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Writing a business plan?

If you are ready to establish a successful cannabis dispensary, the first thing you have to do is—keep a sharp eye on your future cash flows and revenue potential.

So for that, you’ll need to create and maintain a solid financial forecast for your cannabis dispensary.

However, preparing accurate financial projections can be confusing and intimidating for someone with no financial background.

Don’t worry, we’ll help you out. This comprehensive guide and sample dispensary financial plan will help you get started.

It can be a strategic roadmap that aligns with all your financial goals and helps you successfully manage your operating expenses.

Sounds good? Let’s dive right in.

Cannabis Dispensary Financial Outlook

Before diving right into financial planning, it’s time to have a look at the specific cannabis dispensary financial outlook.

The detailed assessment of your financial standing will help you clarify your primary objectives, risk tolerance, investment capacity and desired ROI. It serves as the foundation for your financial plan.

Here are a few important facts that you may consider:

  • The global cannabis market value is expected to grow to $444.34 billion by 2030, showing a CAGR of 34.03% during the forecast period.
  • In the USA, the cannabis industry is projected to reach around $40 billion in 2024, and 79% of Americans find access to cannabis dispensaries readily available.
  • Also, there’s a significant change in consumer preferences towards marijuana, with its use for both medical and recreational reasons.
  • Curaleaf, the largest cannabis company, produces cannabis products and manages dispensaries in the United States.
  • The global cannabis sales are expected to increase and reach nearly $148.9 billion by 2031.

So, it’s truly a rewarding market for anyone who wants to start a cannabis dispensary. Now, let’s move ahead and get started on how to create a successful financial plan.

1. Calculate Business Startup Costs

Once you’ve decided to start your own cannabis dispensary business, it’s very crucial to have a clear understanding of your finances. So, you’ll need to calculate the startup costs very first!

You may start by identifying all the initial expenses associated with your dispensary venture. It includes licensing & legal fees, inventory, dispensary build-out, security systems, compliance consulting, and marketing expenses.

You can also research local market conditions and industry benchmarks to evaluate the typical costs of starting a dispensary business. This will help you get accurate estimates.

Try to be clear and comprise every potential cost, no matter how small it is. You can make a specific list of all the expenses, as shown in the below table:

Expense Category Average costs
Dispensary facility build-out $100,000 – $300,000
Inventory(initial product stock) $50,000 – $250,000
Security Systems $20,000 to $50,000
Insurance fees $5,000 to $15,000
Licensing and Legal Fees $50,000 – $100,000
Marketing and Advertising $5,000 to $25,000

So, having a clear understanding of dispensary startup costs will help you create a proper budget and determine the necessary capital to launch your business successfully.

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2. Determine Financing Requirements & Strategy

Sometimes, people don’t have enough money to start their own business. So, they might need to ask for help from others to get the initial investment.

For your marijuana dispensary, you may evaluate your current monetary position and determine how much startup capital you’ll require to fund your business. Also, assess various financing options and develop a clear strategy to secure funding.

Here are a few funding options you may consider:

  • Traditional bank loans
  • Small Business Administration (SBA) loans
  • Private investors or partnerships
  • Crowdfunding
  • Venture Capital (VC) firms

For each option, you have to evaluate the terms, interest rates, and repayment methods. This will let you devise a financing strategy that aligns with your investment goals and risk tolerance.

Then, you can decide which funding option is the most appropriate for your cannabis dispensary.

Furthermore, while seeking credit from banks or investors, you’ll need a professional document that projects how your dispensary’s financial modeling works. It will assist potential lenders to have a better idea of your business.

3. Understand Your Business Model

Developing a scalable business model is a crucial aspect of your dispensary’s financial plan. This is something you have to decide before you start running your business.

It is a strategic framework that defines how you generate income, manage expenses, and reach your financial objectives.

Here is a list of different dispensary models you should consider:

  • Medical dispensaries
  • Recreational dispensaries
  • Vertically integrated operations
  • Delivery services
  • Franchise dispensary
  • Boutique or specialty dispensary

While deciding on any of the above models, you have to understand their financial considerations, regulatory obligations, market demand, product offerings, customer service, etc.

This will help you make well-informed decisions and achieve your financial goals in the long run.

4. Identify Revenue Streams

Identifying your business revenue streams is an essential part of maximizing profitability. So, try to diversify your income sources within the cannabis landscape and create a robust portfolio.

It will help potential investors or lenders determine how much revenue your business intends to generate over the next few years.

For instance, you may include the following revenue streams in your dispensary’s financial projections:

  • Cannabis product sales
  • Online sales
  • Accessories
  • Consulting services
  • Events

Well, using Upmetrics could be a great help here. It will not just calculate financial projections but also help you identify relevant revenue streams.

For better understanding, you may consider the following example prepared using Upmetrics:

Furthermore, it allows you to make informed decisions about your revenue by using different ways to forecast income streams, such as unit sales, the charge per service, recurring/hourly charges, or fixed amounts. 

So, this can be an effective and accurate way of estimating your income potential. 

5. Market Analysis and Pre-Assumptions

A successful business requires a comprehensive market analysis to gain valuable insights into the local business landscape.

While writing a business plan, you’ve already conducted thorough market research and had a better understanding of the target market, customer demographics, industry trends, and competitors.

So, it’s time to use that knowledge to prepare a financial forecast and make realistic assumptions about sales volumes, pricing, market share, and operating expenses.

Here are a few key components that you should include in your plan:

Pricing Strategy

When it comes to devising a pricing strategy, there’s no bound law. Yet, you’ll need to analyze a few factors, such as your offerings, quality, potential customers, brand reputation, and local competition to develop optimal pricing.

You may conduct a competitive market analysis to comprehend the general market prices and set competitive yet profitable sales prices.

Remember, your prices should reflect the value of your cannabis products and still help you generate sufficient returns on your investment.

Sales Forecast

A sales forecast is a primary element of any business, as sales are the very basis for a company’s profit and growth.

It helps you estimate the future sales volume of your cannabis offerings based on market demand, pricing strategy, product availability, or other relevant factors.

You can analyze historical sales data and industry trends to predict future demand for your target market. Also, include your marketing efforts and pricing strategy to forecast the sales number you expect within a specific timeframe.

Business Expenses

Generally, business expenses are operating costs or day-to-day expenses that will keep your business running smoothly.

For your dispensary venture, you may conduct a detailed analysis of your anticipated ongoing expenses, such as facility rent, utilities, payroll, taxes, compliance, marketing, and inventory costs.

In addition to that, you may consider a few factors, like market trends, inflation rates, and industry standards, while estimating your business expenses.

Here, you should note one thing—you must account for probable cost overruns or unexpected expenses during business operations. So, be conservative in your financial projections.

6. Make Financial Projections

If you want to attract investors, let the numbers do the talking. This is so because potential investors or stakeholders will look at the financial reports once and decide whether or not to invest in your business.

So, ensure that your key reports give a clear picture of the financial health and viability of your cannabis dispensary business.

Here’s a list of several financial statements and analyzes you should incorporate into your projections:

Cash flow statement

A cash flow statement helps you track the cash flow in and out of your business over a specific timeframe, generally monthly, quarterly, or annually.

It provides a detailed explanation of how much cash your dispensary brings in, pays out, and ends with the cash balance. Typically, it’s an illustration of how well your business is generating cash.

You may take into account the cash flows related to sales, payroll, inventory purchases, loan repayments, borrowing, or equity investments.

Be realistic about your financial assumptions and measure your business’s liquidity, capability to meet financial obligations, and sufficiency of cash flow to fund future investments and expense outlays.

Balance sheet

A balance sheet provides a quick overview of your business’s financial position at a specific time.

It clearly demonstrates what you own, what you owe to suppliers or other debtors, and what’s left over for you. After all, it has three main elements:

  • Assets: Cash, dispensary equipment, and accounts receivable
  • Liabilities: Debts, loan repayments, and accounts payable
  • Equity: Owners’ equity & other investments, stock proceeds, and retained earnings

Ideally, it is formulated as, assets = liabilities + equity

By looking at your balance sheet, anyone can get the exact idea of how financially stable your business is, how much cash you hold, and where your money is tied up.

Income statement

The income statement is also known as a profit and loss statement(P&L), explaining how your business made a profit or incurred a loss over a specific period, typically monthly, quarterly, or annually.

Depending on the structure and type of your business, consider adding these factors—revenue or sales, operating expenses, and gross margin to your profit and loss statement.

You may calculate the gross margin by subtracting the cost of sales or COGS from revenue. It enables you to determine your business’s efficiency in utilizing resources.

Further, the P&L statement should also include operating income, which is equivalent to EBITDA. And the net income is the ultimate goal of any business, found at the end by deducting the operational expenses from EBITDA.

Overall, the income statement helps you gauge your business’s profitability, financial performance, and feasibility in the long run.

Break-even Analysis

The break-even analysis allows you to determine the point at which your business’s total revenue matches its total expenses, causing no profit or loss.

It helps you evaluate the level of sales or revenue needed to cover your cannabis dispensary’s fixed and variable costs.

This analysis provides valuable insights into your financial sustainability and helps you set sales targets, pricing strategies, and cost-control criteria.

7. Test Assumptions and Scenario Analysis

As your entire plan is prepared based on assumptions, you’ll need to regularly review and stress-test your financial projections to check their relevance with market realities and business performance.

In this stage, you may consider various “what-if” situations and think about scenarios where things go well or don’t.

For instance, you’ll need to consider the changes in pricing, sales volumes, or regulatory requirements to measure the stability of your real estate financial plan.

By performing test assumptions and sensitivity analysis, you can adjust your strategies accordingly to mitigate risks, optimize returns, and make well-informed business decisions.

8. Monitor and Update Your Plan

Once your plan is ready, continuously evaluate and monitor your marijuana dispensary’s financial performance closely against your financial projections and key performance indicators(KPIs).

You can compare the actual financial results with the projected income streams, expenses, and ROI to take note of any variances or deviations from the plan.

If some factors are remarkably different from projections, recognize the causes behind them. This will help you understand which areas need improvement and which works as anticipated.

Also, review and update your strategies accordingly to optimize financial results and achieve long-term success.

Now that you know how to create a solid dispensary financial plan, it’s time to explore an example for easy understanding.

Dispensary Financial Plan Example

Creating a dispensary financial plan from scratch can be a daunting task, right? But not to worry; we’re here to help you with a realistic financial plan example prepared using Upmetrics.

It includes all the key elements of cannabis dispensary’s financial projection, including the sales forecast, income statement, balance sheet, cash flow statement, and break-even point, streamlining your planning process and helping you get started.

Start Preparing Your Dispensary Financial Plan

And that’s a wrap—we’ve discussed all the fundamental aspects of financial planning. So, it’s time to put that knowledge into action.

But if you still feel swamped by the thought of creating a financial plan, don’t worry. We’ve got you covered.

Our robust financial planning tool can be your savior here, making your process a breeze. You’ll have to simply enter the projected assumptions and let us figure out the rest.

So, what are you waiting for? It’s time to start planning for your cannabis dispensary venture!

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About the Author

Upmetrics                                                       
            Team

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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