Marijuana Business Factbook 2019

245 © 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. Financial & Operational Data: Retailers | Chapter 5 MJBIZDAILY.COM CHART 5.17: Most Expensive Monthly Operating Costs For Retailers: Breakdown By Business Type Source: 2019 Marijuana Business Factbook © 2019 Marijuana Business Daily, a division of Anne Holland Ventures Inc. All rights reserved. Most Expensive Monthly Operating Costs For Retailers: Breakdown By Business Type Vertically Integrated Retailers Stand-Alone Retailers Staffing/Wages Cost of Goods Sold (Inventory) Staffing/Wages Cost of Goods Sold (Inventory) 0% 20% 40% 60% 80% 51% 24% 47% 67% 13% 65% 33% 67% Portion Of Retailers Citing Most Expensive Monthly Operating Cost Average Percent Of Total Monthly Operating Cost Budget While startup costs for retailers varied considerably among respondents and between vertically integrated and stand-alone retailers, monthly operating costs were more consistent, with staffing/ wages and cost of goods sold (i.e., inventory costs) cited as the most expensive among all respondents and between the two categories. Just over half the vertically integrated retailers indicated staffing and wages was their most costly ongoing expenditure, representing an average of 47% of their total operating budget. While staffing and wages led for stand-alone retailers as well, only 13% indicated this was a top operating cost and, on average, wages and staffing accounted for approximately one-third of the total monthly operating budget. Unlike vertically integrated retailers, stand-alone retailers do not run cultivation operations or produce infused products, which, in turn, may reduce the number of employees they need compared to vertically integrated companies. Generally speaking, wages for retail employees also will be lower than employees working in cultivation and infused product manufacturing, where more specialized and in-demand skills are necessary. Master cultivators and master extractors can command six-figure salaries in certain markets, whereas retail employees, such as budtenders, may earn only minimum wage. For stand-alone retailers, the cost of goods sold can be narrowly defined as the amount the business paid to acquire inventory, such as flower, edibles and concentrates. Depending on the size of the store and how many people the company employees, this could easily represent the business’ most costly ongoing expense ― and, for 65% of stand-alone retailers in our survey, it was. Vertically integrated retailers face much higher ongoing operating costs overall relative to stand-alone retailers, as these businesses grow cannabis, run a retail store and , in some cases , manufacture infused products. While the costs of producing and/or acquiring inventory for vertically integrated retailers will almost certainly be more compared to stand-alone retailers, other costs such as staffing/wages outweigh them.