Prince and princess of pot are expanding their dispensary empire, whether it’s legal or not

Jodie Emery struts through the hazy hallway of Cannabis Culture’s flagship Toronto store, through a 15-person deep checkout line, and then past the extracts, pre-rolled joints and display jars of bud into the lounge area where a group of pot enthusiasts is sparking up.

It is just after noon on a Wednesday.

The 32-year-old Cannabis Culture owner makes several attempts to call her husband, Marc, a famous marijuana legalization advocate, to wake him up. The Prince of Pot likes to sleep in, she explains, because he works past midnight, which is closing time at his shop in Toronto’s gay village downtown.

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Marc emerges half an hour later. He joins employees behind the counter to recommend strains and weigh portions for the rapidly growing lunchtime rush. Marc is focused on the Toronto flagship locale he owns, while Jodie oversees the franchising and most other aspects of the business.

“This is what legalization looks like,” Marc said. “That’s exactly what we want to present to the government: You can go and do your rules and your thing and we’re going to do our thing.”

Many in the scene consider the Emerys weed royalty and the couple’s hard-fought decades-long dream of legalization may be on the cusp of fruition. But even as the government pursues legislation to set up a legal recreational market, the question of whether dispensaries such as theirs will be allowed to operate above ground hangs in the air.

Depending on the specific wording of the legislation, Canada’s prince and princess of pot could very well be excluded from the opportunity to earn a legal living in a recreational marijuana market that is expected to be worth as much as $22.6 billion annually.

In the meantime, a plethora of ganjapreneurs are looking to gain a foothold in the coming pot economy through the only current legal path, by becoming a Health Canada licensed medical marijuana producer. Many more are simply opening dispensaries on the sly, hoping to fly under the radar as they count down to legalization.

The Emerys worry licensed producers will monopolize the commercial system, but even if they are shut out, it will not deter the defiant outsiders from their aggressive expansion plans.

The couple is relatively new to the dispensary business, jumping in less than two years ago with their first store in Vancouver and deciding to expand last year at the request of interested investors.

“When the opportunity came up to start dispensing cannabis I thought why not? If everybody else is doing it why shouldn’t we after all we’ve done?” Jodie said.

It’s a decision that has paid off so far. The crowd at Cannabis Culture’s flagship dispensary was just an average weekday, and sales spike on weekends. This location, one of 18 franchises, can pull in between $30,000 and $40,000 a day.

One man calls out to Jodie to say he’s one of her 38,000 Twitter followers. Another guy thanks Marc for his years of sacrifice to the cause, which include a five-year sentence in a U.S. federal prison.

For a guy who sometimes gives pot away for free, Marc keeps a keen eye on performance metrics and knows the exact headcount of customers they had last Friday: 1,783.

“You don’t have to be a genius to figure out that’s a good cash-flow business,” he said.

It could be even better if dispensaries like his become legal.

A task force report on legalization has recommended the government allow storefront locations in addition to the current mail-order system and acknowledged a majority of people who participated in the consultation process prefer a distribution system that includes dispensaries.

Yet it remains unclear whether new government legislation will allow a place for the 400 or so dispensaries already operating.

The shops, most of which maintain at least an ostensible medical purpose, argue that they fill a gap for consumers by providing in-person advice, fostering competition and keeping prices low.

Marc has set an ambitious goal of opening 200 locations by the end of 2017, whether they are legal or not.

“Those questions to me are irrelevant, we just do what we do. We’re going to keep doing it. As long as the law is wrong we will disobey,” Marc said. “After prison, I didn’t want to be relegated to irrelevancy so I had to take the lead in provoking the authorities by opening up retail shops.”

And provoke he does.

Marc was most recently arrested just before Christmas, when cops raided six Cannabis Culture locations in Montreal, the day after he made a splashy debut in the city by bestowing free “nugs,” or marijuana buds, on throngs of admirers. Similarly, the flagship Toronto location opened a day after raids shuttered dispensaries across the city last May.

How police handle dispensaries varies widely across in the country, no more so than in the country’s two biggest markets. Vancouver has opted for a licensing system while Toronto police continue to crack down and raid dispensaries, citing public safety concerns.

Emery wears his 289 arrests, eight raids and five years in prison as a badge of honour. After all, the raids attract media attention and that attracts even more customers.

“Raids are just part of doing business. They’re annoying and they certainly set you back, but ultimately the police are wrong and we’re right,” he said.

Raid-related expenses, including covering the costs of lawyers for any employees who get arrested, have been built into the cost of doing business.

Those questions to me are irrelevant, we just do what we do. We’re going to keep doing it. As long as the law is wrong we will disobey

Stan Behal/Toronto Sun/Postmedia Network

Stan Behal/Toronto Sun/Postmedia NetworkMarc and Jodie Emery’s Cannabis Culture store on Church Street in Toronto. The couple, considered pot royalty, can’t keep up with the requests they have for franchise licences for their business model.

But the Emerys also have to think about the more mundane aspects of growing a franchise business, such as how much of a cut they should take. Jodie has been studying the Subway sandwich model and working with a franchise lawyer to help figure it out.

Cannabis Culture’s model asks for a $10,000 investment up front, plus a royalty of six per cent for the first six months, rising to seven per cent afterward. But she thinks they might be lowballing it. Subway, by contrast, asks for $15,000 upfront and a 12.5-per-cent royalty each month.

Cannabis Culture franchises can take in anywhere from $2,000 to $40,000 a day depending on their location, but about 60 per cent of that goes back into the stores, mostly toward buying new product, Jodie said.

Like all dispensaries, Cannabis Culture currently operates outside the law, so the Emerys have established their own guidelines: they don’t record customer information, do not require a doctor’s note and ask customers to show ID to prove they are over 19.

HST is tacked on to all prices and payroll taxes are collected. Marc estimates they have turned over about half a million in taxes to the government.

The details of their supply chain are, somewhat understandably, sketchy. Jodie said much of the product comes from brokers who get it from those with medical growing licences. Many of the connections have stood for decades.

She equates the growers to farmers at a local market. They are proud of their product and would like to come forward, but prohibition forces them to stay in the dark.

Product quality is mostly assessed by a sight and smell test by store employees. But bigger locations such as the flagship store owned by Marc work with a lab to test strains for pesticides, mold and tetrahydrocannabinol (THC), the psychoactive ingredient in pot, and cannabidiol (CBD), the ingredient said to have therapeutic effects. The tests can cost about $150 each, prohibitively expensive for most small-time operators.

My feeling is if I am not allowed to sell marijuana after all the work I’ve done this far, then who does have that right?

Tyler Anderson/National Post

Tyler Anderson/National PostMarc Emery, owner of Cannabis Culture, speaks with customers at his store on Church Street in Toronto. Like all dispensaries, Cannabis Culture currently operates outside the law.

Despite some unusual costs factored into the underground business, interest in Cannabis Culture and the Emerys runs high among investors — a diverse group that includes fellow activists as well as deep-pocketed business-types — who don’t seem to be deterred by dispensaries’ questionable legal status.

“‘I’ve got hundreds of franchise request emails coming in from all across Canada and even the U.S.,” Jodie said. “People are begging and I can’t even get back to them.”

Cannabis Culture’s brash business style irks some other dispensary owners worried that the Emerys’ in-your-face promotion style could turn off Canadians who are on the fence about legalization and the role of dispensaries within the system.

But Jodie is dismissive of their critics: “They’re looking at Cannabis Culture with a bit of green in their eyes saying you guy are big corporate cannabis now.”

Meanwhile, the Emerys are also feeling squeezed from the publicly traded licensed producers that they believe are trying to monopolize marijuana and shut them out of a free market. The Emerys say the market is big enough for all types of players — especially theirs.

“We’ve paid our dues. My feeling is if I am not allowed to sell marijuana after all the work I’ve done this far, then who does have that right?” Marc said. “And I don’t believe anybody else has that right over me.”

Financial Post

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source via Financial Post

By | 2017-02-03T12:00:04+00:00 February 3rd, 2017|Blog, News|Comments Off on Prince and princess of pot are expanding their dispensary empire, whether it’s legal or not