Marijuana Business Factbook 2019

244 Marijuana Business Factbook 2019 Chapter 5 | Financial & Operational Data: Retailers © Copyright 2020, Marijuana Business Daily , a division of Anne Holland Ventures Inc. You may NOT copy this Factbook, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call (720) 213-5992, ext. 1. RETAILER OPERATIONAL DATA CHART 5.16: Most Expensive Startup Costs For Retailers: Breakdown By Business Type Source: 2019 Marijuana Business Factbook © 2019 Marijuana Business Daily, a division of Anne Holland Ventures Inc. All rights reserved. Most Expensive Startup Costs For Retailers: Breakdown By Business Type Vertically Integrated Retailers Stand-Alone Retailers Real Estate & Renovations Equipment Initial Inventory Permits, Licenses & Applications Professional Fees Real Estate & Renovations Equipment Initial Inventory Permits, Licenses & Applications Security/ Surveillance Staffing/ Employees 0% 10% 20% 30% 40% 50% 60% 70% 56% 11% 11% 17% 6% 66% 40% 43% 55% 24% 29% 21% 21% 14% 7% 7% 56% 60% 44% 41% 30% 50% Portion Of Retailers Citing Most Expensive Startup Cost Average Percent Of Total Startup Costs Retailer startup costs can vary significantly based on the state, market and unique situation of each business. Among vertically integrated retailers, more than half stated that real estate and renovations are their highest startup expenses, accounting for an average of 66% of total costs. Approximately one-third of stand-alone retailers cited real estate and renovations as their most significant startup costs, accounting for 56% of their total on average. Vertically integrated retailers typically require separate buildings for their cultivation and retail operations, which contributes to the higher cited cost for those businesses. Real estate that is suitable for cultivation may come at significant cost as well, depending on the location and state. For roughly one in five stand-alone retailers, initial inventory and equipment ― such as point-of-sale systems and shelving ― represent their most expensive upfront costs. Professional fees, including services provided by lawyers, consultants, real estate agents and accountants, can add up quickly, especially for a retailer operating in a tightly regulated market or where initial competition for a limited number of licenses is fierce. Furthermore, many of these professionals are able to charge a premium for their services, as they need to have a sophisticated understanding of the nuances and perils of doing business in a nascent and federally illegal industry. Permit, license and application fees ― depending on the market ― can easily run into the six-figure range annually. These fees are generally much higher in medical markets where vertical integration is more common.