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The post below is an excerpt from our Retail Franchise Industry Report 2019. Read it here!
A hot button topic currently is the legalization of cannabis (marijuana) and what it means for society. According to JWTIntelligence, about 20% of American adults now have access to legal marijuana, and retailers in these areas have been quick to jump on the new potential revenue stream. For example, Colorado saw well over $1 billion in cannabis sales in 2017 alone.
And it’s not just marijuana. CBD use is on the rise as well. CBD, or cannabidiol, is defined as “a naturally occurring compound found in the resinous flower of cannabis.” Marijuana-derived CBD is currently legal in more states that cannabis because it’s perceived as more safe and less addictive. Many have also purported CBD’s health benefits. There’s also hemp-derived CBD, another derivative of the cannabis plant, which is legal in all 50 states. Brightfield Group predicts the CBD market will soon be a $22 billion industry.
With sales potential like that, it’s no surprise that retail franchises are popping up in the nascent industry.
One of these franchises is Lazydaze Counterculture, which bills itself as “an Amsterdam Style Café” in the United States.
“My introduction to this industry came from working at the local smoke shop in San Marcos, TX during my college years studying business,” says founder Hans Enriquez. “I was an avid collector of glass art and pipes and a cannabis advocate; I saw an opportunity to enter the cannabis industry in a legal space by merging all of these experiences to create Lazydaze Counterculture.”
Lazydaze is focused on four areas to create a franchise opportunity compatible with the varying laws across the country: (1) coffee, (2) CBD health & wellness products, (3) local counterculture lifestyle & retail space, and (4) smoke and vape products. “Essentially I wanted to create the modern smokeshop, upscale and normalized,” Hans explains.
The company currently sticks to hemp in its products because of its acceptance in all 50 states, but has plans to stay ahead of the game as more and more states legalize recreational cannabis. “My professional background in this industry supported my long-held belief that, eventually, momentum would shift toward full marijuana legalization, and the industry and our customers would demand a modern retail experience when it came to shopping for cannabis-related smoking and vape products,” says Hans. The franchise design “allows franchisees in legal [recreational cannabis] markets with a public consumption license to enter the cannabis market without high cost of entry, regulations, and learning curve.”
And as CEO and Co-Founder Christian Hageseth of ONE Cannabis, a retail dispensary that operates strictly in U.S. and Canadian markets where medicinal or recreational cannabis use is legalized, adds, “we operate like any other traditional franchise, providing the same depth of resources, ongoing support and vendor relationships that one would expect with any other franchise concept. Our commodity just happens to be cannabis.”
So where is the cannabis retail franchise industry headed in the near future? “As we approach the realization of [widespread legalization and normalization of use], I anticipate the introduction of a plethora of cannabis and hemp related ancillary businesses and products we have yet to even imagine. Innovation in ways to consume has exploded,” Hans says.
“Another area of focus is trends in retail, e-commerce, and service. We understand that we live in an age of information, personalization, fast fashion, social media, and the freelance economy and that we need to provide an experience to capture our customers’ attention and loyalty while contending with Amazon and Starbucks.”
And with corporate giants like the makers of Corona and Modelo beers recently investing $4 billion for a stake in Canadian cannabis company Canopy Growth; beverage giants Coca-Cola and PepsiCo both publicly expressing interest in the cannabis beverage market; and lawn care company Scott’s Miracle-Gro spending over $1 billion to grow its pot business; you can only expect the market to get bigger and bigger. In fact, a report from New Frontier Data speculates that the industry will create nearly 300,000 jobs by 2020.