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How to open a dispensary in Iowa

Overview

Opening a dispensary in Iowa involves navigating a complex landscape of regulations and requirements, and this guide on how to open a dispensary in Iowa provides a comprehensive overview of the essential steps and considerations. Iowa has a medical cannabis program, allowing for the use of cannabis for medical purposes under specific conditions. However, recreational cannabis remains illegal in the state. 

The Iowa Legislature often reviews changes to the medical cannabidiol program. Senate File 2335, passed by the Iowa Senate on April 2, 2024, aimed to increase licensed dispensaries from five to ten. However, the Iowa House did not pass the bill before the 2024 session ended. The next chance for changes will be in the 2025 session, beginning in January.

From understanding state regulations to securing the necessary licenses, this article aims to equip aspiring dispensary owners with the knowledge and resources needed to successfully enter the medical cannabis market in Iowa. This information will be invaluable whenever a new dispensary license application period opens.

Medical Marijuana Legalization

The history of medical marijuana in Iowa began with the Medical Cannabidiol Act (SF 2360) in 2014, which allowed limited use of CBD oil for intractable epilepsy. This was expanded significantly in 2017 with House File 524, permitting medical cannabidiol for conditions like cancer and chronic pain, and establishing licensed manufacturers and dispensaries. Further adjustments were made in 2019 through House File 2589, increasing the THC cap and expanding qualifying conditions. Today, Iowa’s medical marijuana program continues to evolve under the oversight of the Medical Cannabidiol Board.

Medical Marijuana in Iowa

Iowa’s Medical Cannabis Program, administered by the Iowa Department of Health and Human Services, provides patients and caregivers with access to medical cannabis products for the treatment of debilitating medical conditions. 

To qualify for Iowa’s Medical Cannabis Program, patients must be diagnosed with one or more of the debilitating medical conditions such as Cancer, Multiple Sclerosis with severe and persistent muscle spasms, Seizures, AIDS or HIV and more. Patients seeking to participate in Iowa’s Medical Cannabis Program must follow several steps. First, they need to obtain certification from a licensed healthcare practitioner in Iowa, confirming the diagnosis of a qualifying condition. After obtaining certification, patients must complete and submit the patient application through the Iowa Department of Health and Human Services portal. The application process requires the payment of a fee for processing. Once approved, patients will receive a medical cannabis registration card, valid for one year.

Cannabis License Types Available in Iowa

In Iowa, two main types of licenses are required to operate within the medical cannabis industry: the manufacturer license and the dispensary license. Each license has specific requirements and guidelines.

Manufacturer License

A manufacturer license permits the holder to produce medical cannabidiol. This includes cultivating, harvesting, processing, packaging, and transporting the product. The application process involves a background check and submission of a nonrefundable application fee of $7,500. Licensed manufacturers must also pay an annual regulatory fee and cover costs associated with inspections and other administrative expenses.

Dispensary License

A dispensary license allows the holder to dispense medical cannabidiol to patients and primary caregivers. Up to five dispensary licenses may be issued statewide. The initial application fee for a dispensary license is $5,000, and licensed dispensaries are subject to annual fees for regulatory and inspection purposes. Applicants must also reimburse the Department of Public Safety for background investigation costs.

Steps to Open a Dispensary in Iowa

Iowa is not accepting new applications for cannabis licenses at this time. However, here is information regarding the dispensary license application process under the Medical Cannabidiol Program:

1. Understand the Legal Requirements

Familiarize yourself with the Iowa Code chapter 124E and the administrative rules governing the Medical Cannabidiol Program. These documents provide detailed information on the legal framework and operational standards for dispensaries.

2. Submit a Request for Proposal (RFP)

The Iowa Department of Public Health issues a Request for Proposal (RFP) to select and license dispensaries. Interested parties must submit detailed information about their proposed operations, including:

  • Geographical location of the dispensary
  • Technical expertise of staff
  • Qualifications of employees
  • Financial stability
  • Security measures
  • Retail product cost projections

3. Background Checks and Application Fees

Applicants must undergo background checks conducted by the Department of Public Safety. The initial deposit for background checks is $10,000 per business owner, with additional funds required as necessary. Employees also require background checks, with a $200 deposit per employee.

4. Comply with Security and Inventory Requirements

Dispensaries must implement robust security measures to prevent unauthorized access to and diversion of medical cannabidiol. The Iowa Department of Public Health requires dispensaries to maintain a secure sales and inventory tracking system, operational 24/7, to monitor inventory, sales, and the total tetrahydrocannabinol purchased by patients.

5. Facility Inspection and Licensing

The Department of Public Health conducts regular inspections of dispensary facilities to ensure compliance with state regulations. Upon passing the inspection and meeting all requirements, the department will issue the dispensary license. This license must be renewed annually.

6. Begin Dispensing Medical Cannabidiol

Once licensed, dispensaries must begin dispensing medical cannabidiol by the specified date, ensuring patients and caregivers have access to the product. Dispensaries must maintain accurate records of sales and inventory as part of their ongoing compliance responsibilities. For information about dispensary rules and regulations, you can visit this link.

Recreational Use in Iowa

Efforts to legalize recreational cannabis use in Iowa are ongoing, with advocates pushing for reform due to potential benefits like increased tax revenue and reduced criminal justice costs. Despite these efforts, recreational cannabis remains illegal in Iowa. We will update this section with any new developments on this issue.

As Iowa continues to develop its cannabis program, we will keep you informed of any news regarding marijuana legalization and the establishment of dispensaries in Iowa. By subscribing to our Iowa Cannabis Mailing List (below), you will receive updates on relevant and hard-to-find information about Iowa’s legalization efforts. This includes, but is not limited to:

  • What are the most recent developments regarding the legalization of cannabis in Iowa?
  • When will applications for new cannabis licenses be available?
  • What special programs will be offered?
  • And more

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