How to Open a Dispensary in Iowa

How to Open a Dispensary in Iowa in 2024

Opening a medical cannabidiol dispensary in Iowa requires a bit of funding, which may be raised by various legitimate means, including obtaining loans. Obtaining a dispensary license from the Iowa Department of Health and Human Services (HHS) is also required for opening and operating a medical cannabidiol dispensary legally. However, the state is currently not issuing dispensary licenses.

Why Open a Dispensary in Iowa?

The Iowa Medical Cannabis Program, through the state's licensed medical marijuana dispensaries, accounted for $6.2 million in cumulative sales of medical cannabis in 2021. This was a 76.5% increase from the previous year which had total medical marijuana sales of $3.5 million. By the end of the 2021 calendar year, Iowa had 18,065 registered medical marijuana patients. By June 2023, the number of registered medical cannabis patients had increased to 42,585. Between July 2022 and June 2023, a 12-month period, dispensary sales of medical cannabis in Iowa nearly hit $13.5 million.

The cumulative number of registered marijuana patients in the state has increased since the state expanded access to medical cannabis in 2017. As patient count rises, demand for cannabis products is expanding, and total cannabis sales continue to increase yearly. With this trend maintained, participating in the Iowa medical cannabis market by opening a medical marijuana dispensary is a potentially lucrative venture.

Types of Dispensary Licenses in Iowa

Iowa has only one type of dispensary license: the medical cannabidiol dispensary license. It permits the dispensing of medical cannabidiol products to registered marijuana patients.

How to Get an Iowa Dispensary License

• Complete a dispensary license application form provided by the Iowa Department of Health and Human Services (HHS)
• Pay the amount of money required to satisfy the full reimbursement of costs associated with completing the applicant's background investigation
• Submit the completed forms and all required documentation in a manner advised by the HHS
• For further information on getting a dispensary license in Iowa, contact the Bureau of Cannabis Regulation at (887) 214-939 or by email

The Iowa Department of Health and Human Services will consider the following in determining whether to approve or deny a dispensary license application:

• The qualification of the dispensary's employees
• The dispensary's long-term financial stability
• The technical expertise of the medical cannabis dispensary regarding medical cannabidiol
• The dispensary's projection and continuous assessment of fees for purchasing medical cannabidiol on registered cannabis patients

The dispensary's ability to properly secure its premises with adequate security measures

Currently, the Iowa Department of Health and Human Services is not accepting applications for medical cannabidiol dispensary licenses. So far, five dispensary licenses have been awarded, and they are all operating at different locations across the state. There are no specific periods of the year designated as application windows for medical cannabidiol dispensary licenses in Iowa.

Information and Documents Required for a Dispensary License in Iowa

At a minimum, anyone interested in obtaining a medical cannabidiol dispensary license in Iowa must have or prepare the following documents or information:

• Proof of real estate ownership (dispensing facility)
• Applicant's background check
• Identifying information
• Business plan
• Complete application form
• Security plan
• Inventory control plan
• Any other documents or information requested by the HHS

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

A business plan is required and should be prepared by anyone who intends to open a medical cannabidiol dispensary in Iowa. Typically, having a business plan for a proposed dispensary helps the business owner attract investments and have good control of such investments when the dispensary starts operating. An ideal medical cannabidiol dispensary business plan should have the following:

• Business Description - This should highlight market opportunities and the problems the dispensary wishes to solve
• Product and Operations - A description of the marijuana products the cannabidiol dispensary will sell and where such products are going to be sourced
• Marijuana Industry Analysis - This should identify the industry's market needs, trends, competition, and growth
• Team - This should explain how the business is structured, including the management team and personnel plan
• Target Market - Identify the dispensary's target market, which will, in turn, influence decisions such as choice of location and branding
• Financial Information - This should include the following:
• Sales/revenue projections
• Cash flow projections
• Expenses
• Projected balance sheet
• Projected profit/loss
• Sales and Marketing Plan - A description of how to attract target customers and retain them

Iowa also requires submitting a security plan as part of the dispensary license application process. An ideal security plan for a medical cannabidiol dispensary in the state should cover the following security requirements:

• Fully operational security alarm system
• Perimeter intrusion detection system
• Facility access control
• Security training for all employees
• Personal identification system
• Surveillance system
• Security personnel
• The safe storage and delivery of cannabidiol products and cash
• Physical security systems
• Plans for responding to any security breach at the dispensary

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

Iowa has no law permitting municipalities to adopt local ordinances to prohibit establishing medical cannabidiol dispensaries. However, licensed dispensaries must comply with local regulations set by their host municipalities per Chapter 154 of 641 Iowa Administrative Code (IAC).

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

The Department of Health and Human Services (HHS) determines how long it takes to process Iowa dispensary license applications whenever it requests and receives applications from interested persons or entities.

Where Can You Locate a Cannabis Dispensary in Iowa?

Per Section 641.154.43 of the Iowa Administrative Code, any proposed medical cannabidiol dispensary facility must meet the following location requirements:

• It may not operate within 1,000 feet of any school, private or public, existing before the date the dispensary was licensed
• It may not be situated at the same physical location as a licensed medical cannabidiol manufacturing facility

Here is a list of cannabis dispensaries in Iowa.

Can Licensees Have More Than One Dispensary Location in Iowa?

Yes. Iowa medical cannabidiol dispensary licensees can operate more than one dispensing facility at different locations across the state.

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

Medical cannabis experts estimate the cost of opening a medical cannabidiol dispensary in Iowa to range from $300,000 to at least $1 million. The expenses to consider will include the following:

• One-year lease, including the cost of renovation (for a rented facility) - Between $80,000 and $125,000
• Real Estate (if the proposed dispensary facility is owned) - Between $200,000 and $270,000
• Start-up inventory - Between $35,0000 and $150,000, depending on the size of the dispensary facility and available funds
• Security system setup - Between $20,000 and $35,000
• Cost of dispensary's website design - Between $350 and $2,500
• Monthly staff payroll expenses - Between $10,000 and $17,000, depending on the number of employees
• Annual insurance cost (optional) - Between $3,000 and $ $15,000
• Initial branding and marketing cost - Between $8,000 and $15,0000
• Dispensary license application fee:
• $5,000 for licensure
• $10,000 deposit for a national criminal history background check for each business owner during licensure. If the background check fees are less than the deposited funds, the HHS may retain or refund the balance as mutually agreed with the business owners. If the fees exceed the funds deposited, the business owners will pay additional funds to cover the excess
• Professional costs, including fees for legal assistance and business consulting - Between $10,000 and $40,000

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

It is not legally mandatory to have insurance coverage for medical cannabidiol dispensaries in Iowa. However, it is generally recommended to have cannabis dispensary businesses insured, considering the high rates of thefts and break-ins. The appropriate insurance policies can provide financial safety nets against these risks and other unforeseen circumstances. The following types of insurance coverage can help protect a business investment and are recommended for dispensary owners in Iowa:

• Commercial Property Insurance - This policy can reimburse a dispensary for property loss, including inventory, arising from fire, vandalism, or natural disaster
• General Liability Insurance - This covers customers' bodily injuries and property damage that occurs on a dispensary's business premises
• Workers' Compensation Insurance - This policy covers expenses related to lost wages and medical costs in the event that a dispensary's employees fall ill on the job or sustain work-related injuries
• Product Liability Insurance - This pays legal fees if a customer files a lawsuit against a dispensary for bodily harm caused by cannabis products purchased from that dispensary
• Errors and Omissions Insurance - Popularly called E&O insurance, this policy protects a dispensary against allegations or legal claims of product failures or its employees' errors and will cover legal fees and any court-ordered settlement

The following factors will impact the cost any Iowa medical cannabidiol dispensary will pay as insurance premiums:

• The required coverage limit and insurance type
• The insurance provider
• Number of years in the dispensary business
• The size of the dispensary's operations
• Location and the type of associated risks

How to Get a Grant to Open a Dispensary in Iowa

• Real Estate Loans - Help in financing the construction or purchasing a dispensary and are typically long-term loans
• Self-funding - Funds from a person's long-term savings
• Family and Friends Loans - Funds can be raised from relatives and friends at low-interest rates to finance certain aspects of a proposed dispensary
• Inventory Financing - Usually offered as short-term loans or revolving credit lines, inventory financing is used to finance the purchase of inventory
• Equipment Financing - A type of loan used to purchase equipment required for processing and dispensing cannabis products
• Purchase Order Financing - This is also a short-term loan used to fill customers' orders and is usually repaid with a small fee once the customers pay for their orders
• Loans from Cannabis Private Lenders - These are loans from private lenders that specialize in lending to marijuana businesses, but they usually come at high interest rates

Does Iowa Have a Social Equity Program for Cannabis Dispensaries?

No. Iowa has no social Equity Program for marijuana dispensaries or other cannabis businesses.

Does Iowa Tax Marijuana Dispensaries?

Hemp products, such as those with cannabidiol (CBD), are subject to taxation at the state's standard rate of 6%. In some areas, a 1% local sales tax is also applied, resulting in a total rate of 7% for those regions.