Learn How to Build Out a Retail Cannabis Space Successfully
There’s explosive growth in Minnesota’s cannabis sector, but being a brand-new business type for the state, many questions remain about the process of opening a cannabis business. As a firm experienced in dispensary design and renovation, we wanted to take this opportunity to create a blueprint to help emerging retailers plan their storefronts. From licensing and site selection to cost planning and regulatory considerations, here’s everything you need to know about how to open and build out a cannabis dispensary in the state of Minnesota.
Finding The Perfect Retail Space
Before you start your property search or sign a lease, it’s important to secure the correct license. Cannabis dispensary licenses are currently limited and can only be applied for on an intermittent basis. Minnesota’s Office of Cannabis Management (OCM) has a few different types of licenses applicable to retailers:
- A Cannabis Microbusiness licensee can operate one retail location.
- A Cannabis Mezzobusiness licensee can operate up to three retail locations.
- A Cannabis Retailer licensee can operate up to five retail locations.
- A Lower-Potency Hemp Edible Retailer licensee can only sell lower-potency hemp edibles.
Minnesota currently offers licenses via lotteries. However, this process may be subject to change over the coming months and years. Keep an eye on the OCM homepage for the most up-to-date information.
Once you have your license in hand, the search for a great retail location can begin in earnest. First, you should confirm if the municipality you’re interested in will allow your proposed dispensary plan. Even though cannabis is legal in Minnesota, local units of government are permitted by state law to adopt reasonable restrictions regarding the time, place, and manner of cannabis business operations. These restrictions should be factored into the retail site selection process to ensure you can run your business where and how you envision.
Cannabis Dispensary Lease Considerations
Because federal law still classifies cannabis as an illegal substance, leasing a retail space for a Minnesota dispensary will probably involve some unique provisions, such as:
- Strict property use restrictions as outlined in state cannabis laws
- Indemnification and liability protection for both parties
- Stricter rent structure due to the banking restrictions faced by cannabis businesses
Note that state cannabis dispensary regulations are new and likely to evolve. So, before signing off on your lease, it’s advisable to consult with legal counsel to confirm that the terms align with the OCM’s current requirements.
Minnesota Dispensary Build-Out Costs
The costs to build out a new dispensary retail space start with licensing and registration fees. Application and initial licensing fees for cannabis retailers and lower-potency hemp edible retailers range from $500 to $10,000, depending on the type of retail business license you’re pursuing. The local government may also charge a registration fee ranging from approximately $125 to $500.
Next, there are the rental costs. In Minnesota, retail space rental rates range from around $5/ft2to as much as $50/ft2. Add to that the actual fit-out costs, which will vary significantly depending on the extent of work required and the materials you choose. Dispensaries often entail broader scope requirements than typical retail buildouts, primarily due to heightened security measures and specialized HVAC demands.
Typical retail buildouts can go as low as $30/ft2 and as high as $600/ft2. Add all those price ranges up and, for a 2,500 ft2 cannabis dispensary, the approximate build-out costs range from as low as $75k to as high as $1.5 million. Of course, that’s a massive range, and not so helpful for making concrete plans. To help you narrow down the estimate for your specific build-out, you can always reach out and talk through your plans with a Project Manager.
Design Considerations for a Dispensary Retail Space
Regardless of your budget, location, or concept, there are certain design features a cannabis dispensary should never leave out. These start with a sound retail floor plan. Good retail space design:
- Ensures optimal customer flow
- Provides ample, accessible inventory storage
- Includes strategic display and product placement, encouraging visitors to explore
- Offers clear sightlines to help staff effectively monitor the entire facility
- Complies with all ADA regulations
Other design considerations unique to Minnesota dispensaries include:
- Secured areas for product storage
- Reinforced entry points
- Heightened on-site security and monitoring technology
- Advanced ventilation/air filtration and odor control
Checklist for Minnesota Dispensary Regulations
For quick reference, here are all the state statutes currently in place that directly impact the location and design of a retail dispensary in Minnesota. All dispensaries must:
- Register with the city, town, or county in which the retail establishment is located (link to statute)
- Include restricted access area(s) for product storage (link to statute)
- Provide adequate ventilation and filtration to meet the requirements for odor control (link to statute)
- Maintain a security plan to deter and prevent theft of cannabis products (link to statute)
- Include a designated retail area where customers are permitted and individual samples of products available for sale are displayed (link to statute)*
- Maintain compliance with all state and local building, fire, and zoning regulations (Cannabis businesses and retailers statute) (Lower potency hemp edibles retailer statute)
- Maintain clean and sanitary conditions, free from infestation by insects, rodents, or other pests (Cannabis businesses and retailers statute) (Lower potency hemp edibles retailer statute)
- Keep all lighting, both outside and inside the dispensary, in good working order and with sufficient wattage for security cameras (link to statute)*
*Statute only applies to cannabis microbusiness, mezzobusiness, and retailer licensees.
How to Build Out a Successful Cannabis Dispensary
The best way to ensure your dispensary build-out is successful is to partner with firms that have worked with Minnesota dispensary clients before and understand the strict requirements set forth by law. At Diversified Construction, our uniquely collaborative approach to commercial construction means you get easy access to every type of partner you could need that specializes in the cannabis retail market, including:
- Real estate brokers
- Bankers
- Attorneys
- Architects
With our team, you’ll unlock access to so much more than any single firm can offer. More specialists. More experience. More resources. All of it is dedicated to helping you achieve your goals.
Come discover what countless happy retail clients already know, including Minneapolis’ premier North Loop cannabis dispensary, Sweetleaves. Diversified Construction will help you create a beautiful, thriving space where you can make the most of your cannabis retailer license. Simply reach out to our team today to get started.
