Marijuana Business Factbook 2019

224 Marijuana Business Factbook 2019 Chapter 5 | Financial & Operational Data: Retailers © Copyright 2020, Marijuana Business Daily , a division of Anne Holland Ventures Inc. You may NOT copy this Factbook, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call (720) 213-5992, ext. 1. BUSINESS MODEL BREAKDOWN Beyond medical and recreational classifications, retailers can be segmented based on their level of integration: • Stand-alone retailers: Retailers in this category do not cultivate cannabis or manufacture infused products; they purchase the products they sell entirely from third parties. • Vertically integrated retailers: These companies that cultivate some or all the cannabis they sell in their retail stores or dispensaries. Some businesses also manufacture infused products. These contrasting business structures create very distinct financial circumstances, as a dispensary that cultivates its own cannabis and produces infused products will have much different startup costs, operating expenses and profit margins than a retailer that stocks its shelves with products from a wholesaler. Thus, these types of businesses are broken out in a manner that better reflects their financial realities. “Retailers” is used as an umbrella term for MMJ dispensaries and recreational marijuana stores throughout this chapter. “Dispensaries” and “rec stores” or “rec shops” will be used in cases where the analysis is focused on the medical or recreational markets, respectively. Two primary distinctions are also made in this chapter based on the market a retailer serves: • Recreational market: This refers to businesses that serve the adult-use market either exclusively or in addition to the medical market. Most stores that sell to recreational customers also sell to MMJ patients, though it often represents a small fraction of their overall business, which is why they’ve been combined into one category. • Medical market: This refers to dispensaries solely serving the medical market in a state where MMJ is legal.