How to Start a Cannabis Business in BC
Current Legal State Of The Province
British Columbia (B.C.) has made a number of decisions about what their provincial regulatory framework will look like. British Columbia’s top priorities are protecting young people, promoting health and safety, keeping the criminal element out of cannabis, keeping the roads safe, and supporting economic development.
On February 5, 2018, B.C. published its B.C. Cannabis Private Retail Licensing Guide describing Applications and Operations for people and organizations that are considering applying for a provincial license to retail non-medicinal cannabis.
In Summer 2018, the Province launched a registration process for individuals and businesses who are interested in applying for a cannabis retail license. For information on the cannabis business in B.C. and for potential applicants, please refer to the B.C. Cannabis Private Retail Licensing Guide.
Minimum Age: Who Can Legally Access Marijuana in British Columbia?
British Columbia’s minimum age to possess, purchase and consume cannabis will be 19 years old. A minimum age of 19 is consistent with B.C.’s minimum age for alcohol and tobacco and with the age of majority in B.C.
How is Cannabis Accessed? Private/Public Retail Stores
When recreational cannabis (pot/weed) is legalized in Canada, British Columbians of legal age will be able to purchase non-medical cannabis through privately run retail stores or government-operated retail stores and online sales. The BC Liquor Distribution Branch (LDB) will operate the public retail stores, and the Liquor Control and Licensing Branch (LCLB) will be responsible for licensing private stores and monitoring the retail sector. The operating rules governing public and private retail stores will be similar to those currently in place for liquor. In urban areas, licensed retailers will not be able to sell cannabis in the same stores as liquor or tobacco.
Rural AreasThe Government of British Columbia recognizes that retail access for people in rural areas will require a different approach than those used in urban communities and will establish exceptions for rural non-medical cannabis retail stores, similar to those of rural liquor store.
Like many other provinces, B.C. will have a government-run wholesale distribution model. The LDB will be the only wholesale distributor of non-medical (recreational/adult use) cannabis in B.C.
Online/ Website Sales
The public retailer will be the only retailer permitted to sell non-medical cannabis products online at this time. Consideration may be given to allow private online sales in the future.
Non-Cannabis Products & Edibles
Licensed retail outlets (dispensaries) will be the only stores that can sell non-medicinal cannabis. Initially, they will not be allowed to sell other products, except for cannabis accessories. A cannabis accessory is defined as: “A thing, including rolling papers or wraps, holders, pipes, water pipes, bongs and vaporizers that is represented to be used in the consumption of cannabis or a thing that is represented to be used in the production of cannabis.”
Cannabis retail stores must be self-contained businesses. There is an exception to this rule in rural areas, where a self-contained cannabis retail store may not be a viable business. “Rural areas” have not yet been defined. Neither has the model for a cannabis retailer in a rural area.
The proposed federal Cannabis Act does not permit the commercial production of edibles at this time. Therefore, you cannot legally sell them. The federal government has stated that edibles will be regulated within 12 months of legalization.
If you are an entrepreneur interested in how to open a dispensary in B.C., details on retail licensing and establishing a retail cannabis outlet (dispensary) were published on the BC Government’s website the summer of 2018.
Cannabis lounges and cannabis cafes will not be licensed at this time. The Province will be considering this type of license at a future date.
Where Can Cannabis be Consumed?
B.C. will generally allow adults to use non-medical cannabis in public spaces where tobacco smoking and vaping are permitted. However, to minimize child and youth exposure, smoking and vaping of non-medical cannabis will be banned in areas frequented by children, including community beaches, parks and playgrounds. Use of cannabis in any form will also be banned for all occupants in vehicles.
Local governments will be able to set additional restrictions, as they do now for tobacco use. In addition, landlords and strata councils will be able to restrict or prohibit non-medical cannabis smoking and vaping at tenanted and strata properties.
B.C. will align with the proposed federal legislation and allow adults to grow up to four cannabis plants per household, but the plants must not be visible from public spaces off the property. Home cultivation of non-medical cannabis will be banned in dwellings used as a daycare. In addition, landlords and strata councils will be able restrict or prohibit home cultivation. Additionally, all producers of cannabis (grow op) or cannabis products will, under the proposed Cannabis Act, need to be federally licensed to operate. Following the coming into force of the proposed Act, the Government of Canada will establish application processes and criteria for those individuals or entities who wish to become producers of legal cannabis.
Adults aged 19 years and older will be allowed to possess up to 30 grams of non-medical cannabis in a public place, which aligns with the federal government’s proposed possession limit for adults.Those under the legal age of 19 years will be prohibited from possessing any amount of non-medical cannabis. Additionally, cannabis transported in a motor vehicle will need to be in a sealed package, or inaccessible to vehicle occupants.
A Brief Summary of Key Legalization Points
- Minimum age 19
- Government will wholesale cannabis to retail outlets via the BCLDB
- Online sales will only be provided by the government
- Both government-operated and private cannabis retailers
- Privately-owned cannabis retailers will be licensed by the BCLDB
- Cannabis retailers cannot sell alcohol, tobacco or pharmaceuticals; they can sell cannabis accessories
- Maximum operating hours are 9:00 am to 11:00 pm subject to local municipal regulations
- There will be rules about opening hours and locations
- There will be no initial limits on the number of dispensaries (retail outlets)
- Municipalities can set their own rules
- Adults can possess up to 30 grams
Bottom Line Impact
If you’re buying from the BCLDB, you’ll pay the same wholesale price as every other dispensary (retailer). So, the only way to increase your margin on BCLDB products is to be able to charge more than other retailers:
- Have an up-market store
- Ensure that you have knowledgeable and helpful staff
- Provide additional service
You may be able to buy cannabis products directly from federally licensed cannabis sellers (LPs and sales organization), so you may be able to obtain better pricing and/or exclusive product lines.
Selling accessories and clothing. These items are not provincially or federally regulated, so you can handle this as you want to.
You can set up your business with strong branding or use the branding from the products that you purchase.
Top 5 Common Problems Faced With Cannabis Business Plans
1. Using a Template
As with many other industries, there are many templates available. Some are free, and some you pay for. Reality is that using a template is really going to cost you.
- Is the template Canadian or American?
- Does the template assume that you’ll be able to sell all cannabis products? You’ll only be able to sell flower and non-concentrated oil for the first year.
- Is your business going to be the same as every other business?
Garbage in – garbage out. Your final plan will only be as good as the template. If you are uncertain about the feasibility of your basic concept, how to research the market opportunity, or where to find your startup costs, you need expert help from a business plan consultant. If you don’t know what you are doing with the company, a template will only help you write a plan faster, but can’t make your launch successful or improve your chances of raising funds.
2. What’s The Point?
One of the first questions you should ask before writing a business plan is “Why am I writing this plan?”
- Are you looking for financing?
- Do you want to see if the business will actually work?
- Are you trying to obtain a license?
A successful business plan should always be targeted to your audience. Most business plans that we see are generic. Sure, they follow a format, but it is hard to understand the actual purpose of the plan.
3. Not Focusing on The Competition
- Playing down the competition
- “We have no competition”
- No competitive analysis
Competition is almost always an issue with every business. You want your customers to spend their money with you rather than with your competition. Don’t dismiss your competitors. Unless you really do “know it all,” you have to do your market research to write a good business plan. Check out the competition. What’s their niche? Why do their customers choose them? How do you know that your competition won’t get in your way? Even if you believe that you have a unique business, there will still be other businesses competing for your customers’ money.
4. Inadequate Market Research
- How large is the total market for your products?
- What share of the market can you expect?
- How do your products and service compare to the competition?
- How does your pricing compare to your competition?
Good market research can help you define and refine your value proposition. Not dissimilar to your USP (Unique Selling Proposition) your value proposition answers the question: What is the compelling reason for customers to buy your product? This question can also be rephrased as: Why should a customer choose your product/service over every other option available to them?
5. Unrealistic Financial Projections
- Financials do not make sense
- A “hockey stick” growth curve
- No cash flow or break-even analysis
- Assumptions not listed
- Essential expenses omitted
Let’s face it. Opening a business is going to cost you money. Not just to open and equip the store and buy inventory, but also to pay the rent, meet the payroll and take care of operating expenses until you make decent profits. You’d better have a solid Financial Model so that you KNOW “what it’s going to take and what it’s going to make.”
Summary of Article
- Wholesaling will be run by the British Columbia government through the BCLDB
- Federally licensed cannabis sales organizations may also be permitted
- Licensed Producers may be able to sell directly to retailers
Online Cannabis Sales
- BCLDB only
Dispensary/Retail Cannabis Outlets
- Regulated by the BCLDB
- Cannot also sell alcohol, tobacco or pharmaceuticals
- Opening hours and locations will be regulated
- Staff have to be properly trained
In B.C., private cannabis retailers have a great once-in-a-lifetime opportunity. If you’re wondering how much does it cost to open a dispensary, you must first apply for a license. All individuals or entities, including federally licensed producers, who wish to pursue a retail operation under the proposed Cannabis Act will be required to meet any criteria that may be set out by the province.
How Sharp Business Plans Can Help You
- We are business plan experts. We’ve been writing business plans for over 30 years and helped hundreds of people realize their dreams of owning and operating a successful business.
- All of our business plans are reviewed by a professional accountant to make sure that the financial statements and financial information make sense.
- We are experts at writing business plans for the cannabis industry in Canada, Australia and the U.S.
- We have written over 40 business plans for licensed producers and potential licensed producers under the ACMPR. We have prepared business plans for over 20 retail cannabis stores. Some of our clients have already received their licenses.
- We understand that not all Canadian provincial regulations have yet been finalized, so we can prepare business plans targeting the politicians that will help smooth the way for your license.
- You need to know how much you’ll have to invest in a cannabis business and how much you should make in profits. You’ll also need to know the cash flow information…especially for the first couple of years, when you won’t be able to sell concentrates or edibles.
If you have any questions about B.C.’s cannabis private retail licensing, or Access to Cannabis for Medical Purposes Regulations (ACMPR) or want more information on how we can help prepare a cannabis business plan for you, call us toll-free at 1 (800) 661-9842 and contact us today for a free consultation.