How to Open a Dispensary in Vermont

How to Open a Dispensary in Vermont in 2024

After forming a business entity, anyone interested in opening a marijuana dispensary in Vermont must obtain a license from the state's Cannabis Control Board (CCB). A cannabis dispensary licensee may only operate one location per dispensary license. In a bid to encourage certain deprived communities to partake in the state's cannabis industry, Vermont runs a social equity program under which it waives a particular percentage of application and license fees. Vermont cannabis laws mandate having commercially reasonable insurance to open and operate a retail cannabis store within the state's boundaries.

Why Open a Dispensary in Vermont?

Having legalized both medical and recreational marijuana, Vermont is an ideal place for anyone aspiring to open a cannabis dispensary. Cannabis use among the state residents is consistently among the highest in the United States. The legalization of adult-use cannabis in Vermont resulted in increased demand for marijuana products, opening up new business prospects for entrepreneurs looking to do business in Vermont, including opening marijuana dispensaries.

Before recreational marijuana legalization, the state had a thriving Medical Marijuana Program with over 4,000 active, registered patients in 2022. Also, before the sale of adult-use cannabis started, Vermont's unregulated/illicit recreational marijuana market was estimated and valued at about $318 million in 2022. Now that the state has legalized recreational cannabis, there is a whole lot of consumer demand to meet in the legal market, and opening a cannabis dispensary will be a wise investment. In 2023, legal adult-use cannabis sales are projected to reach $65 million, while state-licensed marijuana retailers are projected to generate at least $237 million by 2026.

Types of Dispensary Licenses in Vermont

• Retailer License - A retailer licensee can sell marijuana products to the general public, per Title 7, Section 907 of the Vermont Statutes. The following are the two tiers of retail license in Vermont:
• Retail Storefront - A standalone retail facility that sells marijuana, including seeds and clones, and cannabis products to consumers
• Retail Nursery - Sells marijuana clones and seeds to home growers and other cannabis licensees
• Integrated License - Per Title 7, Section 909 of the Vermont Statutes, an integrated licensee can, in addition to manufacturing, cultivating, wholesaling, or testing cannabis, sell marijuana products to the general public

How to Get a Vermont Dispensary License

• Understand the rules and regulations that apply to opening a marijuana dispensary in Vermont
• Form a business entity for the proposed marijuana dispensary application
• Complete and submit an application for a dispensary license through the Vermont Cannabis Licensing Portal
• Pay the required application fee
• After submission, the staff at the Vermont Cannabis Control Board (CCB) will review the application
• After the initial review, the applicant is sent to Creative Services Inc. (CSI) for a background check
• After obtaining reports of their background check, the applicant will update their application online and resubmit it for further review by the CCB
• If the reviewing staff finds any missing information, they will send the applicant a request for information (RFI). This is usually done within 30 calendar days of the submission date
• After updating the application with the background check report, a CCB staff will review the updated/new information, usually within 14 calendar days
• The reviewing staff will determine the completeness of the application and submit their recommendation to the Cannabis Control Board for approval or denial
• If the application is approved and applicable fees are already paid, the CCB will issue the applicant a dispensary license

The Cannabis Control Board (CCB) opens the application windows for licenses whenever it is set to accept applications. The application windows for all available Vermont adult-use cannabis license types, including dispensary licenses, are currently open (as of October 2023). State law requires the CCB to provide a notice of at least 30 days if it opts to close any application windows, including the application window for dispensary licenses. Once the state has 7,000 registered medical marijuana patients, the CCB will announce a window to receive applications from interested persons or entities. Vermont currently has five licensed medical cannabis dispensaries.

Information and Documents Required for a Dispensary License in Vermont

• Operating plan
• Background check records
• Business plan, which must include information on financiers
• A list of intended sale cannabis products
• Compliance and management plans
• Information about the proposed dispensary location
• Certificate of good standing for the business
• Documentation of insurance, banking, and taxation requirements
• Any document showing compliance with location and local zoning requirements
• Written consent for information sharing with Vermont state agencies
• Statement attesting to the accuracy and truthfulness contained in the license application
• A plan to adhere to security requirements

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

Besides submitting a business plan for a dispensary license application, having an operating plan and a compliance and management plan is mandatory to open a dispensary in Vermont. Generally, a business plan provides a proposed dispensary with a road map to enable them to achieve their goals and help them succeed. Where the prospective dispensary owner needs funding, a well-prepared business plan can help them secure the required funding. Some of the key elements that should be in a Vermont dispensary's business plan are listed below:

• Target market - A description of the target customer base
• Market need and prospect - This is where the need for establishing the dispensary in the proposed location should be explained
• Brand identity - A description of how the dispensary views itself and should include items such as the business values and long-term vision
• Products - A detailed description of the cannabis products and strains and where they will be sourced
• Organizational structure - A description of the dispensary's core team members, qualifications, and what they will be doing at the dispensary
• Execution plan - This should explain the strategy intended to execute the business plan, which may include the strategy to employ workers who will help achieve the dispensary's goal
• Location - An explanation of the proposed location for the dispensary
• Financial plan - This should include the following:
• Details of investors
• Projected sales/losses
• Dividend sharing policy
• Plans to raise capital for the dispensary operations
• Cash flow projection
• Compliance and security - A description of the security equipment intended to be used and how to ensure compliance with the standard operating procedures in the proposed dispensary location
• Marketing and sales plan - A description of industry competition and how the dispensary intends to market its products to the target market

A Vermont dispensary operating plan should include the following information:

• The proposed dispensary's legal name and any other name (dba- doing business as) under which the dispensary may operate
• A list of individuals having control of the dispensary
• The name of the person who will be the primary point of contact with the Cannabis Control Board
• Federal tax identification number
• The name and/or tier of dispensary license sought

A dispensary's compliance and management plan in Vermont must, at a minimum, include the following:

• Storage and record-keeping plan
• A plan to enroll or adhere to any CCB-mandated third-party systems, for instance, the Inventory Tracking System
• Information about a timeline for starting dispensing operations
• Health and safety plan
• A contingency and continuity plan describing how inventory will be disposed of or dispersed if the dispensary closes unexpectedly
• Commitment to adhere to the applicable municipal ordinances and comply with permits or inspections from local or state agencies

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

Unlike other cannabis establishments, a municipality must opt in to host retail marijuana establishments. Under the state's Statute, a municipality must affirmatively allow the operation of a dispensary or the retail section of an integrated establishment by a majority vote of those present at an annual or special meeting.

Per Title 7, Section 863 of Vermont Statutes, a municipality may hold cannabis establishments to the same ordinances and bylaws that apply to other businesses of similar characters. Hence, no municipality in the state may adopt bylaws or ordinances to prohibit marijuana establishments, including cannabis dispensaries. Similarly, they may not create rules governing the operations of dispensaries on any basis other than their (dispensaries') adherence to zoning bylaws per Title 24, Section 4414 of Vermont Statutes.

While not required, a municipality in Vermont may create a local cannabis control commission to administer local licenses for new cannabis dispensaries. However, they are not authorized to charge local licensing fees. A local license issued to a dispensary in a municipality attests to the dispensary's compliance with ordinances and bylaws. In addition, it shows the dispensary's eligibility to obtain or retain a CCB-issued dispensary license.

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

It may take several months for the CCB to process and approve a Vermont dispensary license application. Elements such as local considerations, application volumes, and regulatory processes are usually the determining factors for how long it takes to get a dispensary license in the state.

Where Can You Locate a Cannabis Dispensary in Vermont?

No state law or rules by the Cannabis Control Board require a particular zoning designation for marijuana establishments, including cannabis dispensaries, in Vermont. However, a municipality may require dispensaries to only operate within a specific zoning designation within their borders. Generally, Vermont law prohibits citing dispensaries within 500 feet of any school. This also applies to the retail portion of integrated marijuana establishments. Cannabis dispensaries cannot operate if the facility is on a property that abuts a school property and if the retail sales of cannabis would occur within 500 feet of the school property. A property is considered abutting a school property if:

• It is adjacent to the school property and is separated by a public highway, river, or stream
• It shares a border with the school property

Here is a list of cannabis dispensaries in Vermont.

Can Licensees Have More Than One Dispensary Location in Vermont?

No, a retail (dispensary) licensee may not operate multiple retail locations in Vermont. There can be only one retail location per dispensary license.

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

The key costs anyone may incur when opening a marijuana dispensary in Vermont include the following:

• Costs of real estate/lease - An average of $80,000 to $100,000 for annual rent and at least $45,000 for renovations. If the prospective dispensary owner chooses to purchase a building to run the dispensary business, they should expect to incur between $300,000 and $700,000, depending on the size of the building. For new construction, they may spend up to $2 million
• Employee costs - Between $150,000 and $250,000 yearly
• Security and surveillance systems - Between $40,000 and $60,000
• Inventory/product costs - This cost is determined by the quantity of cannabis products with which the dispensary intends to start operations. It costs between $1,200 and $1,500 per pound of cannabis by industry standard
• Dispensary equipment cost - This will cost between $10,000 and $20,000
• Professional services - At least $20,000 annually
• Cost of dispensary license - $10,000 for retailers and $100,000 for integrated licensees
• Dispensary marketing - Between $5,000 and $20,000

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

Yes. Vermont mandates marijuana dispensaries to obtain and maintain commercially suitable levels of insurance to protect their investments and the general public. Any dispensary that is unable to get commercially reasonable levels of insurance coverage must place at least $250,000 in escrow for coverage liabilities. Cannabis dispensary insurance comes at a cost, depending on several factors. These include the type of coverage, dispensary location, coverage limits, and the dispensary size. Recommended insurance policies for Vermont-licensed dispensaries include the following:

• Workers' Compensation Insurance - Covers lost wages and medical bills for dispensary employees who get ill on the job or sustain work-related injuries
• Product Liability Insurance - Protects a dispensary from potential financial losses due to lawsuits filed against it by customers who get hurt by using products purchased from the dispensary
• Business Interruption Insurance - If a dispensary shuts temporarily as a result of a covered risk, this policy will cover temporary relocation costs and lost income until the dispensary gets back to full operations
• Commercial Property Insurance - This covers a dispensary's property in the event of damage or loss due to covered risks like vandalism, theft, or fire

How to Get a Grant to Open a Dispensary in Vermont

• Friends and Family - Raising funds from family and closest friends to open a dispensary may come as donations or at little or low interest rates
• Self-funding - This is the easiest way to raise capital to open a dispensary for someone who has enough money saved
• Equity Funding - This involves borrowing to start a dispensary from investors seeking a share of the business. Typically, the investors lend in exchange for a certain percentage of the business
• Cannabis-specific Investors - Getting capital from companies that are committed to investing in marijuana businesses. However, these companies lend at high interest rates, and it is usually for short terms
• Social Equity Investments - Certain persons in Vermont can get funding to open marijuana dispensaries from the state-managed social equity program

Does Vermont Have a Social Equity Program for Cannabis Dispensaries?

Yes. Vermont recognizes the disproportionate impact of government-led policies that promoted the economic oppression of certain people through the CCB's Social Equity Program (SEP). Such persons are known as social equity applicants under the state's marijuana programs. Individuals who meet the following criteria qualify as social equity applicants in Vermont:

• Persons from a community that has been disproportionately impacted by marijuana prohibitions for ages who are able to prove to the CCB that they were affected by the impact
• Individuals who have been convicted of marijuana-related offenses or whose family members have been incarcerated for marijuana-related offenses
• Hispanics and Blacks

Under the state's SEP, previous Vermont residency is not mandatory. However, an applicant must currently reside in the state to be eligible for the program. Generally, social equity dispensary license applicants in Vermont can access grant funding and technical assistance through the Cannabis Development Fund. They usually enjoy some reductions on dispensary license application fees for the first few years, as scheduled below:

• 1st Year - Application and license fee fully waived
• 2nd Year - Licensees only pay 25% of the fee
• 3rd Year - They pay 50% of the fee
• 4th Year - Licensees pay 75% of the required fee
• 5th Year - They make full license payment

Dispensary license applicants who do not qualify for the SEP but are from historically disadvantaged communities may be eligible as economic empowerment applicants. Their businesses must be at least 51% owned by a member of the historically deprived community. Such communities include veterans, Asian Americans/Pacific Islanders, women, Native/indigenous Americans, members of the LGBTGIA+ community, and persons with disabilities.

Does Vermont Tax Marijuana Dispensaries?

Yes. Vermont-licensed marijuana dispensaries, including integrated licensees, are required to collect a 14% excise tax on the retail sale of cannabis and marijuana products from purchasers during taxable transactions. The state also imposes a 6% sales tax on tangible personal property, including cannabis, and there is an additional 1% if there is a local option tax in the municipality where the sale occurs. So, the combined tax rates of the retail sales of marijuana would be 20% of the pre-tax sales price or 21% if there is a local municipal option tax. Dispensaries must correctly remit this tax to the state's Department of Taxes to avoid incurring penalties and interest.