Washington Cannabis Startup Guide

Starting a cannabis company in Washington, D.C.? We’ve put together a state-specific guide covering everything from available license types to fees, regulations, and what you should include in an Washington, D.C., cannabis business plan. Jump to a section by clicking below, or go straight to our sample cannabis business plan.

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Overview
Cannabis license types
Fees and other barriers to entry
Are cannabis business plans required in Washington, D.C.?
What to include in a business plan
Helpful links
Get expert help

Overview of legal cannabis in Washington, D.C.

Recreational and medical marijuana are both legal in Washington, D.C. Patients with a written recommendation from a doctor can possess up to 4 ounces of cannabis each month, as well as grow it at home. More than 9,000 patients have registered for medical marijuana use in D.C., and 2021 sales of medical marijuana via D.C. dispensaries could be as high as $21 million.

The District of Columbia has yet to establish a regulated market for recreational cannabis. Since D.C. is governed by the U.S. Congress, it will be up to them to create a legal market for the sale of cannabis products. Adults can possess up to 2 ounces for recreational use, as well as up to six marijuana plants per person. Some local businesses sell home-grow equipment, while others operate in the “gray market” as pop-up shops or delivery services.


Cannabis business license types

Washington, D.C., issues licenses for three broad categories of medical cannabis businesses: dispensaries, cultivation centers (aka grow operations), and testing labs.

Dispensary: This is a retail storefront where patients can purchase marijuana. Dispensaries must follow strict protocols for product tracking, security, record-keeping, and hiring.

Cultivation Center: These businesses, also called grow operations, grow cannabis plants indoors or outdoors. Some cultivators also produce items like edibles, capsules, and oils. Marijuana is then sold through a dispensary. Cultivation centers are allowed to transport marijuana to dispensaries.

Testing facility: Consumers and regulators alike demand consistency and quality control in cannabis products, which creates demand for marijuana testing labs. These labs use methods like liquid or gas chromatography to analyze products for CBD and THC content, pesticides, terpenes, bacteria, fungi, and heavy metals, to name a few.

Ancillary business: If you don’t want to grow or sell cannabis in Washington, D.C., there are plenty of other ways to be part of the cannabis industry. You can create a marijuana app, payment processing service, advertising agency, consulting firm, pest management product, accounting firm, automated plant watering system, security service, packaging labeling service, or legal firm--and that’s just the tip of the iceberg!




Fees and other barriers to entry


Application fees: There are no application fees to apply for a cannabis business license in Washington, D.C.

License fees: It’s $16,000 for a medical marijuana dispensary license in Washington, D.C., and $11,000 for a cultivator. Testing labs pay $7,500 years. All licenses are discounted in the first year of operations.


Do you need a cannabis business plan in Washington?

Yes, a business plan is required to get a medical marijuana dispensary license in Washington, D.C. The District of Columbia Department of Health says, “The applicant shall provide a business plan that describes how the dispensary will operate on a long-term basis. This shall include...a detailed description about the amount and source of the equity and debt commitment for the proposed dispensary that demonstrates the immediate and long-term financial feasibility of the proposed financing plan, the relative availability of funds for capital and operating needs, and the financial capability to undertake the project.” And if you plan on raising funding from investors, you definitely need a business plan.

What to include in your business plan


Here’s what an D.C. cannabis business plan should include:

  • Product/service description: Will you run a dispensary, grow operation, testing lab, processor, wholesaler, consulting firm, or something else? What’s unique about your business? Be as specific as you can. If you’ll open a marijuana dispensary, which strains of flower or whose manufactured products will you sell?

  • Market research: If you’re opening a dispensary, how many people live within five miles? If you’ll wholesale flower or edibles, how many dispensaries will you sell to? If you’re creating an app, who will be the user base, and why would they use your app instead of someone else’s? Use concrete numbers verified by a third party whenever possible (instead of estimates).

  • Competitors: Who will you compete with, both directly and indirectly? What do they do well and poorly? What is their online reputation? How will you differentiate your company?

  • Management team: Summarize your qualifications and those of others on your management team. (Think of it as a shorter, “greatest hits” version of your resume.) Include cannabis industry experience, as well as leadership skills, customer service, and business development experience in other industries.

  • Financials: This part can be tricky. You need a five-year financial forecast, including projected annual revenue, operating expenses, costs, and net profit. Each year’s projected revenue should include not only revenue but also your margin and direct costs. You can forecast revenue by estimating how much product you think you’ll sell (based on market potential), your retail price, your production cost, and how much you’ll spend on payroll, rent, and other expenses. Your cash flow statement will show that you’ll have enough cash to stay operational. You might want to include a sensitivity analysis (best- and worst-case scenarios), which shows 15% higher and 15% lower revenue than your initial forecast. For marijuana cultivators, it’s important to do a sensitivity analysis based on future potentialities of the wholesale price per pound. You can also include a break-even analysis, showing which month you will be profitable.

  • Washington, D.C.-specific requirements:
  • If not included elsewhere in your application, you should include details in your business plan about your security system, staffing, training, facility, zoning, and anything else required by the district.

  • Investor proposal: If you are presenting your plan to investors, how are you valuing the shares? Consult with your attorney to make sure you are within state and federal compliance. Sometimes, you’ll need your attorney to draw up an offering memorandum, often called a private placement memorandum (PPM). A PPM informs potential investors on the details of the investment vehicle (your company) and potential risks associated with the investment.


Helpful Links


Get expert help


Confused or overwhelmed yet? That’s normal. With such a highly regulated industry, and one with different rules in every state, starting a cannabis company can be very complex. Get help with your cannabis business plan from Masterplans, the industry leaders. We’ve worked with hundreds of cannabis entrepreneurs like yourself to create investor-ready documents and presentations so you can not only meet regulations but get the funding you need. Click below for your free, confidential consultation:

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