How to Open a Dispensary in Connecticut

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How to Open a Dispensary in Connecticut in 2024

Prospective dispensary owners in Connecticut are required to obtain dispensary licenses from the state’s Department of Consumer Protection in order to open marijuana dispensaries. It is also essential that they contact the municipalities where they intend to open their dispensaries to learn about local regulations regarding situating cannabis businesses there. Social equity program is available for certain disadvantaged groups in Connecticut. The program aims to encourage participation in the state’s marijuana industry by people from areas disproportionately affected by the state’s past cannabis prohibition.

Why Open a Dispensary in Connecticut?

As of October 1, 2023, there were 42,814 patients enrolled in the Connecticut Medical Marijuana Program. Sales of adult-use and medical cannabis from January 1, 2023, to August 31, 2023, totaled over $170 million, according to the Connecticut State Department of Consumer Protection. Although the number of registered medical marijuana patients dropped between January 2023 and August 2023, the number of cannabis products sold continued to rise. Sales of adult-use cannabis products sold in Connecticut showed a steady rise from 114,459 in January 2023 to 354,700 in August 2023. Usable cannabis products were the most popular, accounting for 53% of all sales totaling over $90.1 million.

The total monthly sales of medical marijuana products in Connecticut increased from over $8 million in January 2023 to $10.9 million in August 2023. Sales of adult-use cannabis products also rose from about $5.1 million in January 2023 to over $14 million in August 2023. The steady increase in marijuana product demand shows that Connecticut’s cannabis market still has the potential to grow even larger, which is a key reason to consider opening a dispensary in the state.

Types of Dispensary Licenses in Connecticut

The following licenses are available for cannabis dispensaries under the Responsible and Equitable Regulation of Adult-Use Cannabis Act (RERACA):

  • Retailer license: This authorizes the licensee to purchase cannabis from producers or cultivators and sell final cannabis products to adults aged 21 years and older
  • Hybrid retailer license: This license authorizes the sale of medical and adult-use cannabis

How to Get a Connecticut Dispensary License

To obtain a dispensary license in Connecticut, interested individuals must have the following prerequisites:

  • They must have active pharmacist licenses issued by the Department of Consumer Protection and be in good standing
  • For a medical marijuana dispensary license, an individual must be an employee of a Connecticut-licensed medical marijuana dispensary

Any individual who meets these pre-application requirements can then apply for a Connecticut dispensary license through the following steps:

  • Form a business establishment and register with the Connecticut Secretary of State
  • Access the state’s eLicense Website to initiate a dispensary license application. The Applicant should log in using the existing account information attached to their pharmacy license
  • Complete the online application and pay the application and lottery fees to be eligible for the license. Connecticut selects license winners using a lottery system operated by a third-party lottery operator

The State Department of Consumer Protection issues cannabis dispensary licenses in Connecticut. Applications for licenses in the state are usually accepted by the department within a given 90-day period. As of October 2023, the first round of dispensary licensing has been completed. The Department of Consumer Protection will announce when the next round begins. At the end of the first round of licensing in 2022, 12 retailer licenses and 4 hybrid retailer licenses were issued. Half of these licenses were issued to participants in the social equity program.

Information and Documents Required for a Dispensary License in Connecticut

To obtain a dispensary license in Connecticut, an applicant must provide certain documentation and information, including the following:

  • A full list of all owners and backers, including full names, dates of birth, home addresses, social security numbers, and email addresses
  • A list of any other Connecticut cannabis establishments to which they are associated, have applied for, or intend to apply
  • A copy of a valid U.S. government-issued identification
  • Business establishment documents such as articles of incorporation, articles of association, charters, by-laws, partnership agreements, or agreements between any two or more members
  • A current organizational chart showing the ownership of the dispensary, including but not limited to holding companies, subsidiaries, and investors
  • Criminal history
  • Any compensation agreements

Social equity applicants will be required to submit some extra documentation from the social equity checklist. Applicants should note that during the application process, the Connecticut Department of Consumer Protection may request additional information if necessary.

What Plans Do You Need to Open a Dispensary in Connecticut?

One of the most important steps in opening a dispensary in Connecticut is creating a business plan. A dispensary business plan will help identify and prioritize critical aspects of the business and maximize efficiency. It should encompass the following:

  • A funding plan outlining how to source funds to start and operate the dispensary
  • Revenue and profit projections for the dispensary
  • Information about the cannabis market at the proposed dispensary location, including the competition, target customers, and business strategies to succeed
  • Proposed locations for the dispensary. This will include building plans showing property boundaries and dimensions, building floor plans, storage areas, entrances, exits, and other amenities
  • The types of cannabis products to be sold and where they will be sourced from
  • An organization plan showing the number of employees required, their duties, and wages. An organization chart can be submitted to show employee duty, salary, hierarchy, and authority
  • Marketing and advertising plans
  • Technology plans, including point of sale and inventory management software

Are There Municipal Requirements for Opening a Cannabis Dispensary in Connecticut?

Yes. Connecticut allows municipalities to permit or prohibit recreational cannabis dispensaries within their boundaries. For a dispensary to operate, it must receive zoning approval from the municipality. Prospective dispensary owners are advised to contact the municipalities where they intend to locate their facility and find out the local requirements for opening marijuana dispensaries.

How Long Does It Take to Get a Connecticut Dispensary License?

It usually takes about sixty days to process a cannabis dispensary license in Connecticut. Applicants can contact the state’s Department of Consumer Protection about the progress of their application.

Where Can You Locate a Cannabis Dispensary in Connecticut?

Connecticut Statutes make no provisions for location requirements for cannabis dispensaries. The Department for Consumer Protection relies on zoning approval provided by the municipality where a person proposes to locate their dispensary. Municipalities have the authority to put restrictions on the locations of cannabis establishments within their jurisdictions.

Can Licensees Have More Than One Dispensary Location in Connecticut?

Yes. According to Connecticut laws, cannabis licensees can operate in multiple locations within the state’s borders. However, each location will require a separate dispensary license and must comply with any zoning requirements and regulations specific to that location.

How Much Does It Cost to Open a Marijuana Dispensary in Connecticut?

The cost of opening a cannabis dispensary in Connecticut will usually depend on several factors. Listed below are the average costs a person should consider when opening dispensaries in Connecticut:

  • Costs of renting or leasing a retail dispensary space: This can be estimated at between $3,000 and $10,000 per month
  • Property upgrades and renovations: It can take between $50,000 and $300,000 to bring the facility to standards, depending on its size
  • Application fee: This costs $100 for every dispensary license application
  • Licensing fee: The licensing fees for a retailer license are $500 for the lottery, $5,000 for a provisional license after the lottery, and $25,000 for the final license
  • Inventory costs: This will differ depending on the size of the inventory. On average, it costs about $1,500 per pound of cannabis
  • Operational costs: These are the costs required for the daily running of the dispensary and are estimated to be between $120,000 and $150,000 yearly
  • Staff expenses: It is recommended to start with at least 5 staff, including a manager. The average wage for anyone working in a dispensary in Connecticut is about $20/hr. Employee salaries can be estimated at $300,000 yearly, depending on the number of employees
  • Taxes: This will depend on the amount and type of cannabis products sold at the dispensary

On average, the total cost of opening a marijuana dispensary in Connecticut will range from $700,000 to over $1.5 million.

Do You Need an Insurance Policy for a Cannabis Dispensary in Connecticut?

Yes. Cannabis dispensaries in Connecticut are required to have some form of insurance coverage for their businesses. Insurance will protect cannabis dispensaries from unexpected events such as vandalism, thefts, injuries, and fire. Insurance policies recommended for cannabis dispensaries in Connecticut include the following:

  • General liability insurance: This type of policy covers common risks associated with operating a business, including lawsuits, property damages, and injuries to customers on dispensary premises
  • Business interruption insurance: This policy covers a dispensary if it has to be temporarily closed due to reasons such as accidents, damaged goods, or relocation
  • Commercial property insurance: Commercial property insurance helps protect the dispensary building and its contents against physical property damage. It covers tools, furniture, documents, records, computers, and office supplies from events such as floods, fires, theft, and vandalism
  • Product liability insurance: This covers the costs of legal defenses, judgments, or settlements if the products sold cause harm to the dispensary’s customers
  • Workers’ compensation insurance: This will pay workers' expenses and compensation, including medical bills or wages, if they become ill or injured on the job
  • Commercial auto insurance: This policy is required if a dispensary uses vehicles to transport cannabis products or their employees for work-related assignments

How to Get a Grant to Open a Dispensary in Connecticut

The following are means of getting the necessary funds to open a cannabis dispensary in Connecticut:

  • Self-funding: This normally involves funding the dispensary using savings and other personal funds. While it is often advised not to use personal savings to fund a dispensary business because of the industry’s volatility, it remains the best form of funding
  • Loans from family and friends: Prospective dispensary owners can take loans from family or friends to open the dispensary. This may come at little or interest
  • Equity funding: This allows a dispensary owner to exchange some shares in the business for capital to fund the dispensary
  • Home equity loans: This sort of loan involves obtaining funds from a bank or individual using a home as collateral
  • Inventory financing: This form of loan helps cover the cost of the inventory used to run the dispensary. In this case, the inventory itself is used as collateral for the loan
  • Social equity program: Connecticut’s social equity programs provide incentives to dispensary owners from areas disproportionately affected by marijuana policing and prohibition. These incentives may be in the form of grants and discounts
  • Cannabis lending companies: Dispensary owners can borrow from financial institutions that specialize in lending to cannabis businesses
  • Commercial real estate loans: This type of funding specifically helps to acquire the real estate required for a dispensary. This includes floor spaces, warehouses, storage, and land

Does Connecticut Have a Social Equity Program for Cannabis Dispensaries?

Yes, Connecticut has a social equity program for cannabis businesses. The program is run by the Connecticut Social Equity Council. The council was created to ensure the adult-use cannabis program operates equitably. It also aims to ensure funds from the program are returned to communities worst hit by the war on drugs and disproportionately impacted by previous enforcement of cannabis prohibition.

To qualify for the social equity program in Connecticut, applicants must meet the following criteria:

  • They must have at least 65% ownership or control of the business
  • They must have earned an average household income that is less than three times the state median household income for the last three years
  • They must have lived in disproportionately affected areas for at least five of the last ten years. Alternatively, they must have been residents in such areas for at least 9 years before the age of 18

Those who qualify for the program can expect a 50% savings on all dispensary license applications and licensing fees. They will also receive discounts for subsequent license renewals. Social equity applicants were issued 50% of the available licenses in the 2022 cycle.

Does Connecticut Tax Marijuana Dispensaries?

Yes, Connecticut imposes three taxes on the sale of cannabis. These are:

  • A 6.35% sales tax on cannabis products charged by the state
  • A 3% sales tax charged by the municipality where the dispensary is located
  • A tax based on the THC content of the cannabis product valued at 10% to 15% of the sale price of the cannabis product

The total tax on cannabis is expected to total about 20% percent of the product’s retail price and must be remitted to the Connecticut State Department of Revenue Services.

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