In California, for instance, the license fees are based on an applicant’s estimated gross revenue during the 12-month license period, according to the state’s website. Cova Software, a cannabis business software provider, estimated that the up-front investment for opening a California dispensary would be $80,000 to $250,000 a year, with variations in real estate and the scaled licensing fees playing a factor. The costs in Michigan would be much less, $47,000 to $136,000.
As of Dec. 31, 2018, the last time Hightimes Holding reported revenue amid hopes of launching an IPO, it had earned most of its revenue (almost 70%) from events, including a competition series, the Cannabis Cup; a music festival, the Bright Side Festival; and the BizBash party, held at the cannabis expo MJBizCon. The company’s events business generated ticket sales as well as sponsorship revenue. Advertising and publishing represented 29% of its revenue, with direct sales advertising accounting for most of that revenue stream, though the company also sells some programmatic advertising. And the remaining 2% came from merchandise, commerce and licensing deals. In 2018, the company’s total revenue was $14.8 million.
High Times’ new CEO, Stormy Simon, wants to expand her business beyond its 46-year-old magazine into weed dispensaries.
“The past three years in cannabis has been like 90 years in any other industry,” Simon said. “In each of these markets, we’ve held Cannabis Cups,” she noted, adding,”And we have award-winning cannabis that can be featured and promoted and displayed on our stores.”
Direct investment is important for a company seeking to expand into operating a dispensary business because banks won’t finance loans for cannabis businesses, said attorney Michael D. Cutler of EvansCutler Attorneys, which specializes in cannabis licensing in Massachusetts.
While Simon declined to provide the company’s 2019 revenue figures, she said she expected retail and commerce to be big areas of potential growth in 2020. Simon did say that merchandise sales increased in 2019 over the previous year but declined to be more specific.
“You need to have a pretty good war chest going into it before getting out on the other side,” said Cutler, explaining that most banks are federally chartered and marijuana use is still illegal, according to federal law.
From securing a location to preparing to open this type of business, the state licensing process can take as long as a year, Cutler said. The cost of renting a venue, making the venue operational, applying for the license and hiring legal representation could run upward of $2 million, though the fees vary from state to state.
Programmatic advertising has historically been a difficult area for cannabis publishers to capitalize on. And because of this, High Times has put an emphasis on consumer revenue and sponsorship-driven events, as well as direct-to-consumer commerce businesses. Simon said the next step for a publication that connects consumers with cannabis is creating retail locations.
With a new CEO, High Times looks to open dispensaries High Times’ new CEO, Stormy Simon, wants to expand her business beyond its 46-year-old magazine into weed dispensaries. While Simon, who
With Compass, brands can drag and drop any digital asset such as advertisements, social media posts, and website content for analysis. The tool then uses advanced artificial intelligence, image recognition, and language processing to analyze text and imagery to detect non-compliant content.
Compliance has just gotten easier for cannabis companies.
“Building a successful cannabis business means having to deal with numerous regulatory hurdles and roadblocks,” said Chad Bronstein, the CEO and founder of Fyllo. “Each state government and local municipality has its own stringent rules on advertising, which makes it complicated for brands to advertise holistically. We’ve built Compass using the most advanced AI and image analysis technology to help give clients complete trust and confidence in compliance, so they can put more attention into running much bigger campaigns in better environments.”
Bronstein told High Times in an email that Compass can help companies stay nimble as they react to a dynamic business environment.
“As the world deals with the ongoing impact of the global public health crisis, this is proving to be a pivotal moment in the history of the cannabis industry,” he said. “Cannabis businesses are being declared ‘essential’ in more than a dozen states around the country due to the current pandemic, and Compass and Compliance Recognition Technology are going to help these brands, dispensaries, and retailers scale up more efficiently.”
Once it has analyzed content, the brand can review its compliance by market and channel. The technology also provides suggestions on improvements that can be made to achieve compliance and extend reach. All analyses are verified against CannaRegs, the most comprehensive cannabis regulatory database in the industry.
“Despite explosive growth of cannabis advertising, creative compliance remains one of the biggest barriers to scalable marketing,” said Jesse Channon, chief growth officer of Columbia Care. “With the launch of Compass, we can maximize our reach by expanding into new markets while also mitigating risk.”
Compass is already being used by beta partners including the popular brands Apothecanna, Columbia Care, Papa & Barkley, and Grassroots.
Legal cannabis companies operate in one of the most tightly regulated industries in the world, rife with rules governing issues such as labeling, advertising, and claims of medical benefits that can vary by country, state, or even municipality. This lack of consistency from jurisdiction to jurisdiction makes it difficult to produce compliant creative content, particularly for brands attempting to establish a footprint at the regional or national level.
Compliance has just gotten easier for cannabis companies.