Marijuana Business Factbook 2019

242 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. CHART 5.14: Growth Of Retail Chain Stores In Colorado & Oregon’s Recreational Markets Source: Colorado Department of Revenue, Oregon Liquor and Cannabis Commission © 2019 Marijuana Business Daily, a division of Anne Holland Ventures Inc. All rights reserved. Growth Of Retail Chain Stores In Colorado & Oregon's Recreational Markets Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 Colorado Oregon 8.3% 9.2%8.9%.210.0%11.1 6.7% 9.5% 9.6% 9.7% 11.4% 8.7% 10.9% 25.3%8.9%30 232.2% 34.7% 38.6% 7.3 19.8% 30.7% 30.2% 33.6% 27.3% 36.6% 4.9%6.0%6 8 3.7% 6.3% 4.9% 6.9% 17.6% 20.3. 15.1% 18.0% 23.4% 23.6% % All Stores Owned By Retailers With Three Or More Locations % Retailers With Three Or More Stores Although Colorado’s retail marijuana sector is not considered concentrated, there has been a shift toward chain retail stores since 2015. There is no set definition of what constitutes a retail chain in the marijuana industry, however, for the purposes of this analysis, any retailer with three or more locations is classified as a chain store operator. As of January 2019, 11% of retailers in Colorado operated three or more stores ― up from 7% four years earlier ― while 37% of stores were owned by retailers with three or more locations, compared with 20% in January 2015. A similar phenomenon is happening in Oregon. The prevalence of established chains is not an unexpected development and underscores the advantages that larger, well-capitalized retailers have over their smaller competitors. Vertical integration is a key component of the business model for retail chains, as tight control over supply chains and the ability to leverage economies of scale allow the companies to profitably sell products at lower price points than their smaller, independent competitors can reasonably afford. Chains are also in a better position to take advantage of increasing their footprint relative to stand- alone retailers. Knowledge and experience play a role as well, as a company that has gone through the process of successfully applying for a retail license several times is better positioned to go through the process again ― especially when it comes to such aspects developing a competitive bid and assuaging the worries of local officials in communities that have previously banned or limited marijuana retailers.