Open a Cannabis Business in North Dakota
Updated: Jan 14, 2019
MEDICAL MARIJUANA IN NORTH DAKOTA
In 2016, North Dakota voted in the general election to approve Measure 5, The Medical Marijuana Initiative, which provided qualifying patients the ability to obtain medical cannabis from state regulated non-profit compassion centers (dispensaries) and use medical cannabis if recommended by a physician. It included a provision for patients outside a 40-mile radius of a compassion center to cultivate a limited amount of cannabis for their own use. Although voters legalized medical marijuana by initiated measure in November 2016, state lawmakers, citing flaws, wrote a number of modifications and further definitions which substantially changed the law, lowering the number and range of qualifying conditions, in conjunction with the types of cannabis products prescribed (no edibles or concentrates), and the provision for home cultivation has been revoked. The amended laws, now SB 2344, may be found here.
NORTH DAKOTA MEASURE 3
The North Dakota Marijuana Legalization and Automatic Expungement initiative would amend the North Dakota Century Code to remove hashish, marijuana, and tetrahydrocannabinol (THC) from the list of scheduled I controlled substances and legalize recreational use of marijuana for individuals 21 years of age and older. A unique aspect about this initiative is it would also create an automatic expungement process for individuals with convictions for a controlled substance that has been legalized.
Measure 3 specifically includes:
Legalize the recreational use of cannabis in the state of North Dakota for people 21 years of age or older.
Create penalties for the possession or distribution to or by any individual under 21 years of age.
Create an automatic expungement process for individuals with convictions for a controlled substance that has been legalized.
Eliminate the state of North Dakota’s immunity from damages resulting from expungement lawsuits.
Unlike legalization measures approved in a number of other states, the North Dakota proposal would set no limit on how much cannabis people could possess or cultivate. It would allow a system of legal commercial cannabis production and sales. Voter registration for November general election deadline is Tuesday, October 9, 2018. North Dakota’s election begins Tuesday, November 6, 2018. If you are not registered to vote, you may do so here.
Compassion center means a manufacturing facility (grower/production) or dispensary (retail store). NDCC Section 19-24. 1-12 states that up to two (2) manufacturing facilities and up to eight (8) dispensary may be registered. The state may opt to register additional compassion centers if they determine additional dispensaries are necessary to increase access to medical cannabis for registered marijuana patients. Unfortunately, because there is no metric to gauge medical marijuana patients due to the delays in state legislature, supply and demand estimations won’t be available until there is adequate statistical data to make accurate projections.
Manufacturing: licensed to produce, process, and other related activities including: acquiring, possessing, storing, transferring and transporting marijuana and usable marijuana for the sole purpose of selling usable marijuana to a licensed dispensary.
Dispensary: licensed to purchase usable marijuana from a manufacturing facility, and related activities including: storing, delivering, transferring and transporting marijuana to a registered qualifying patient, directly or through their registered designated caregiver. The activities of a dispensary include providing educational material and selling usable marijuana and related supplies to a registered medical patient or their designated caregiver.
At this time, two medical marijuana manufacturing facilities have been selected to move forward with the business registration process. The two entities selected are Pure Dakota, LLC, located in Bismarck, and GR Vending ND LLC, dba Grassroots Cannabis, located in Fargo.
DISPENSARY REGIONS AND APPLICATION PHASES
There are eight (8) regions for dispensary locations. Applicants may apply to be located anywhere within one of the dispensary regions. The regions are comprised of a 50-mile radius from eight communities in North Dakota: Bismarck-Mandan, Devils Lake, Dickinson, Fargo, Grand Forks, Jamestown, Minot and Williston. An entity is not authorized to possess more than one license. If an applicant is applying for more than one region and receives the highest score in more than one region, the entity will have to select one region in which to operate.
The state is accepting applications for dispensary licenses in three phases. The first application phase closed August 7, 2018 for the Bismarck and Fargo regions of the state. The second dispensary application phase window for Grand Forks and Williston opened on September 12, 2018 through October 10, 2018 (it is anticipated that an applicant in each region will be selected by the end of November). The third phase will open in January of 2019 for the four remaining dispensary regions: Devils Lake, Dickinson, Jamestown and Minot.
For a cannabis business application in North Dakota to be complete and eligible for review, the following information must be included:
The suitability of the proposed dispensary location, including compliance with local zoning laws, and the geographic convenience for registered medical marijuana patients and registered caregivers to access.
The character and relevant experience of the principal officers and board members, and/or of the member-managers, managers, executives, including training or professional licensing and business experience.
Detailed and complete business plan and standard operating procedures, which demonstrates compliance with section 19-24.1-27. for operations and services including staffing and training plans.
The amount of capitalization required to successfully operate and the applicant’s ability to provide an adequate supply of cannabis products to registered medical marijuana patients and caregivers.
Detailed plans for recordkeeping, safety, security and the prevention of diversion, including the proposed location and security devices employed.
Detailed plan for making cannabis products available on an affordable basis to registered patients with limited financial resources.
Detailed plan for safe and accurate packaging and labeling of cannabis products.
Detailed plan for testing usable cannabis.
HOW TO APPLY
Securing a commercial cannabis business license in North Dakota is your first hurdle, and unlike other states, North Dakota has set strict limits for the number of dispensaries allowed, as well as in which parts of the states they may operate. The contents of a North Dakota dispensary application tend to be complex and requires a great deal of intricate data, such as financial planning, standard operating procedures, community and environmental impact planning, citation and references to state statues, amongst other information that must be carefully crafted, presented and explained. The state is really emphasizing the need for completed and detailed business proposals to make their decision. Additionally, there are many concerns to keep in mind when drafting your cannabis business application; it is essential to proofread each and every page, part and element with sharp eyes. After all, this is your first impression and quite possibly your only chance for the foreseeable future to prove to the state of North Dakota that you have the means, and are willing and able to build, operate and manage a successful and compliant medical marijuana business in North Dakota.
Compassion Center (dispensary) applications will be granted on a merit-based application process, which will consider: the suitability of the proposed location; the applications character and expertise in related fields; the proposed centers plan including record keeping, safety, security, staffing and training; sufficient capitalization; and ability to make medication affordable for patients. The requirements for a complete application are included in NDCC Chapter 19-24.1 and NDAC Chapter 33-44-01. Completed applications may be hand delivered or mailed to the Accounting Division of the North Dakota Department of Health. Applications faxed or emailed will not be considered and there is not an online portal to submit dispensary applications. The department may disqualify any applicant who fails to pay the application fee prior to the deadline and/or submits incomplete, false, inaccurate, unresponsive or misleading information within the application. If the department disqualifies your application, the decision is final. The more complete your cannabis business proposal, the greater your chances of advancing to the next round of implementation in North Dakota. The need for cannabis business consulting in North Dakota is on the rise, especially if recreational cannabis is legalized, as current applicants are attempting to winnow the application complexities.
APPLICATION FEE AND STARTUP CAPITAL
The initial costs of a medical cannabis business facility license in North Dakota includes a non-refundable application fee of $5,000, which is required with the submission of each application. Applicants selected for registration must also pay:
$110,000 certification fee for a manufacturing facility registration every two (2) years.
$90,000 certification fee for a dispensary registration every two (2) years.
Breaking into the medical marijuana industry in North Dakota will require a pretty penny before you can even launch your operation. The J. Whitney Group, a cannabis business consulting firm, typically anticipates a minimum capitalization of $250,000 to $500,000 will be required for facility build-out costs and initial operating expenses in addition to the application and registration fees stated above.
If you are hoping to qualify for a dispensary license in North Dakota, whether it be medical or potentially recreational, working closely with a cannabis business consulting firm is a surefire way to succeed. North Dakota is an emerging market, leaving the application process and new regulations unclear and difficult to navigate, not to mention the steep competition considering the limited number of licenses available. In a heavily regulated industry, such as the cannabis industry, a breadth of experience in conjunction with the flexibility to adapt as circumstances change is a bare necessity, not a recommendation. At The J. Whitney Group, we help build cannabis businesses that thrive, from licensing, start-up and launching, to operations management. Whether you are looking for a final proofreading with valuable feedback about improvements to strengthen your application, or need application assistance from start to finish, we have a team of dedicated professionals to help you each step of the way. Our Application Advising + Review will give you more confidence and peace of mind knowing you submitted the best possible application. Contact us today and discover how we will help you overcome the first hurdle, and more, to create a winning application and successful, thriving cannabis business!