(This is an abridged version of a story that appears in the July issue of Marijuana Business Magazine.)
It can take months for a marijuana business to gain licensing approval from regulators.
The biggest problem facing a company in such a situation is it usually must have the location nailed down before filing an application.
But paying rent on space before having a license in hand can cost a lot of money, unless steps are taken early in the process to minimize costs.
The good news: By choosing the right place, working with the current building owner and having a knowledgeable team in place, it’s possible not to pay rent before the license is approved.
But there are ways to mitigate the upfront costs, even in such a market. And, when an entrepreneur makes the right moves, the savings can be substantial.
“In Illinois, our rent was $9,500 a month (for a medical medicinal dispensary), and we didn’t pay any rent during the year we spent waiting for our license to be approved,” said Brian Fox, managing partner of St. Louis-based Greene Fox Enterprises.
“You can do the math,” he said, “and see that we saved more than $100,000 by not paying rent in the first year.”
Fox successfully used that strategy in Maryland, where he is CEO of Cannavations.
The company recently opened medical marijuana dispensaries in Maryland but was able to avoid paying rent during its one-year waiting period for license approval.
Click here to learn more about:
- Navigating licensing requirements during such a time
- The merits of renting vacant or distressed properties
- Knowing when it’s time to seek the help of a pro
- The challenges of leasing in a hot market
- When it’s time to walk away from a potential deal