So You Want to Open a Smoke Shop, Part 1

So You Want to Open a Smoke Shop, Part 1

Published by Denise Mckenzie on Oct 29th 2019


Are you thinking about opening a smoke shop? Now is a perfect time, given that 11 states have legalized cannabis (soon to be 12), and a handful of others allow for legal medicinal use, have decriminalized it, or both. 

However, there are a few things you'll want to consider before you open your retail location. 

Yes, dispensaries and retail cannabis stores usually have some pipes and papers for sale. But with limited space dedicated to accessories, the need for stores that sell smoking gear is in high demand. With the smoke shop industry thriving, this is your golden opportunity to get a slice of the pie. Maybe you have been dreaming of owning a head shop since high school, or you already run an online store. Either way, making your move to a brick and mortar will take time and preparation.

What does it take to open a smoke shop?

You must have a game plan. You'll need to budget, get permits and licenses, scout and land the perfect location, stock shelves, hire staff, build your brand, market, and…oh yeah, open the doors and make some cash! Like any new business venture, it will come with hurdles, and poor business strategy can lead you straight to failure. If you are serious about opening a brick and mortar smoke shop, here is part one of our step-by-step guide to getting started.  

Don't wing it. Create a business plan.

First off, you are going nowhere fast if you don't have a solid business plan. What are you trying to accomplish? Take this opportunity to evaluate what you want for your storefront and begin to mold your business identity.

What kind of smoke shop will it be, and who is your target audience? What will you offer that brings value to the local community? Answers to these questions will become your mission statement. Think of it as your creative vision!

From there, your business plan should touch on each of the following:

Daily business operations

How will business run from day-to-day? Consider store hours, what POS system you will use, and how many employees you plan to hire. Do research online and learn about how other smoke shops operate. Step it up and do some recon by going to the stores in person!

Management

Who will run the show? Many business owners end up wearing too many hats- owner, operator, purchaser, social media manager, sign spinner. Decide what you want your role/s to be, but don't try to be Superman. Also, if you have a business partner, clearly define what each of your roles are in the company to avoid conflict or confusion later.

Products and services

What will your store retail? Will it offer other services? Give a general idea of what you will have on your shelves. A typical smoke shop will include anything from high-end glass, vaporizers, rolling papers, grinders, incense, storage accessories, lifestyle apparel, and other novelties. 

Is there any unique service you could offer? For example, if you blow glass and plan to open a shop attached to your studio, you could provide glass-blowing classes or demonstrations. This is just one way to add value to your customer's experience and to create a community around your store. 

Distributors and suppliers

Where will you be getting your product? You should already have a list of potential suppliers. Be sure to do your research to find the most dependable wholesalers. There are many out there, but try to find one that will, for the most part, serve as a one-stop-shop, like Windship Trading. Even at this early stage in your planning, you can reach out with a wholesale inquiry to learn more about opening a brand new store.



Figure expenses. Set a budget.

Knowing your minimum operating budget is crucial for success. There are many costs associated with running any retail shop. Often, people will sell only online to skip the overhead costs. But, if you budget correctly and keep a close eye on what you spend, you can turn a store barely breaking even into a money-making machine.

Consider the necessary expenses retail stores face:

Monthly bills – Total payments for rent, business insurance, payroll, utilities

Equipment and technology – Determine costs of tools for transactions such as a POS system, security equipment, computers, and any other supplies needed to operate daily

Storefront – Figure costs of any display equipment, product shelving or other furniture you will need

Inventory - Approximate how much it will cost to stock the store fully

There are other expenses to consider also, such as what it costs to register your business and whatever permits and licenses you'll need to operate legally, which we'll discuss below. Once you calculate this, you will know how much you need to make each month to break even and in turn, see what your budget should be over the next year (or however long you are projecting).


Register your business and obtain appropriate licenses.

If you haven't already, you need to register your smoke shop and claim your name. There are three common ways to do this. You can use a DBA (Doing Business As), create a business structure such as an LLC or corporation, or register a trademark. There are many online resources available to help you with this process.

The next part will take a little more research on your end. Smokes shops are required to have specific licenses other retailers may not have to acquire. If you plan to sell any tobacco products at all, you must get a tobacco license that complies with state and local laws. 

There may even be restrictions on which tobacco products you can sell, since the recent crackdown on flavored vaping and e-cigarette products. Several states have passed laws banning fruit flavors, including menthol in some cases, and even going as far as banning all vaping products, like Massachusetts. Be sure you know your local laws and where your state stands with the vaping bans. 

Also, some states require a resale certificate to retail any product, such as California. Resale certificates are related to your sales tax permit and are regulated at a state level. Once you are ready to order inventory for your shop, most suppliers will ask for a copy of it to ensure that you are legal to sell certain products in your state. 


Now you are ready to get started.

So far, we have covered the basics. You know how to create a simple business plan, outline a budget, and what sort of permits and licenses you will need to open your smoke shop. Our talented sales team is here to help you through the process. Feel free to reach out to us with any questions you have along the way. Stay tuned for part two of this article where we'll discuss how to land the perfect location, store design, stocking shelves, hiring staff and what marketing you'll need to plan your grand opening.