How to Construct a Dispensary Marketing Budget

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In business, every expense is—or should be—a calculated investment. Typically, expenditures are based on their predicted effect on the bottom line and estimated as a percentage of projected revenue. This is especially true for dispensary marketing budgets, without which no company can expect to expand its customer base.

Dispensaries are not immune from the need to market or budgetary constraints, but determining spend and measuring results can be a bit tricky in an industry where all commerce is hyper-local. With the average dispensary raking in $1 million per year, according to a 2020 Statista report, what is a reasonable marketing and advertising budget?


In general, a dispensary should allocate to marketing anywhere from 3 percent to 9 percent of sales or more on a monthly basis. Assuming $1 million per year in sales, that’s $2,500 to $7,500 per month.

Market parameters

Each business faces its own set of market forces, which ultimately determine how it conducts marketing and advertising campaigns. When determining what dispensary marketing budget you may require, ask yourself the following questions.

  • How big is the market you serve?
  • How many competitors do you have?
  • How may seasonality affect consumer traffic and revenue?
  • What kind of media would you like to use: billboards, local print, geo-targeted digital, social, local TV, or radio?
  • Do you expect to be able to directly correlate return on investment (in the form of sales) with your spend, or are you okay with subjective impressions and branding impact alone?

Market size should be the first factor you examine when considering how much to spend. How many potential customers are within driving distance? From how far away do they travel? Is your business near tourist destinations? Is delivery allowed in your area? If so, how many potential customers live or work within the deliverable zone?

Next, identify your competitors. How far away are they? How do you anticipate they might impact your sales?


Once you’ve established market parameters, turn your attention to the mechanics of the operation.

How can you make sure customers are finding you? If you’re using digital marketing platforms, the answer is a combination of search engine optimization (SEO) and outbound advertising. SEO is both an art and a science—a combination of maintaining updated and relevant content that is “discoverable” by search engines as well as making sure your address and hours are correct and all your reviews are answered in a timely manner (yes, even the ones where reviewers left only stars).

Outbound keyword buys, as in search engine marketing, are a tougher puzzle. Google will not take cannabis ads, and even though many have explored potential workarounds, these are typically unsustainable. While digital advertising options may be more limited in cannabis than in other industries, there are still ways to reach the right customers at the right times—namely, by converting them with branding and highly transactional ads. This can be accomplished effectively with programmatic ads using the appropriate targeting parameters for your operation.

The basic targeting parameters that almost always apply are 21-plus age-gating and some degree of canna-curiousness. (Gotta love this industry for our ability to create new words). The rest require a bit of alchemy combining location, visitation, and interests to meet the individual needs of the brand. If tracked properly through point-of-sale systems and baskets, digital programmatic becomes a provable medium that can link exposure to ads and sales. The advantage here is that the technology is adjustable. Programmatic algorithms are artificially intelligent; they learn what works and try to duplicate or improve upon previous successes.

Co-operative spending

If you’re unfamiliar with these concepts, it can be daunting to figure out how to allocate and where to spend a digital marketing budget. But does it all have to come out of your pocket?

The answer is “no.” By leveraging your customer base, you can encourage the brands you stock to participate in your marketing efforts. After all, marketing your dispensary also markets their products, right? Consider charging “slotting fees” for shelf space or a spot on your menu. Perhaps some of your customers’ favorite brands have co-op advertising dollars that will help promote their products at your location. Both of these practices are common in the auto, consumer electronics, and consumer packaged goods industries. They are win-win strategies that promote brands while bringing customers through your dispensary’s door.

There is a fair amount to unpack here, with perhaps more questions raised than answers given, but this important topic boils down to two basic marketing necessities: developing your brand messaging and promoting your operation. At the end of the day, it does “take money to make money,” and an “always on” approach to advertising and marketing is necessary in this highly competitive business. With a reasonable, wisely allocated marketing budget, anyone can ensure their business goes the distance.

JB Sugar WeedStreetNow

JB Sugar is Director of Digital Advertising at WeedStreetNOW, a performance marketing and advertising platform specifically for the cannabis industry. He possesses more than twenty years of experience in digital advertising sales at brands including TV,, and Sugar earned a certificate in cannabis plant biology at the University of Vermont and grows outdoors in his garden.