$9M in Startup Costs for MA Dispensary

Starting a medical marijuana business in Massachusetts is not for the faint of wallet.

A company that received two of the 20 provisional dispensary licenses awarded by the state anticipates shelling out at least $9 million in startup expenses and initial operating costs.

New England Treatment Access (NETA) will open storefronts in Brookline and Northampton as well as a cultivation facility in Franklin later this year. The company’s two principles – Kevin Fisher and Arnon Vered – said roughly $3.8 million will cover infrastructure costs all those locations, while $5.2 million will float the entire operation until its projected break-even point in the first quarter of next year.

The funding comes via a loan from businessman Howard Kessler, who owns a financial services consulting company in Boston.

Fisher and Vered have ambitious revenue projections. They estimate the business will bring in $9.8 million in 2015 under the assumption that each patient will purchase 1.6 ounces per month with average prices of $4,800 per pound. The two hope to grow revenues to $19 million by 2017 and reach a peak patient count of 3,200 in 2016.

The numbers highlight the sizable financial risk of opening a dispensary in a restrictive market. NETA’s revenue projections could be impacted by unfriendly neighbors, price fluctuations, market size and patient purchasing habits, among other factors.

The figures also underscore the enormous capital costs required to open a medical marijuana business in a restrictive market. First-generation medical marijuana entrepreneurs in less restrictive states such as Colorado, California and Washington state often started their businesses for tens of thousands of dollars. That will not be the case in newer markets such as Massachusetts, Nevada and Illinois, where entrepreneurs are will need to spend millions to get started.

4 comments on “$9M in Startup Costs for MA Dispensary
  1. Clifton Middleton on

    The MA medical marijuana setup is totally corrupt and not anything that anyone wants except the wealthy and politically connected applicants.

    Reply
  2. mmj patient on

    The MA DPH pretended to be worried about diversion but these bone-heads say that average customer will buy over an ounce and a half at f $300/ounce. These guys shouldn’t smoke their own supply before it is legal to do so. These guys care sooo much about patients that they are doing the kind hearted thing and charging black market prices to sick dying patients. Thanks guys!! Swell of you. Greed before compassion is going to be their company motto.

    Reply
  3. smplydi on

    MMJ Patient – don’t be so quick to judge. There are no overhead costs to the blackmarket prices – they don’t have to pay for testing, compliance, license fees, employee training, tracking software, security, child-proof packaging…SAFE medicine has a huge cost associated to it. The owners that I know have a tremendous amount of compassion for the patients, and many have personal histories of why they want to be a part of the change. I hope that some day cannabis can be covered by insurance like other medications. Also, many businesses have a “compassionate use” program to provide discounted prices to those who qualify.

    Reply
  4. Cam on

    It’s sad but it just as I knew it would be, only the rich will get richer and there will be no “Mom & Pop” small businesses in this either. The big corporations will take it all over and the Americans who have given their lives and a lot of times their freedom to help make this legal will gain nothing from it large or small.

    Reply

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