Residents in North Dakota and Utah have recently been receiving postcards and flyers inviting them to open medical cannabis dispensaries. In some cases, the information says that qualified entrepreneurs can own their dispensaries at no cost to them. Is it a scam? Absolutely. Opening a cannabis dispensary is costly. There are no shortcuts; no one gets to open a dispensary for free.
As popular as medical and recreational cannabis are it was only a matter of time before the scams appeared. The truth of the matter is that scammers are always looking for ways to separate gullible people from their money. Promoting ownership of a medical cannabis dispensary without spending a dime preys on people we don’t understand how business works.
Opening a Dispensary Out-of-State
In North Dakota, the scam invites people with marijuana convictions to apply to own cannabis dispensaries in Illinois. The out-of-state angle is a bit different. Even without knowing anything about business, it is easy enough to look into Illinois cannabis laws and discover that the invitation isn’t legit.
It is not clear what the scammers are after. In all likelihood, they want personal information that would allow them to steal a victim’s identity. Victims submit applications that include names, addresses, Social Security numbers, and perhaps even bank account numbers. It’s game over as soon as the scammers get the information.
Opening a Utah Dispensary
Utah residents are subject to a similar scam involving alleged state licenses for new dispensary operators. Again, scammers focus on people with marijuana convictions. It is not clear why such people are targeted, but perhaps the thinking is that they are less likely to report being scammed. Or it could just be all the media hype of state and federal efforts to make amends for harsh marijuana laws.
At any rate, a quick look into state law verifies that the offer is a scam. State law only allows for a total of 15 cannabis dispensaries in the state. Payson’s Pure Utah is one of them. According to the folks behind Pure Utah, all the approved licenses are currently taken, and there are no plans to issue more licenses in the foreseeable future.
Nothing Is Free
Even if an individual did not want to look into state law, just the idea of opening a new business without spending any money should be a big red flag. Nothing in this life is free. Even when state and federal grants are available to business owners, such grants do not cover the full cost of starting a business. Entrepreneurs still need to invest their own money or find investors.
Opening a medical cannabis dispensary at no cost is especially absurd if you understand how expensive it is to get an operation up and running. Before anything else, entrepreneurs need to pay for a license. That could be a few thousand dollars on the low end and tens of thousands of dollars on the high end.
A dispensary owner must find a location to either purchase or rent. The business needs to be insured. Utilities must be covered as does payroll. And in some states, Utah included, there must always be a licensed pharmacist on-site when a medical cannabis pharmacy is open. Pharmacists are well paid; six-figure incomes are the norm.
Opening a medical cannabis pharmacy requires a lot of money upfront. Long before sales ever begin, a business owner could spend north of $100,000. So no, do not believe any offers suggesting you can start your own dispensary without spending a dime. Any such offers are clearly scams.