Startup Costs For a Cannabis Dispensary in Thailand
r/CannabisThailand Newsletter - Issue #89
Sawadee Everyone,
Last week, it seemed like you folks really dug the rundown I shared about what it's like to run a cannabis dispensary. Got me thinking, why not dive into what it actually costs to start one up?
Since I'm in Phuket, the figures I'm tossing your way are mostly from what I've seen around here. But if you're not in Phuket, no sweat – you can adjust these numbers to fit your neck of the woods. Keep in mind, though, stuff like rent might hit your wallet differently depending on where you're at, but other things, like your POS system, shouldn't really change with the scenery.
Also, I don’t know why but anytime numbers are posted in relation to anything having to do with Thailand and finances, there’s always some dude that’s like, “I could do it for half that.” Great, but I’m giving numbers as reported to me, not the cheapest possible price for everything. I find that a better guide as it’s the most likely price someone will pay, instead of the price you could pay if you lived here 20 years, spoke Thai fluently, and know a guy who knows a guy.
So, where do we start?
First up, location, location, location. You gotta nail down a physical spot for your shop to get that dispensary license. Without a storefront, you're pretty much stuck in the dream phase.
From what I've seen, rents can swing from 20,000 baht for a modest spot to a whole lot more for a prime slice of Patong near Bangla Road. But I've spotted some decent dispensaries doing their thing for about 25,000 baht a month, so let's roll with that for our rent estimate.
To lock in your lease, you're likely dropping first month, last month, plus a security deposit. That's about 75,000 baht out of the gate.
Okay, so you paid 75,000 and you have a signed lease in your hand, what’s next?
This may sound backwards but now go register your company. In case that sounds confusing, if you are starting from scratch, you will probably need to lease your location before you have a company.
There are two main reasons for this:
Practicality: It can take anywhere from a few days to a couple of weeks to get your business formation, company seal, tax id, etc, sorted out. You will probably be looking for real estate during that period. If it’s a killer deal either because of great location or because of price, you’ll likely be forced to act on locking up a lease before your company formation is completed. Sometimes things move fast and this gives you the most options.
Generally, it’s easier to get your landlord to re-sign a lease with your new company information than it would be to go back to the DBD and update your shop location with them (though you may need to do that too if you already began the company formation process). Your landlord has an incentive to keep you happy and making rent payments. The DBD has no such incentive beyond just doing their job.
Once you have a company, as mentioned above, you will need to update the lease to have your new business be the lessee. The business must be the lessee when you apply for the dispensary license.
I would recommend hiring a competent lawyer to do the company formation (especially if anything above seems confusing).
Unfortunately, finding a competent lawyer that also knows anything about cannabis is not easy to find. Plan on doing a lot of interviews with lawyers. Ask them questions that you already know the answers to so you can see if they know what they’re talking about.
And they don’t necessarily need to be a lawyer. I have a business that is set up via my accountant (you will need one of those too).
I would put the company formation, licenses, and work permit on their plate leaving you to focus on setting up the actual business.
Expect to pay anywhere from 30,000 baht to 100,000 baht for these services.
That’s a pretty wide range but there’s a big difference between having real Thai partners that own a majority of the company and using nominee shareholders. The less rule bending that needs to be done, the cheaper the setup costs.
Let’s say 60,000 baht for legal and business formation as an average if we don’t need to bend the rules much.
Depending on what you leased, you can have anything from four empty walls all the way to a fully furnished business ready to go.
Most people will be closer to four blank walls so let’s budget based on that.
Counter = 30,000 baht
POS (point of sale - ie the cash register) system = 20,000 baht
Printer = 1500 baht
Display cases = 10,000 baht each, figure at least 2
Couches, chairs, tables, etc = 60,000 baht
Decorations, etc = 10,000 baht
Weed jars and selling supplies (scales, gloves, tongs, Boveda) = 5,000 baht
Packaging = 3,000 baht
There are a lot of optional things here too. Like, if you plan on selling cold drinks, you’ll need a drink cooler, if you plan on storing weed in a wine cooler, you’ll need one, if you want nice drapes and rugs, you’ll have to add those in.
While you’re building out your shop, you should start working on logo and signage. The price for a logo can be $5 on Fiverr all the way to millions of dollars to hire a top design firm. I assume nobody here is doing the million dollar option so let’s say maybe 15,000 baht for logo design (average cost on 99 Designs) and another 30,000 for shop signage.
Don’t forget to go to the local gov office and pay your sign tax.
Now you need to stock your shop with products.
Figure 10 strains, 50 grams of each strain, or basically half a kilo. Wholesale prices right now are around 100 baht a gram so let’s say 50,000 baht in weed.
You’ll need rolling papers, cones, bongs, pipes, rolling trays, grinders, and other miscellaneous items, figure another 20,000 for smoking supplies.
Where does that put us so far?
75,000 lease
60,000 legal and company formation
149,500 shop furnishings and basic supplies
45,000 baht logo and signage
50,000 weed
20,000 smoking supplies
399,500 baht for the most minimal of setups. This would allow you to open the doors except for staff and waiting for a work permit.
Most of the people I spoke with said they spent closer to 1 million baht per location.
The 399,500 budget gets you the most basic setup possible. Once you start buying drink coolers, TV menu displays, video games, CCTV, safes, lighting, repainting, doing any level of renovation, etc the prices can start climbing very quickly.
Pro tip: Spend a few days visiting different dispensaries before you even commit to getting into the weed game, making notes on what catches your eye and what you'll need. Even little things, like customer charging stations or staff uniforms, can add up.
Seemingly small decision like, you want to have an area for people to be able to work on their computers (a quasi-coworking space) might mean adding a 2 meter long table, which means you need room in your shop for a 2 meter long table, which could bump up your square meterage requirements, which will probably mean paying more in rent to rent a larger place.
The other thing to keep in mind is that you aren’t necessarily in the weed business, you’re in the retail sector. When you visit other shops looking for ideas, look at how they operate. How are they allocating floor space between products, operations, and customer areas? Is everything laid out well so customers can find things easily? Do they greet customers right away or do they let them browse first?
Instead of thinking, “Wow, a game room would be so cooooool” you should be thinking, “They have about 30 sqm devoted to gaming, how much additional revenue is that 30 sqm generating compared to what it’s costing them in extra rent?”
So, I would recommend rounding up to 500,000 on the bare bones end and the million that most people quoted me sounds very realistic for an average cost for a nicer shop.
I probably haven’t covered everything but that should get most people in the ballpark. So much of the cost over and above the bare bones option is up to the shop owner in terms of what they want to offer their customers.
Again, in case people skipped the beginning, these prices are applicable to Phuket for a pretty basic dispensary. You will not be starting a Wonderland on Sukhumvit Soi 5 in Bangkok for a million baht. The signage alone probably cost more than that and the rent is probably 500,000 - 1,000,000 baht per month (total wild guess based on what I’ve seen bar rents going for in the same general area).
And a million baht to open a dispensary might be total overkill for some sleepy village in Issan.
Adjust your numbers accordingly.
One last parting shot piece of advice is that if you have exactly 399,500 baht burning a hole in your pocket and anything I said above has made you believe that’s all you need to start a dispensary, you may want to take a step back.
You may not turn a profit out of the gate. Do you have enough cash to cover salaries, rent, etc for a few months until you build up enough regular business to cover your costs? Your landlord, staff, suppliers, etc don’t care about your money problems, they just want paid and they can ruin your business very quickly if you can’t pay. Your dreams of being a weed mogul will dry up very quickly when you see a padlock on your dispensary because you haven’t paid the rent.
It’s not actually a startup cost but I think it would be unwise to not factor in at least three to six-months worth of operating costs (rent, payroll, etc) as emergency reserves. So if your rent is 25,000, payroll is 20,000, and misc expenses are 10,000, that’s 55,000 baht per month, or 165,000 - 330,000 baht you should have in reserves.
You really need closer to 564,500 - 729,500 to maximize your chances of success.
That’s enough number crunching for today . . .
Stay lifted and enlightened,
Don’t forget that we’ve partnered with some dispensaries for exclusive deals available to members of this newsletter and the r/CannabisThailand sub on Reddit. Just type “Dank Deal” into the comments of any post and the AutoMod will send you the current discounts being offered.
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