Marijuana is becoming big business as more states pass medical marijuana laws, making way for a new niche industry for growers and users of cannabis. WeGrow, a marijuana “megastore” that offers supplies for growing, an on-site physician for evaluating medical claims, classes on how to grow and a lab for cannabis testing, opened its first franchise in Arizona. The company has two other stores located in California and intends to open many more. Critics note that it could be a risky investment due to the conflict between state and federal law, but weGrow investors say the franchise model can serve the market no matter the legal climate. For more on this continue reading the following article from Blue MauMau.
Franchising has now officially gone to pot. A marijuana hydroponics franchisor, weGrow, opened its first franchise Wednesday. It anticipates its new 21,000 square foot retail franchise will sell products to an estimated 100,000 medical marijuana growers who reside in the Phoenix area.
"We’re not talking tomatoes," whimsically says Arizona’s first weGrow franchisee Sunny Singh.
The superstore is weGrow’s third. It has two California stores: one store in Oakland opened its doors in January of 2010 and the Sacramento location launched in February of this year. While not selling pot itself, the franchise aims to be a one-stop shop for cannabis cultivators. It not only sells growing supplies like UV lights, carbon dioxide generators and other supplies to get the most buzz from a bud, but it also offers services aimed at educating medical marijuana cultivators. The megastore will showcase live growth demonstrations with real plants, an on-site doctor for medical cannabis evaluations, expert technicians to teach safe and responsible growth practices, and even an on-site laboratory to test cannabis before patient consumption.
WeGrow’s website declares its franchising intentions: "WeGrow locations will be taking root across the nation, with new stores sprouting in Arizona, Colorado, New Jersey and Oregon in the next few months." Its website states that the company is looking for franchise investors who are at least 21 years old and have $166,000.
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Is a pot dealership franchisable?
David Hood, president of iFranchise Group, a builder of start-up franchise systems, observes that one point conducive to franchising is that the medical cannabis sector isn’t fresh, with all moves pioneering ones. An established industry with years of experience has been set up in a wide variety of markets. "There are currently 16 states that have medical cannabis laws that permit the sale of medical cannabis in one form or another, either through retail or by people growing it themselves," says Hood.
The architect of new franchise systems thinks that this is the kind of business in which it is easy to train franchisees on how to run the various aspects of the business. Judging this retail sector in store economic terms, leaving out the sizable ethical and legal considerations, Hood suspects that retail costs are comparatively low and product sales very high, either in the dispensing of medical marijuana or in supplying growers. "I understand that the margins are better than, say, a cost of 40 cents on a dollar burger for fast food," he observes.
Legal turmoil
However, the franchisor sets up amidst considerable turmoil for Arizona’s new crop of legalized pot pushers. Although the state is now one among many to decriminalize marijuana dispensing for medical purposes, it still is a federal crime to dispense it. Add to that complication the fact that Governor Jan Brewer is putting a kibosh on new medical marijuana shops. Last Friday the governor announced that the state is suing the U.S. Justice Department to get it to rule on whether or not stricter federal laws preempt Arizona’s more permissive dope dispensing law.
On Wednesday, June 1, the same day that the weGrow megastore opened, the state’s top health official refused to accept applications from new dispensaries because of the conflict between state and federal law.
Arizona’s Department of Health Services Director Will Humble announced in a press conference that day, "It’s probably better to answer it up front before folks invest tens to maybe even hundreds of thousands of dollars in dispensaries and cultivation facilities," reports the Associated Press.
WeGrow thinks that the move by the state isn’t so bad for business. "Suspending the state’s medical marijuana program will transition Arizona from a state-licensed cannabis distribution model to a patient-cultivator distribution model like California," says Dhar Mann, founder of weGrow. "Now in order to get their cannabis, patients will have to grow it themselves, and most of them will have no idea how to do that. WeGrow was created to assist exactly this type of customer."
This article was republished with permission from BlueMauMau.
