How to Open a Dispensary in North Dakota

How to Open a Dispensary in North Dakota in 2024

To open a dispensary in North Dakota, start by registering a business entity in the state and then apply for a dispensary license when the application window opens. A prospective dispensary owner must also secure a suitable location for the proposed dispensary and create a business plan. A panel set up by the North Dakota Department of Health reviews and selects successful applications through a merit system.

Why Open a Dispensary in North Dakota?

North Dakota’s medical marijuana industry has been experiencing steady growth since the legal sales of marijuana products to registered patients began in 2019. As of June 2023, 9,596 qualifying patients are registered in the state’s medical marijuana program. Opening a medical cannabis dispensary (compassion center) in the state will help fill the market gap required to cater to these patients and meet the increasing demand for medical marijuana products. A 2023 Medical Marijuana Program Annual Report published by the state revealed that the overall medical marijuana sales in the fiscal year 2023 totaled $21.6 million. This marks a 41% increase from the $16.3 million total dispensary sales reported in the fiscal year 2021.

Types of Dispensary Licenses in North Dakota

North Dakota issues a registration certificate as its marijuana dispensary license.

How to Get a North Dakota Dispensary License

Take the following steps to obtain a dispensary license in North Dakota:

• Initial Preparation and Research - Research North Dakota's medical marijuana laws and understand the regulatory requirements for dispensary licensure in the state
• Business Registration - Establish a legal business entity for the proposed dispensary by registering it as a general partnership, limited liability company (LLC), or a corporation in North Dakota
• Secure Funding - Determine the cost of opening the proposed dispensary and how to raise the required capital
• Find a Location - Find a suitable location for the proposed dispensary and ensure it conforms with local zoning requirements
• Business Plan - Create a detailed business plan that outlines its business objectives, financial plan, operation strategy, and other essential information
• License Application - North Dakota requires applicants to mail a completed application for the registration certificate with applicable fees to:

North Dakota Department of Health Accounting Division (Dispensary Application) 600 East Boulevard Avenue, Department 301 Bismarck, ND 58505-0200

• Application Review - A review panel is set up to evaluate dispensary license applications and select licensees based on the following criteria:

1. Facility location selection
2. Character and experience of the management
3. Operations and services plan
4. Staffing and training
5. Recordkeeping
6. Safety and security plan
7. Affordability
8. Labeling
9. Education and outreach
10. Dispensing procedures
11. Facility description, timeline, and hours of operation
12. Transportation

The North Dakota Department of Health (NDDoH) reviews dispensary license applications and selects successful applicants. The department is not accepting new dispensary license applications and may only register up to eight dispensaries in the state, per NDCC Chapter 19-24.1-12. However, the NDDoH can register additional dispensaries if it revokes a dispensary license or increases access to medical marijuana for registered patients and caregivers. Application windows for new dispensary licenses are announced on the department’s website.

Information and Documents Required for a Dispensary License in North Dakota

North Dakota requires the following information from anyone applying for a dispensary license (registration certificate):

1. Legal name and physical address of applicants
2. Contact information of the applicants
3. The physical address of the proposed dispensary location
4. The name, address, and date of birth of each of the principal officer, board member, member-manager, manager/governor of the proposed compassion center
5. A detailed description of each principal officer, board member, member-manager, manager/governor:
   • Relevant work experience
   • Training or professional licensing related to medicine, pharmaceuticals, natural treatments, botany, food science, food safety, production, processing
   • Experience running a business entity
6. The security and safety measures of the proposed dispensary facility that are compliant with the NDDoH security requirements
7. Description of the design and features of usable marijuana containers that comply with the department’s requirements
8. The proposed dispensary’s plans to make marijuana products affordable to low-income patients
9. A list of all the individuals and business entities with control over the management or policies of the proposed dispensary
10. A list of all individuals and business entities with an ownership stake in the proposed dispensary
11. Details of creditors with a security interest in the proposed dispensary’s location

Applicants must also submit the following documents:

• Articles of incorporation or articles of organization of the entity
• The entity’s bylaws or operating agreement
• Documentation of business registration with the North Dakota Secretary of State
• Certificate of good standing with the North Dakota Secretary of State
• A document showing the approval of the proposed dispensary's compliance with zoning laws by local officials

What Plans Do You Need to Open a Dispensary in North Dakota?

Preparing a business plan is essential to open a cannabis dispensary in North Dakota. It serves as a roadmap to an ultimate goal. A business plan can also help dispensary owners to implement the necessary strategies for a sustainable business. A North Dakota dispensary’s business plan should include the following:

• Information about the dispensary, including its legal name, address, and ownership details
• Financial projections and budgeting details
• Operations manual
• Employee handbook
• Surveillance measures that comply with state requirements
• Product line of the dispensary
• Risk assessment
• Inventory control plan

A North Dakota dispensary license applicant must also submit an operations manual for their proposed dispensing compassion center. The operations manual should include the following:

• Procedures for supervising the proposed dispensary, including documentation of the dispensary’s reporting and management structure
• An overview of an inventory control plan that complies with the NDDoH requirements
• Safety and security measures, including the protocol for fire outbreaks, security breaches, or other emergencies that may occur while working
• Security policies for the employees of the proposed dispensary
• Measures for personal safety and crime prevention
• A business continuity plan
• Measures for accurate recordkeeping
• An alcohol-free and drug-free workplace policy
• Documents that an employee must carry while transporting marijuana products or waste
• A detailed description or employment contract for each of the dispensary’s employees and volunteers
• Procedures for recalling marijuana products

A dispensary site plan submitted to the Department of Health should include these details:

• A drawing of the proposed dispensary facility layout that includes:
• Display areas
• Restricted access areas
• Patient education areas
• Lobby area
• Restrooms
• Transaction/sales area
• Description of the areas where usable marijuana and other retail Items are stored
• Description of the parking area for patients and designated caregivers (including the amount of handicap-accessible spots and the proximity of parking spots to the front door)

Are There Municipal Requirements for Opening a Cannabis Dispensary in North Dakota?

North Dakota currently authorizes the operation of medical marijuana dispensaries in eight municipalities in the state. However, the dispensaries must comply with local ordinances and business regulations. North Dakota cities/towns have zoning laws that specify the districts/areas where cannabis dispensaries can build and operate their dispensing facilities.

How Long Does It Take to Get a North Dakota Dispensary License?

The North Dakota Department of Health selects applicants who are eligible for dispensary registration about three months after it opens the application window for the registration certificate. Selected applicants will be issued registration certificates after paying the certification fees and submitting the required information or documents.

Where Can You Locate a Cannabis Dispensary in North Dakota?

Cannabis dispensaries in North Dakota must abide by the location requirements of the state and local municipalities. A dispensary may only be located in the following places:

• At least 1,000 feet (measured in a straight line) from the property line of a public or private school that existed before it
• In an area that complies with local zoning laws

Can Licensees Have More Than One Dispensary Location in North Dakota?

Yes, North Dakota cannabis laws allow medical marijuana dispensary licensees to operate multiple dispensing compassionate centers in the state.

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

To open a marijuana dispensary in North Dakota, a business owner will incur various costs depending on the business size, inventory, and other factors. Some of these costs include:

• Property purchase or lease - Purchasing or leasing a property to set up a dispensary facility may cost between $50,000 and $100,000 annually, depending on location, size, and condition
• Property renovation cost - An average of $25,000 and $100,000 to renovate the dispensary to meet the state’s standards
• Professional fees - This may cost about $50,000 for legal, financial, security, or architecture services
• Dispensary license application fee - A non-refundable fee of $5,000
• Certification fee - It costs $90,000 to certify the dispensary, which must be renewed every two years
• Inventory cost - Usable marijuana costs about $1,600 per pound, depending on the amount and type of product
• Operational cost - Operational expenses can range from $110,000 to $120,000 annually
• Staffing costs - A dispensary will pay $200 per employee to register them as compassion center agents with the Department of Health. On average, dispensary employees earn between $16 and $23 per hour in North Dakota
• Taxes - This will depend on the dispensary’s total product sales

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

No, North Dakota does not require insurance coverage for cannabis dispensaries. However, getting an insurance policy for a marijuana dispensary can protect it against potential liabilities and business risks. The following insurance policies are suitable for North Dakota cannabis dispensaries:

• General Liability - This insurance policy protects a dispensary against common risks like third parties’ personal or property damage on their premises
• Property Insurance - This policy covers the dispensary’s properties against various disasters, such as fire, vandalism, or theft
• Workers’ Compensation Insurance - This provides medical and financial benefits to employees who suffer work-related injuries
• Product Liability Insurance - This covers the legal fees or compensation arising from a lawsuit filed by a third party due to harm caused by the dispensary’s product
• Directors & Officers Insurance - If a dispensary’s director or officer faces legal action, this policy will cover their legal expenses

The following factors can affect the cost of insurance for a North Dakota cannabis dispensary:

• Dispensary location
• Coverage amount
• Security measures
• Business size
• State regulations

How to Get a Grant to Open a Dispensary in North Dakota

A cannabis entrepreneur can raise funds to open a cannabis dispensary in North Dakota through the following ways:

• Self-funding - Using personal savings or assets to finance a marijuana dispensary
• Funding from family and friends - Family members and friends of a prospective dispensary owner can invest in the business
• Equity funding - Dispensary owners can offer equity to investors or private equity firms in exchange for funding the dispensary
• Cannabis-specific Brokers and Lenders - These are financial institutions that provide funding for cannabis entrepreneurs

Does North Dakota Have a Social Equity Program for Cannabis Dispensaries?

No. North Dakota does not have any social equity program for marijuana businesses, including dispensaries.

Does North Dakota Tax Marijuana Dispensaries?

Yes, marijuana dispensaries pay taxes in North Dakota. The state charges a 5% sales tax on medical marijuana purchases. However, there is no local cannabis tax in the state. The North Dakota Office of State Tax Commissioner is responsible for collecting cannabis tax in the state.