How to Open a Dispensary in Alabama

How to Open a Dispensary in Alabama in 2024

A license from the Alabama Medical Cannabis Commission is required to open a medical marijuana dispensary in the state. Prospective marijuana dispensary owners must provide all required documents, including business plans, criminal background checks, proof of capital, security plans, and standard operating procedures to obtain dispensary licenses in Alabama. In addition, they need permission from the local jurisdictions where they intend to operate before they can open for business.

Why Open a Dispensary in Alabama?

Alabama has yet to begin registering medical marijuana patients or selling medical cannabis. However, according to a 2021 PRNewswire report, it is estimated that medical marijuana will bring about $600 million in revenue to the state within the first 3 years of sales. Obtaining a medical marijuana dispensary license from the Alabama Medical Cannabis Commission (AMCC) and opening a dispensary will help anyone to access the anticipated huge cannabis market. Note that the Alabama Medical Marijuana Act limits the number of marijuana dispensary licenses that can be issued in the state.

Types of Dispensary Licenses in Alabama

The two types of medical marijuana dispensary licenses in Alabama are:

• Integrated Facility License: An integrated facility license holder is allowed to cultivate, process, transport, and sell medical marijuana. They can sell medical cannabis to other licensed dispensaries and registered medical marijuana patients. A licensee can operate up to five dispensing sites in the state
• Dispensary license: A dispensary licensee can operate up to three dispensing sites in the state. They can only sell medical marijuana to registered medical marijuana patients

How to Get an Alabama Dispensary License

• The Alabama Medical Cannabis Commission (AMCC) requests for applications for Dispensary licenses
• Applicants must read all relevant rules and regulations, including the following:
• Alabama Medical Cannabis Commission Act (SB 46)
• Alabama Medical Cannabis Commission Rules and Regulations Chapter 3 - Applications and Licensing Requirements - Generally
• Alabama Medical Cannabis Commission Rules and Regulations Chapter 8 - Regulation of Dispensaries or Alabama Medical Cannabis Commission Rules and Regulations Chapter 9 - Regulation of Integrated Facilities
• Application guide for dispensary applicants
• Establish a business entity in the state. Alabama laws provide strict requirements for ownership of marijuana businesses that must be adhered to
• Prepare a business plan
• Secure the proposed dispensary location. If the proposed location is leased, the owner must consent in writing to the use of the property for cannabis dispensing
• Raise capital for application fees and required proof of funds
• Send in the dispensary application to the Alabama Medical Cannabis Commission
• The AMCC will process the application and award licenses to successful applicants

The Alabama Medical Cannabis Commission awarded all four dispensary licenses and all five integrated facility licenses on August 10, 2023, but had to pause the process because of a series of lawsuits against the licensing procedure. It is uncertain if a new round of applications will be initiated or if the court will uphold the initial awards.

Information and Documents Required for a Dispensary License in Alabama

The following documents must be submitted to the AMCC while applying for a dispensary license in Alabama:

• Exhibit 1: Curriculum vitae or resume of individuals with ownership interests in the dispensary
• Exhibit 2: Residency of owners
• Exhibit 3: Criminal background checks
• Exhibit 4: Proof of sufficient capital
• Exhibit 5: Financial statement
• Exhibit 6: Tax Plan
• Exhibit 7: Business formation documents
• Exhibit 8: Business License and authorization from local jurisdictions
• Exhibit 9: Business plan
• Exhibit 10: Evidence of business relationship with other licensees and prospective licensees
• Exhibit 11: Coordination of information from certifying physicians
• Exhibit 12: Point-of-sale responsibilities
• Exhibit 13: Confidentiality of patient information
• Exhibit 14: Money handling and taxes
• Exhibit 15: Standard operating procedures
• Exhibit 16: Policies and procedures manual
• Exhibit 17: Receiving and shipping procedures
• Exhibit 18: Facilities
• Exhibit 19: Security Plan
• Exhibit 20: Personnel
• Exhibit 21: Business leadership credentials
• Exhibit 22: Employee handbook
• Exhibit 23: Quality control and assurance plan
• Exhibit 24: Contamination and recall plan
• Exhibit 25: Marketing and advertising plan
• Exhibit 26: Website and social media

What Plans Do You Need to Open a Dispensary in Alabama?

Alabama requires dispensary license applicants to submit business plans during the application period. A dispensary’s business plan outlines the steps the business will take to start and run the dispensary business. It also helps the regulator measure the readiness of the prospective owner to operate a cannabis business.

An Alabama medical marijuana dispensary business plan must include the following:

• Business goals, including 3-year and 5-year plans
• Business structure
• Organizational chart
• Job descriptions of all employees, including managerial positions
• An executive summary containing the business’ mission statement, business philosophy, leadership background and qualifications, key personnel, and facility locations
• Funding plan
• Revenue projections
• Description of cannabis products to be dispensed and plans to procure them
• Advertising strategy
• Community engagement plan
• Environmental impact statement
• Detailed recall plan
• Insurance plan

Are There Municipal Requirements for Opening a Cannabis Dispensary in Alabama?

Alabama Code, Section 20-2A-51 (c), prohibits operating marijuana dispensaries in a local jurisdiction unless the local government submits the municipality resolution or ordinance authorizing their operations within its boundaries. The AMCC lists local jurisdictions that have submitted ordinances/resolutions allowing medical marijuana dispensaries. In addition, municipalities allowing marijuana dispensaries can limit them to specific zones within their jurisdictions.

How Long Does It Take to Get an Alabama Dispensary License?

There is no specific time frame for obtaining a marijuana dispensary license in Alabama. The AMCC determines the application window and processing duration.

Where Can You Locate a Cannabis Dispensary in Alabama?

The AMCC enforces the following dispensary location restrictions:

• Medical marijuana dispensaries can only be located in municipalities that allow the operation of marijuana dispensaries within their boundaries. Medical cannabis dispensary applicants must submit local jurisdiction authorization (Exhibit 8) while applying for marijuana dispensary licenses
• Medical marijuana dispensing sites are prohibited from operating within 1,000 feet of schools, childcare facilities, and daycare centers
• Any other zoning restrictions established by ordinance in a local jurisdiction

Can Licensees Have More Than One Dispensary Location in Alabama?

Alabama medical cannabis law allows integrated facility and dispensary licensees to operate multiple dispensing sites. Dispensary licensees can operate up to three dispensary sites in the state, while integrated facility licensees can operate up to five. Sections 20-2A-64 (f) and 20-2A-67 (f) of the Alabama Code limit licensed dispensaries and integrated facilities to establishing no more than one dispensing site in a county. However, the AMCC can authorize a dispensary licensee to establish more than one dispensing site in a county if, after a year of operation, the commission determines that the dispensary’s patient pool is better served by additional dispensing sites.

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

The cost of opening a medical cannabis dispensary in Alabama varies depending on the size of the dispensary and the location. It ranges from $400,000 to $1,000,000 or more. The following are some of the average costs a prospective marijuana dispensary owner may incur in Alabama:

• License application fee - $2,500
• Annual license fee
• Dispensaries - $40,000
• Integrated Facilities - $50,000
• Proof of fund - At least $250,000 in liquid assets
• Cost of leasing a dispensing space - Depends on size and location, between $50,000 and $120,000 annually
• Security, software, and hardware costs - An average of $50,000 per annum
• Employee salaries - About $250,000 per annum
• Marketing/advertising expenses - $50,000
• Inventory costs - Depends on the dispensing facility size and stock size, an average of $1,500 per pound of cannabis products
• Taxes - Depend on sales

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

Yes. Alabama mandates dispensary license applicants to have up to a $2 million insurance bond before they can be issued dispensary licenses. They are also required to get casualty/workers' compensation insurance to cover the medical bills of injured dispensary employees. In addition, a marijuana dispensary owner in Alabama may consider getting the following insurance policies:

• Professional liability insurance - This is to protect against errors and omissions by the dispensary and its employees
• Product liability insurance - To cover the cost of harm caused by a cannabis product purchased from the dispensary
• Commercial property insurance - This covers the cost of replacing destroyed, damaged, or lost dispensary equipment

Factors that determine dispensaries premium in Alabama include:

• Coverage
• Dispensary size
• Dispensary location
• Policy limits

How to Get a Grant to Open a Dispensary in Alabama

The following are some ways to raise the money required to open a medical marijuana dispensary in Alabama:

• Self-funding - Using personal funds to open a dispensary
• Friends and family - Through loans or investments from friends and family members
• Partners - Combining the funds of partners can help cover the cost of opening a dispensary in Alabama. Some partners can be silent partners and primarily provide the funding
• Equity financing - Funds are obtained from private equity companies. They can offer short-term financing at higher interest rates or for a share of the business
• Equipment financing - A loan used to acquire equipment needed for processing and dispensing cannabis
• Loans - Dispensary owners may be eligible for personal loans to finance the establishment of a dispensary. Getting a dispensary business loan can be more difficult because of the illegal status of cannabis at the federal level
• Purchase order financing - This involves borrowing funds for already placed orders and repaying the lender after the consumers make payments

Does Alabama Have a Social Equity Program for Cannabis Dispensaries?

Alabama does not have a social equity program for cannabis dispensaries. However, the state’s medical marijuana law provides that 25% of medical cannabis dispensary licensees must be awarded to businesses with at least 51% shares owned and managed by a minority group. It also reserves 20% of integrated facility licenses for minority group-owned and managed businesses. It defined minority groups as persons of Native American, African American, Asian, or Hispanic descent.

Does Alabama Tax Marijuana Dispensaries?

Per Section 20-2A-80 of the Alabama Code, state-licensed marijuana dispensaries must pay a 9% privilege tax. This is in addition to the 9% sales tax on every medical cannabis purchase. The Alabama Department of Revenue is responsible for collecting cannabis taxes in the state. Medical marijuana dispensaries are also required to pay all municipalities levies.