What Surprised Me About Dispensary Economics Coming From Traditional Finance

• Dispensary economics behave differently than traditional retail models
• Gross margin does not always translate into predictable cash flow
• Compliance and operations materially affect financial performance
• Assumptions from traditional finance often break down in cannabis

Before entering cannabis retail, my background was in traditional finance, where unit economics, margin modeling, and cash flow forecasting follow relatively predictable patterns. Entering the dispensary world challenged many of those assumptions. While the financial fundamentals still matter, regulated cannabis introduces constraints and variables that materially change how those fundamentals play out in practice.

One of the first surprises was how misleading gross margin can be on its own. On paper, dispensaries may appear healthy from a margin perspective. In reality, regulatory costs, security overhead, compliance labor, and inventory constraints compress usable cash far more than expected. Strong gross margins do not automatically translate into operational flexibility.

In traditional finance, cash flow timing is often manageable through standard banking tools. In cannabis, access to banking, payment processing, and credit is more limited. Inventory purchasing, tax obligations, and payroll timing create pressure points that require constant attention. Managing cash flow becomes a daily operational concern, not a quarterly exercise.

Another key realization was how directly operations impact financial performance. Staffing inefficiencies, slow throughput, compliance missteps, and inventory shrinkage immediately affect cash and margin. Financial models only work when supported by disciplined operations. In dispensaries, operational execution and financial health are inseparable.

Compliance is not a static expense. Ongoing training, reporting, audits, and regulatory changes introduce recurring and sometimes unpredictable costs. From a finance perspective, these costs behave more like fixed overhead than variable expenses. Underestimating compliance cost is a common mistake for first-time operators.

Coming from traditional finance, I initially focused on optimizing models. Experience in cannabis retail has shifted that focus toward building durable systems. Reliable operations, disciplined inventory management, and conservative cash planning matter more than aggressive projections. These lessons shape how we approach both financial planning and partnerships at ShowGrow.