Jen Lamboy:

Thank you for joining us. I’m Jen Lamboy, Director of Strategy for Hybrid Marketing Co., a Denver-based business outcomes-focused cannabis marketing agency. And I’m joined today by Greg D’Agostino from Tenax Strategies. If you’re still familiarizing yourself with Greg or his organization, take a moment to hop on LinkedIn and follow them. 

They’re producing a lot of great content and have their finger on the pulse of the cannabis industry. Of course, this webinar is specific to dispensaries; it’s designed to help you show up and compete in this highly competitive space. But first, I should provide some background about Tenax Strategies, a cannabis consulting company.

Tenax works with organizations in all stages, from concept to commence operations. Greg has been in the space for over 20 years, bringing a deep well of experience from his work with highly regulated industries; I follow that same tenure. I’ve been in this space, working with highly regulated industries for over two decades. 

So he and I are both familiar with the pain points and red tape specific to the cannabis industry. We also both understand what it’s like working with complex legislative and regulatory issues. Greg, please give us a little more information about you and your organization, Tenax Strategies.

Greg D’Agostino:

Jen, thank you so much. Our firm helps operators, whether new to the industry or multi-state operators looking to expand into new states, navigate the state licensing, municipal licensing, and regulatory process. 

So we are by trade, licensing, and permitting experts. Still, our services are end-to-end project management, taking operators from the initial steps they need to penetrate a new market by opening their doors and becoming cash flow positive. 

And we now offer post-operational compliance oversight in some mature states for companies that want to avoid bringing that in-house or need assistance. That includes initial site selection, dealing with the municipalities and the state regulators, local support, and state licensing and managing land use applications. 

Almost every site and every state require some special permit or a site plan review. And then just navigating all the regulatory frameworks around both the application stage and the final inspections to get doors open and become operational.

Jen Lamboy:

We see a lot of folks, especially on the emerging market side, coming to us for marketing support, and we’re realizing that there needs to be more education. 

Folks are often new to the industry or retail, so it’s great to work with a partner like Tenax Strategies, which has the nuts and bolts lined up. Could you give us a sense of end-to-end? What does that timeline look like for somebody just now applying for a license? What timeline can they expect to open doors?

Greg D’Agostino:

In most cases, I’d put doors open around the 18-month mark, but that depends on where their interest intersects with the marketplace based on where regulators are in addressing the application queue. For example, suppose you were applying on March 15th with everybody else in New Jersey. 

That timeline may have been slightly extended because they were dealing with this colossal glut of applications they had to work through to review your application. So, in addition to the regulatory application review that has to happen at the state level, one of the other longer lead time items in the project usually is the land use process, and that takes some time not only to develop the documentation but also just because there are land use laws in place. They vary from state to state, creating some timeframes for seeking land use approval.

Jen Lamboy:

How are the state websites? Are they well-designed and clear on the necessary steps, or is smoke in the way? Is it easy for folks to understand the appropriate steps to secure a spot?

Greg D’Agostino:

Overall, the state regulators do an excellent job sharing information. Usually, when markets open (we saw this in Massachusetts and New Jersey, and now you’re seeing this play out in New York), the regulatory body starts to determine all those steps and how applicants navigate their portals. Overall, the regulators try to put forward a lot of good information. 

A lot of times, at the beginning of those processes, they’re learning and figuring it out on their own because, generally, these are new standalone regulatory bodies that sometimes become a hybrid of a previous government agency that was in place. So as the market continues to mature from those initial application periods, that information becomes clearer, and most states have a medical program in place before adult use.

So, if we’re talking about the adult-use markets, and that’s a lot of the activity the industry is most interested in because that scales to opportunity, at least there’s been a dry run from the regulatory body when navigating this application process, so usually when the adult use applications open up, they’ve fleshed some of that stuff out. 

There’s a high learning curve for some of the other components you have to navigate as it relates to going from the application stage to actually opening up your doors. Many people have to navigate a land use application required sometimes by the state and often by the municipality. And that’s where you see the most significant learning curve on where people have to try and figure out how to navigate that process.

Jen Lamboy:

So, we’re seeing folks open a single store, let’s say, in New Jersey with plans and then open in New York, almost like they’re mini-MSOs. Is that going from state to state? How does that work? As far as the large learning curve, getting used to the rules and regulations, and moving into a new state – is that easy to translate?

Greg D’Agostino:

It actually translates well. Our company helps operators nationwide in legal markets, so we see the regulatory frameworks in Massachusetts versus those in New Jersey. And while they certainly differ, many core application requirements and facility and operations components map well. There’s not a significant deviation. 

Some of the early adult-use legal markets needed a more well-thought-out regulatory framework. Still, as you see states in the Northeast put their regulatory framework in place, which informs the application and the timeline and all those things; there are many similarities.

Anyone that has opened a dispensary will tell you the first location was a significant learning curve. That’s why we wanted to do this today; to give people tips on what they should be thinking about when they’re making plans, either to begin a new dispensary or, frankly, even to expand into a new marketplace where they can take their lessons learned and set the foundation for a more efficient process in getting through to doors open and doing that in a way that builds long-term success.

Jen Lamboy:

Where does in that timeline, I’m looking at the roadmap you guys have built, and I’ll share that in just a moment, but at what point should people be thinking about budget, that duration of 18 months? What does that budget even look like? What should they have nested away, set aside to get rolling, and what could they realistically generate revenue-wise in the first year?

Greg D’Agostino:

There are a few questions in that. So where you want to think about the money is on day one. I say that because many people have a lot of vim and vigor around wanting to get into these operations. It’s an exciting marketplace. 

Indeed, there are opportunities to generate a good business there, but where you can really fall short is to get six or nine months into that process and then find out that you need more money. And so you’ve gotten some of these approvals and had some success on your pathway to getting your doors open. You’re getting to the construction phase and now have to raise money. All of that kind of capital that you built up in consolidating the timeline to getting your doors open, you start to lose it.

And in many of these businesses, especially for first-time operators, you are burning money for an extended period before you get cash flow back into the entity, into the operation, and then move toward profitability. Generally speaking, in terms of total budget, if you’re talking about a single retail dispensary, we typically tell our clients to budget between a million and a million and a half dollars. So that includes soft costs like attorneys, engineers, architects, and project managers like ourselves. So you’ve got quite a bit of soft costs and application fees. Those application fees can be at the municipal and state levels, and you have your construction. 

So built into that construction, it’s not just a typical interior fit out of a retail store. You’ve got to be thinking about security. Security is a massive element of these stores and a significant cost driver for overall construction costs.

Something we always recommend to our clients in addition to planning for that capital outlay from day one, that’s vital to your success in getting your doors open and really your long-term success overall because so much of the foundation for your store, which informs your customer experience, is built during the construction phase and the layout of the store, the planning of the whole operation. 

One of the most fundamental things to having a successful long-term operation is to think about those critical questions and have a plan at the outset. 

Some of the things that we always talk to our clients about planning for is to think about the geographic location of where you want to be in that marketplace. It’s always limited to some degree by the municipalities that will allow cannabis businesses to locate within their borders, but that becomes your universe of opportunity.

So where do you want to be in the marketplace, and then what do you want the size of your facility to be? It’s excellent to be thoughtful about some of those components because when you go to the site selection phase, you have some information at least to pivot off of, so where do we want to be? How big of an operation do we want to have? 

And we see clients have very different answers to that. So people say, “Well, how big should my dispensary be?” If you’re going to ask me that question and you want just a carte blanche answer somewhere between 2500 and 3,000 square feet. It’s somewhere in that range. 

But some clients are looking for four or 5,000 square feet to create a specific customer journey. And as we think about the long-term success of these dispensaries, we’re thinking about differentiation and how differentiation could work.

Conversely, other clients think, “We want a smaller building envelope for our retail dispensary because we want to be in an urban setting and know we’re not going to have a standalone building, and it’s going to be an inline suite and there’s obviously a cross per square foot of that real estate, we need to be mindful of budget.” 

So, thinking about the location where you’d like to be in that market and why that makes sense based on your business goals is essential. Thinking about the square footage of your facility and the rationale behind that based on your plans to run a successful retail operation, and keeping in mind that customer journey and the demographics, who are the customers you want to serve? Because that really impacts both of those things that we just touched on. So planning and doing that in advance and taking the time to do that is fundamental to the business’s long-term success and navigating all of these initial stages.

So when we think about going and assume we’ve picked a location, we found a piece of real estate, and we’ll talk about site selection in a minute; you’ve got to create a narrative not only for the landlord that you’re trying to secure that property for but for all the local officials that are going to be part of your approval process, whether that’s developing local support, in some states that’s a host community agreement and others, it’s a municipal resolution, but ultimately you’re going to have to get buy-in from those municipal officials. 

The tighter that story is, the more well-thought-out your plans are for the dispensary, and the better opportunity you’ll have to get that support to secure that piece of real estate.

And so having well laid out plans that included what the financial picture is going to look like, some of those things that we just touched on that are foundational to understanding how you’re going to have this thriving business really warrant the time and attention to those because ultimately you will save time most likely later in the process by doing that planning upfront.

Jen Lamboy:

Sure. And we see that on the marketing side as well. Part of our discovery process runs through revenue goals and business objectives. We see some folks entering the space who want to exit within five years, so that strategy looks slightly different. 

Some are looking to secure a retail license first and then move into cultivation or eventually open a consumption lounge on-site, so having all of those pieces mapped out, I can see in your position how that helps, but also on the marketing side as well because that narrative that we’re building for a brand, it’s great to have all of those pieces in place and understood and noted. We also realize that goals and objectives shift throughout the process.

Again, from the marketing side, it’s essential to have the initial revenue goals and business objectives laid out so we can build a strategy aligned with those in the same way you’re saying; it saves you time and resources. 

That plan is enormous, and what happens often is folks get so excited, and this industry races; I can’t even say how fast it moves. If you’re already in the space, you know it. And there’s this pressure always to keep moving faster. Still, that foundational piece is so vital to building campaigns atop our building plans down the road, or again, as I mentioned for folks who plan to exit in five years, having all those pieces in place will save you a lot of gray hair.

Greg D’Agostino:

I said I was going to touch on site selection. So anyone in the industry or even really looked under the hood and explored what it takes to get involved has learned that securing good real estate for your project is essential. And so the more that you have figured out the plan in terms of the long-term sustainability of the business, you’ve thought about the geographic location, you’ve thought about the footprint, there is going to be a reality that you’re going to have to set that against, “Where can I find a property? Can I get local support in that municipality?”

Having that foundation and then being able to compare your options from a real estate perspective against your plan and try to align those as much as possible, understanding that there’s a reality. There are constraints in real estate, and there’s undoubtedly competition for local support. 

We see that in almost every municipality in every marketplace, you still have that foundation to reflect on because if you abandon that altogether, the whole plan goes out the window. And does that lead to long-term success if you’ve abandoned all that to get that piece of real estate? So there’s a push-pull between the plan and what’s available and where you can succeed. Still, if you’ve got that foundation, it always gives you something to reflect on as you make those decisions.

For a little bit of insight as it relates to site selection because many people think, especially if they’re new to this or even well-versed in their market but not in another market. They’re trying to figure out what right looks like for them. 

We talk to our clients about looking at the average vehicle traffic per day; that information is readily available. When you’re thinking about your site, think about parking. When our customers can easily access the site, do they have a place to park so they can come in because you want to build those loyal customers? You want people to be able to come back to your store, not because it’s the closest to work or home or whatever you want it to be, but because it’s a good shopping experience.

We can all think of the three or four liquor stores in our town or nearby. I guarantee you go to the same one repeatedly for some reason. And so parking’s a big piece of that. Is there foot traffic that’s available on that site? Foot traffic is only sometimes the most critical aspect. 

If you’ve got plentiful parking, if it’s in a location that lends itself well for people to drive in, park, and shop at your store, great, but certainly something to think about, and then evaluate the competitive landscape. 

As we discussed earlier, there’s almost always some existing medical marketplace when these adult-use markets open. They’re likely going to be able to transition into an adult-use store. So take a look at what’s around you and how that factors into all of these elements we have discussed, and are you positioning yourself for that long-term success?

Jen Lamboy:

What I’m hearing and what you’re saying is also relevant, and I’ll bring it back to marketing; that’s our area of expertise. But when thinking about a brand coming out of the gate in an emerging market, it’s much easier to have a strategy centered around being top of mind and first to market. That’s not always possible, but when you start to build those initial relationships with customers and develop loyalty, it’s significantly easier to have your culture out there, to have an understanding of who the brand is so that folks, when they step foot in the door for the first time, already know the brand; they already know the organization versus the competition.

And again, maybe folks will drive the extra few miles to check out the competitors in an emerging market, but that’s also important to think through. Suppose it’s a highly trafficked area with ample parking and cannabis delivery. In that case, all those things come into play when building the customer journey and setting customer expectations. Then it’s up to the dispensary to deliver that high-end customer experience.

Greg D’Agostino:

That dovetails into another element that, as people lay out their plans to start their business or penetrate a new market, we talk about as one of those early-stage elements to build long-term success.

It aligns with what you’re talking about; building relationships not only with the municipal officials but with the community, so build a base of support, and you understand the people in your community because as these markets become more mature, other competitors arrive, it and becomes more like that liquor store model. 

And so, have you built a facility that lends itself or an operation, irrespective of the facility? Have you built an operation, including marketing, where you can make good customer acquisition and, more importantly, customer retention?

And part of that is really to know the environment of your surrounding area because, as I was saying, as the market gets more mature, people’s desire to travel further and further away from home is reduced because the convenience factor comes into play at some point. So, it’s essential to understand the community. And then to your point, Jen, be thoughtful about how you’re differentiating yourself from those nearby competitors that you’re competing with for customers based on geography.

Jen Lamboy:

We have a juicy question. One of our attendees asks, “What happens when market saturation inevitably hits? Is building out large locations with high overhead and startup costs a good idea? Looking at more developed markets, it appears that big box discounters and small express-style stores are the winning models?”

Greg D’Agostino:

The answer to that question depends on a few factors. This is a new industry in many states. It’s an emerging market, so at some point, you’re going to see competitors come in, and you’re going to see price compression at the wholesale and retail levels. 

So if you are laying out plans for that to occur and paying attention to that, the shiny ball in all these new markets is that retail and wholesale prices are high, generating a lot of revenue into the operation. But if you’re laying out plans, understanding that you’re stepping down your price per ounce, price per eighth, however, you’re looking at it in your proforma and planning for that. You can make the decision around what the suitable footprint is for you. And again, it’s dependent on what your business goals are.

Some stores are built for speed and volume: Get them in. Put them in rope and stanchion. Get them to the register. Get them out the door. Others are more experiential, so it would be hard to say which is better. 

They serve different customer bases and will create different loyalty profiles. So if I come into your store, and there’s one not too far from my home here in Massachusetts that it’s just a churn and burn, I come in, I get my product, it’s no frills, it’s not fancy looking, and I get out the door. 

I’m not building loyalty to that store. I am not going out of my way to get to that store because I love going there, and that’s much more of a transactional experience. We’ve got an operator out in Illinois that has built one of the nicest stores I have ever seen.

Those guys will have a loyal customer base because it looks nice. There’s a feel and a vibe to the space. They’ve got well-trained employees. Usually, when you’re doing some elements of these right, you’re doing most elements right, which translates to customers. So while it’s undoubtedly reasonable to have a small footprint and churn and burn – get people in and out – creating a loyal customer base will be more difficult for that operator. That’s all going to be geography-based.

Greg D’Agostino:

For those who opt to have larger footprints that can carry more SKUs, remember they’ve got a more extensive vault; they can create a wider variety of products when people search the menus. 

They say, “Oh, they have the drinks I like, or they have the edibles I like,” they can stock more, that they’re going to have likely a more extensive, more loyal customer base that as that price compression occurs, as those margins get shrunk, that those people are going to help to sustain that business and come back to them, probably have larger market baskets and all the things that come along with having a loyal customer base. 

They will tap into their network and tell folks, “You’ve got to come see this store,” which also helps build that customer base.

Jen Lamboy:

We’re often seeing folks new to cannabis and retail opening stores. So, we’re continually suggesting they partner with a cannabis retail strategist like Krista Raymer. Folks who know a retail strategy and how to build that within your store and return to the goals you are trying to achieve. 

Suppose we were talking about a particular size store with high traffic and a great parking area, with delivery or online ordering and curbside pickup. Those components all shift with the store’s interior and how you use that space. So do you have any experience working with retail strategists?

Greg D’Agostino:

I don’t personally, but to your point, you want to consider your demographic. There’s no one size fits all. So, in the town next to me, I’m thinking of a different retailer; there’s a quote, “discount retailer.” 

I don’t know if they would think about it that way. Still, that’s how they advertise themselves, which is appropriate for a segment of the population in the town where they’re located. They came in with a strategy from day one. 

So, when they’re thinking about finishes and budget, when they’re thinking about millwork and signage, all the construction items that can drive up the cost, they understand what’s going to motivate the customers that come into their dispensary is the cost of cannabis. That’s going to be different for some customers. Indeed, we see a vast diversity of customers in a dispensary, and they’re all looking for different things.

But what’s so interesting about that low-cost retailer is what they planned out of the gate, “We’re going to come into this community. We know that there’s a need for a low-cost dispensary.” They’re doing a high volume on smaller margins with more customers coming in and out. Still, they did that thoughtfully and met their business model. 

But certainly, there isn’t a one size fits all model for your dispensary’s size, scope, and look. It’s really going to depend on what customer segment you’re trying to target, always looking for the long-term sustainability of your business, and that’s why planning at the front end is vital to ensuring long-term success so that you plant the flags fundamental to what you want to do. And that factors in what is inevitable in emerging market price compression, different competition, etc.

Jen Lamboy:

I want to share the infographic because it includes so much information, and a visual representation of what we’re talking about might be helpful. I will share a screen, which is also available on LinkedIn. We can email it out to you as well. Do you want to walk folks through what we’re looking at?

Greg D’Agostino:

Absolutely. This is the Tenax roadmap to success. We’re creating a visual that shows the steps to get through the approval process. We’ve discussed why it’s so fundamental to develop what you’re trying to do in that marketplace and put together the strategic plan behind that. 

And those are the first two steps, and we’ve talked a lot about why that’s so fundamental, but then these primarily go in order. 

You’ve got to secure your real estate because a lot of times to go and build that community and municipal outreach, which is the next step on the roadmap, you’ve got to have site control, that’s not universal, but it’s nearly universal. So you’re going to want to get that real estate with those plans in place; you’re going to use some of those plans to have that conversation with your landlord.

We’ve seen many landlords say, “Well, I’ve got 10 people who have given me letters of intent either to lease or purchase this property. Why should I select you?” And so when you can go in and really lay out those plans that you’ve made, it will increase your ability to be successful around site selection. You will take that property and that narrative, and that’s how you will build the community and municipal support you need. 

Ultimately, these municipal processes are competitive. They’re going to ensure the limited licenses they give out to the stores will be successful, not only because they want it to look nice; these are often new stores to that town. They want to ensure it will be well done. Still, ultimately, they will also drive tax revenue from your customer traffic.

So if you are not successful, then the municipality’s not maximizing their opportunity to have a cannabis facility located in their town, and then those state and local applications. So as you’re building those relationships with the municipality, often we see either through a local application or an RFP that you have to outline all of your plans that you’ve done on the front end and transmit that into an application and an RFP. 

Those are going to be different for some operators. The folks thinking about what they’re going to do will be able to build out better applications and demonstrate that they’ve got an excellent ability to perform, usually through a three to five-year proforma. 

Those are going to shine as they’re being reviewed by whether it be a committee, sometimes it’s a community economic development director. Municipalities do it in all sorts of different ways. But also for the state regulators, we see many local applications mapped very closely to what’s required by the state regulators and their applications.

I can’t say it enough, having those basic plans in place and understanding who will be a part of your team and what they bring to the project is vital. If you successfully build local support, the next step is to have that site plan reviewed or receive that permit. 

Again, sometimes that’s a requirement by the state; it’s often the requirement at the municipal level, so it’d be written into their ordinance. And this is an essential element for prospective operators or expanding operators to understand because it can be costly. 

You want to understand what is required versus what might not be required so that you’re not spending more than you need, and it can also eat a lot of time. So as we were talking about at the beginning of this conversation, you will be spending a lot of dollars before you have cash flow coming back into the entity to the operation. 

This is where you can falter if you don’t understand what’s required and what you must spend to succeed here.

And again, this is all about your plans. So this is about your site plan, your interior fit-out. A lot of times, the security question comes up; indeed, the parking question comes up. So this is critical to getting doors open and then regulatory inspections. So if you’ve gotten approved with municipal support, you’re navigating the regulatory application and review phase, you’ve got your special permit, and now you’ll start constructing your store. 

And when you’re constructing your store, it can’t just be any old thing you want. There are a lot of requirements not only from the state but also from the municipality on how you’re going to have to build out your secure storage or your vault; however you want to refer to it, how people are going to ingress in egress from the store and what’s required to do that appropriately.

So taking some time outside of the fundamental business plan to really think about your store layout not only is essential to make sure that you can go through your regulatory inspections when your store is built out and not have compliance issues that ultimately would have to be resolved before you open your doors, but it allows you to really be thoughtful about what the customer journey is from the time they pull into the driveway, assuming it’s not foot traffic, from the time they pull into the driveway, the parking, getting through into the facility, how are your employees interacting with those customers to create an excellent experience to create that stickiness and friction that you want to have where customers build loyalty to coming to your store.

So this application regulatory inspection work really is not only fundamental to getting your doors open, but it impacts your customer journey because if you haven’t been thinking about that, you’ve got to meet some requirements, and then that creates friction for your customers where it’s not easy to get through the door or have your ID checked, or when you get on the sales floor, it’s not easy to navigate around. 

You’re not going to be able to retain those customers. So indeed, you want to be thinking about all of that simultaneously. Then all of that really rolls up to your site state licensing. So receiving that final license and moving to commence operations, getting your doors open, and really just focusing from a retail standpoint on having good customers, building that customer base, and ensuring that you’re operating that store compliantly.

Jen Lamboy:

If I could add one little step, it’s not even a little step. Still, one step within that roadmap is building the physical space, building a digital presence, the website, branding, and even SEO, before doors open. Where in that timeline are you finding it most effective for folks to start building a digital presence?

Greg D’Agostino:

The earlier, the better. I’ll give you a perfect example. One of our clients has been working with Hybrid. Hybrid has done a phenomenal job establishing the brand. They’re building out their digital presence, so they’re still getting into their construction facility now, so this is a good story. The local municipality that supported us, we’ve gone through the planning process, that’s done. 

They had a job fair. We had our marketing and branding put together, and we had our logo. We were in that room when we went into that job fair with what would ultimately be our competitors and the city officials that we needed continued support from. This client’s presence at that job fair, because they had done that early, was entirely elevated from the competitors, and it’s because they had done some of that work early.

People are always working under budget constraints, but you’ve got to plan for that because if you are thinking about long-term success, the longer that you can create brand awareness, location awareness and get people familiar with your stores and your presence, and why they might want to shop at your store versus the one two blocks, two miles down the street, that’s a fundamental piece. It’s one that people tend to overlook or come to too late, and that’s because they haven’t budgeted for it appropriately. 

And that goes all the way back to that planning and the question, “When should I have my money?” You want to consider all aspects of what will make your operation successful over the long term. 

Ultimately, especially as the market matures and more competitors come into place, marketing is one of the things that will be most vital to that. The foundation for that is all the things that you do pre-opening. 

So in terms of a timeline, it was probably nine to 12 months before the expected door opening started. Then anywhere from three to six months, we want to make sure that our clients are certainly at least thinking about their strategy for all their marketing and getting that well underway at least three months, if not more, out from when they anticipate their doors opening.

Jen Lamboy:

I can say it all day, but I’m a marketer, so I want to hear it from your perspective with examples like that. I’ll even add that when we’re talking about, especially in these emerging markets, having to show the community and municipalities who you are and your involvement, I would also suggest for folks to go ahead and join the lobby days, join organizations like the NCIA, learn a little bit more about the legislation and the regulations that are on the table in your state, and be a voice for the community that is pro-cannabis. 

And really, when we’re looking at that, and folks see also, not sort of, but they do see your involvement and passion around the industry, it’s also part of a brand story.

I think we work and encourage our clients as well to work with these associations and larger organizations because we’re all collectively trying to move the needle in the right direction, so the stronger that we’ve got a unified voice, especially in emerging markets too, where regulations are hard to navigate and so they can be on the ground floor of really having a voice within that as well. Before we end, I want to jump into pitfalls and mistakes. 

What are common mistakes that folks make? We’ve covered a lot, but from your perspective, what big landmines can folks avoid?

Greg D’Agostino:

I’ll give you two that are the most vital, one we’ve already touched on. Still, it’s worth reiterating here that having your financing plan in place is essential. It’s also essential that you understand the costs associated with the operation. 

I think there’s not a lot of room for error when ensuring you have the appropriate funding for your operation because there are so many other roadblocks that you must tackle as you go from day one of deciding to get into a marketplace till you have your doors open. 

You are going to have to tackle so many challenges along the way. You want to avoid creating your own challenges, so that’s number one: understand your budget, know your source of funds, and be ready to execute because you’ll have challenges along the way, hard stop. That’s the answer.

So really understanding that because otherwise, you start working against yourself, and I don’t think that will work. And ultimately, what we’ve seen is happening in some markets where there’s been price compression and consolidation; people don’t get their doors open. 

They have spent a lot of money to get to whatever point they are. Then the asset’s value, the work’s value, is depleted significantly. The other key point and takeaway from all of this is understanding the process.

One of the things that Tenax Strategies does for our clients, in addition to being able to help them navigate all of the different aspects of what it takes to go from day one until doors open, from concept to commence operations, is really understanding the process because a lot of these things can be on a parallel track, so you don’t want to bookend them, putting them end to end, understanding the processes and being able to align some of those on parallel tracks to save yourself time, which in the long run saves yourself money. 

We’ve talked about how there’s often a lot of spend before any cash flow back into the operation; understand that process. One of the critical things we do for our clients is to stack as many of them as possible so that they can become revenue positive and profitable as soon as possible.

Jen Lamboy:

We’re talking about revenue in the plan and budgeting. I want to revisit revenue expected during year one or even basket size because it’s fun to hear you talk about these numbers because, coming from Colorado and a more mature market, these numbers are shocking to us. So what are you finding on estimated basket size in emerging markets?

Greg D’Agostino:

I’ll touch on annual revenues because that’s what’s most helpful for folks. I say this understanding that there is a tremendous amount of variability based on store size, location, traffic areas, traffic counts, etc. 

But the typical gold standard for a store is at least a million per month in revenue. Those stores are often well-run; doing good volume can contain the cost aspects of that because they don’t have enormous overhead expenses, hopefully against that revenue, but obviously, enough size facility to move enough customers through for that. 

So that’s an excellent standard when you’re thinking about this, understanding that it is a well-run store in an excellent geographic area. Are there stores that do more? Absolutely, without question. Are there successful stores with good profit margins on less revenue than that? Absolutely. All those things come into play as you’re thinking about how you will define success, but if you need a benchmark that that’s decent.

Jen Lamboy:

Before we wrap up, is there anything else you’d like to share – any missed points?

Greg D’Agostino:

There’s a tremendous amount of opportunity in the industry. Still, you need to plan and think ahead about how you will be successful in the long term by having good financials and being mindful of things like your marketing strategy to build customer loyalty. 

So be thoughtful about your plans and use the right professionals to avoid snags. You’re spending a lot of money. Leave that to the people who understand the plan and process and ensure you execute.

Jen Lamboy:

I’m going to display our contact information on the screen. You can email Greg or me or connect with us on LinkedIn if you aren’t already. We’re happy to answer questions or point you toward helpful resources or potential partners. And if you have questions about securing funding or insurance for your organization, we’re happy to help. I invite you to join us for part two of this conversation featuring Greg’s brother, Peter, on June 14th.

Specific to dispensaries, we will cover the first five years of building awareness and overcoming challenges with Peter D’Agostino of Tenax Strategies. And in July, we will tackle local SEO for dispensaries for queries like “dispensary near me.” We know it’s on everybody’s mind. It’s one of the top search results specific to the sector, so join us. We’ll also provide a recording. Again, reach out to us via email or find us on LinkedIn. 

We’d love to get your questions, share our insights, and connect you with those who can catch you moving in the right direction. So thank you so much, Greg. Thank you to those who joined us, and we will talk soon.