000 297 16%
New Jersey $400 344 6.625%
New York $5,000 337 9%

Oregon, Colorado, Michigan, Alaska, California, Massachusetts, Washington, Vermont, Nevada, Maine, Arizona, New Jersey, and New York are all great states to consider when starting your weed business as a dispensary owner. Each state offers its unique advantages and opportunities. Let’s proceed to more specific information about the states mentioned earlier to open a dispensary in 2023.

Oregon

Fee: $250

Excise tax: 17%

Price per ounce: $210.75

Price per gram: $6.65

Oregon is one of the best states to open a dispensary. The legal environment is favorable, and there are plenty of opportunities for market entry. Additionally, the tax climate is good, and there is a strong demand for cannabis products.

It is a trailblazer in the field of coffee, microbrews, and, more recently, cannabis. Unlike California, Oregon is a cheap state to start and operate a cannabis company. The application process is less competitive, and there are no residency requirements.

The most remarkable thing about Oregon is that it has the lowest application fee in the US. But remember that you’ll have to pay $4,750 for a license after the application approval. It is much lower than any other state’s dispensary license application fees. While the cost of cannabis in Oregon is among the lowest in the country, it is not subject to an excise tax either.

Considering all the points to start a business here, it is possible to state that this is the cheapest state to open a dispensary. In other words, a favorable business environment helped Oregon appear in first place on our list.

Colorado

Fee: $5,000

Excise tax: 15%

Price per ounce: $241.74

Price per gram: $7.14

Colorado is another great state for dispensaries. The market conditions are excellent, and many resources are available to help you get started. Additionally, the tax climate is favorable, and the demand for cannabis products is relatively high.

The state’s legal framework is conducive to a dispensary business. Colorado was one of the first states to legalize cannabis and had a long history of supporting the industry. Additionally, there are plenty of resources available to help you get started. However, it is essential to consider that Colorado’s price per gram is low, suggesting that the state may suffer from over-saturation and intense competition.

Michigan

Fee: $6,000

Excise tax: 10%

Price per ounce: $290

Michigan is another great state to open a dispensary. The legal environment is favorable, and there are plenty of opportunities for market entry. With nearly 30 million people, North America is the world’s largest consumer market, making it a lucrative opportunity for enterprising businesses. And Michigan is second on our list in terms of population number.

Cannabis was legalized in Michigan in 2018, and the industry has been booming since then. There are currently over 200 dispensaries operating in the state, which is expected to grow.

The market opportunity is good, and Michigan has a meager tax rate on cannabis. It may make it easy to compete with other states with higher taxes.  Moreover, the application fee is even higher than the nation’s average. The best part of Michigan is its profit potential. That’s why it appears in third place.

Alaska

Fee: $5,000

Excise tax: 20%

Price per ounce: $298

Price per gram: $10.82

Being one of the wildest states in the US, Alaska also has a lot of favorable opportunities to start a business. If you’re planning to start a cannabis dispensary in that state, you’ll find it an excellent place to do business. Plenty of resources are available to help you succeed.

Alaska was another of the first states to legalize cannabis. The market is already quite active, but there is still enough space to enter. The average price of their products is significantly above the national average owing to higher tax rates — growers pay $50 an ounce in excise taxes.

On the other hand, Alaska has no income tax or sales tax. In summary, Alaska is one of the best states to open a dispensary, with plenty of market opportunities and favorable tax rates.

California

Fee: $6,000

Excise tax: 15%

Price per ounce: $257

Price per gram: $11.21

This state is not new to cannabis. It has a long history of use and sale for medical and recreational purposes. The state’s legal environment is conducive to a dispensary business, and plenty of resources are available to help you get started.

Moreover, the market opportunity is excellent as California has the largest population in the US. The average price per gram in California is almost $12, but it is subject to an excise tax of 15% an ounce. The application fee is also quite affordable, being the nation’s average.

It is also essential to consider that the demand for cannabis products is relatively high in California. However, the market is already quite saturated, so it may be challenging to compete with other businesses. Create a business strategy in advance to have a better possibility of success.

Massachusetts

Fee: $1,500

Excise tax: 10.75%

Price per ounce: $341

This state has a lot to offer for those interested in the cannabis industry. In 2016, Massachusetts became the first state in the United States to legalize recreational cannabis. In 2018, it opened its first recreational dispensaries. Its most appealing feature for new dispensary owners is its quick approval time, with many applications being approved in less than 90 days. Let’s look at the budgeting prospect to start a cannabusiness in this state.

First of all, it is necessary to mention that being a business person in this state is quite pricey. The license fee will cost you $10,000. It is understandably a significant sum. However, compared to some other states like Illinois and Hawaii, with $200,000 and $100,000, respectively, Massachusetts becomes a much more affordable option. At the same time, it is considered one of the easiest states to open a dispensary in terms of legal regulations.

Washington

Fee: $250

Excise tax: 37%

Price per ounce: $232.90

Washington State was one of the first states to legalize recreational cannabis, and it has had a lot of success in the sector. The Washington state cannabis market generated $1.8 billion in revenue in 2020, up 21% from 2019. The market continues to grow despite the number of already existing companies.

The fee for the entry application here is as low as in Oregon. However, the possibility of entering the market is currently unavailable. It is necessary to keep track of the latest news if you choose this state. At the same time, Washington has the highest excise tax rate nationwide. It doesn’t prevent numerous applicants from waiting for the possibility of opening a business here.

Vermont

Fee: $2,500

Excise tax: 14%

Price per ounce: $346

Price per gram: $11.67

This state is known to be one of the friendliest in the cannabis business. The application fee for a retail license here is only $2,500, but the license fee is relatively high — $20,000. The application fee is much lower than in other states like Ohio, where the fee is $5000. Moreover, Vermont has a meager tax rate on cannabis.

The market opportunity is also quite good as the state has a population of over 600,000 people. It is wise to start a business here, as the absence of taxes will also make it easier to expand and develop. It is also necessary to mention that opening a dispensary in Vermont is relatively straightforward. There are plenty of resources available to help you get started.

Maine

Fee: $10-250

Excise tax: 10%

Price per ounce: $288

Price per gram: $11.24

This state has a lot of potential for the marijuana industry. The market is already quite developed, but there is still room for new businesses. Afterpay when the application is approved ranges from $250 to $2500. The average price per gram in Maine is a little bit higher than that in Alaska. Maine is a state worth considering for those interested in the cannabis industry.

The legal environment is also quite favorable, with a low tax rate. The application fee is also quite affordable, to a maximum of $250. However, if you want to start a dispensary, the price will be much higher. At the same time, conditions here are still much better than in many other states, which makes it worth considering. Who knows, maybe the situation will change in a couple of years, and your business will prosper by that time.

Nevada

Fee: $5,000

Excise tax: 15%

Price per ounce: $270

Price per gram: $11.67

This state is often associated with gambling and tourism. However, it also has a lot to offer those interested in the cannabis industry. The legal environment is quite favorable, with a low tax rate. The application fee is also quite affordable.

Nevada is surely a state worth considering for those interested in the cannabis industry. The market opportunity is quite good as the state has a population of over three million people. Considering a favorable tax policy, it is undoubtedly an excellent place for development.

It is also necessary to mention that the market is already quite saturated. So, it might be pretty challenging to find a niche here. Still, if you are determined enough, Nevada can become a great state for your cannabis business.

Arizona

Fee: $5,000

Excise tax: 16%

Price per ounce: $297

Price per gram: $8,00 – $25,00

The State of Arizona, which just legalized recreational cannabis use in November 2020, has completed a fast turnaround in issuing recreational permits. The cannabis market here is anticipated to grow in popularity and profitability in the years ahead as more cannabis firms begin operations.

It is necessary to mention that the market welcomes new businesses. The reason for it is the state’s large population, with only a few businesses currently operating there. In other words, the demand exceeds the supply.

Growers and processors will additionally profit from Arizona since the state began issuing recreational cultivation permits in April 2021. The state was expected to make $406 million in sales in its first year. Quite a good prospect for any business, right?

New Jersey

Fee: $400

Excise tax: 6.625%

Price per ounce: $344

Price per gram: $12.50

New Jersey is one of the states with a very developed cannabis market. The application fee for a retail license here is $400, and an additional payment of $1,600 is required if the application is approved. However, the market opportunity is perfect as the state has a population of over nine million people.

New Jersey may earn approximately $1 billion in annual cannabis sales by 2024, according to some experts (depending on how quickly New York implements its recreational marijuana laws). With demand expected to outpace supply, the state is an excellent location to start a cannabis company in cultivation or extraction. Small companies can access the necessary services, particularly those with five or fewer employees. Microbusiness dispensary licenses make it possible in New Jersey. It is a perfect opportunity for everyone to compete in the market.

The legal environment for the marijuana business is also quite favorable, with a low tax rate. Considering all the factors, New Jersey is definitely a state worth considering for those interested in the cannabis business industry.

New York

Fee: $5,000

Excise tax: 9%

Price per ounce: $337

Price per gram: $13.00

Regarding the recreational cannabis market, New York is one of the newest states on the scene. They have implemented one of the most advanced approaches to legalization nationwide. The state has a population of over nineteen million people, making it one of the largest potential markets in the country.

The average gram price in New York is slightly higher than in New Jersey. The city has a very favorable legal environment for the cannabis business with a low tax rate. The application cost of a dispensary license is also quite affordable.

Regarding being a newbie among other states, it is worth considering starting a business here and not wasting time. When the market becomes oversaturated, your company might become recognizable and popular among cannabis consumers. That’s why starting your weed brand as early as possible is often a good idea.

In Conclusion

The best states to open a dispensary will likely change as legal marijuana grows in popularity and more states decide to join the movement. While there is no perfect state for opening a Dispensary, some states are more favorable than others. Colorado and California are two of the most well-known states. Still, as marijuana laws continue to change and adapt across the country, it may be wise to check out other less popular states to open a dispensary.

The states listed in the article are just a few that offer a favorable environment for those interested in the cannabis industry and thought about opening a dispensary. When considering which state to start your weed company in, assess all the factors affecting your bottom line. The legal environment, tax climate, market opportunity, and ease of market entry are all crucial factors to consider for future dispensary owners.

Andrew High is an experienced digital marketing expert. He specializes in helping businesses within the marijuana industry market their products and services online. With years of experience in creating marketing strategies for cannabis-related businesses, Andrew has a proven track record of success.