By Fred Dreier
Forced relocation has become a reality for many dispensary owners in the past few years.
In some cases, skittish landlords have booted cannabis tenants because of pressure from the feds or banks. In others, municipalities have adopted new zoning rules or regulations that relegate cannabis businesses to certain areas of the city, as happened in San Jose, California, earlier this month.
Uprooting is exponentially more challenging for cannabis businesses than for traditional companies, as it can be hard to find suitable property and a willing landlord.
Entrepreneurs who have moved their dispensaries told Marijuana Business Daily that a successful relocation requires ample time, effort and money – which can be difficult when under the gun to find a new space quickly.
“It’s going to take longer than you think it’s going to take, and it’s going to cost more than you think,” said Sean Luse, chief operating officer of Berkeley Patients Group in California. “You can bet on complications.”
Prepare for Renovations…and Delays
Berkeley Patients Group was forced to move in 2012 after the local district attorney pressured its landlord.
Luse said executives hoped to have the new location up and running by the moving date, but they underestimated the timeline required for renovations. Installing new electrical wiring, plumbing and other additions dragged out.
Most landlords would not rent to the dispensary, so the only real estate it could secure was in poor shape. Berkeley’s new landlord would not contribute to the renovation cost because it was for a cannabis operation. The dispensary decided not to cut corners on the renovations to speed them up, as executives believed that city code inspectors would scrutinize the business closely.
“You’re going to have to do everything right,” Luse said. “And that is more time consuming and expensive.”
Buds and Roses Collective – a dispensary in the Los Angeles area – had to move in December to comply with new regulations on the local medical cannabis industry.
The dispensary spared no expense in preparing the new building for code inspectors, according to its president, Aaron Justis. But operating under the city’s codes and guidelines added weeks to the project.
“When you start the process for getting permits, you’re working on the city’s time,” Justis said.
Try Not to Close
Buds and Roses was able to operate out of its old location as it completed renovations to the new space. Justis said he did not move into the new space during construction for fear of contaminating the cannabis.
Berkeley Patients Group was not as lucky.
The dispensary was closed for nearly seven months because of all the delays it encountered, which had a huge impact on the business. Berkeley’s owners had to spend tens of thousands of dollars on renovations during that period, yet the business wasn’t generating any revenue.
When the dispensary finally opened again, Berkeley had lost almost half of its regular business.
“If you’re closed, they will find a new dispensary to go to, and they will get in a new pattern,” Luse said. “It was an eye-opener for how easy it was to lose people.”
Beware of Hidden Costs and Unforeseen Hurdles
Luse said his move topped $100,000, while Justis estimated his total relocation costs at approximately $75,000. Both said that unforeseen costs and hidden hurdles contributed to the final price tag.
For Luse, renovations to the new location cost considerably more than he anticipated because the building’s problems kept piling up.
Justis said the move itself created headaches. His security safe was so heavy it required six employees as well as a moving company to get it out of the door. Most companies balked at moving the safe, Justis said, because it was for a cannabis company.
He encountered issues with the new locations as well. The bigger building required additional security cameras and alarms, and the parking lot required a parking attendant to shoo away non-customers.
Both Luse and Justis relied on employee labor to cut costs. Employees moved the display shelves, cannabis products and other in-store products. Both men said they planned the move at night.
“Be discrete with your move,” Luse said. “I would not outsource that.”
Luse and Justis also cut costs by not transporting cannabis plants, which are heavy and cumbersome and can be damaged. Justis said he purposely harvested his existing plants just before the move. He said vertically integrated businesses should consider putting their grow operations on hold entirely until after the move.
“Consider staying longer on your lease to finish your crop, rather than moving it,” he said. “Throwing plants into a Uhaul… that is entering a gray area of California law.”
Advertise Your Move
Moving locations can confuse patients, even if the new location is close by. Both Luse and Justis said that they could have done a better job communicating their respective relocation to customers.
Justis said he sent out multiple emails via Buds and Roses’ patient list advertising the move. He also posted moving messages across the dispensary’s social media page. Finally, he updated the new address on dispensary listings, but some websites took several weeks to update the new location.
After completing the move, Justis paid a security guard to stand at the old location everyday for a month to walk patients down the street to his new location. Still, the message did not get to all of his patients.
“We still get people going to the old location,” he said.
Reach Out to the New Community
Luse said entrepreneurs will likely underestimate how much community outreach they should do when moving. He went door-to-door in his new neighborhood to speak to other business owners about medical cannabis. He also printed up an informational sheet on his business to distribute.
Luse then invited his neighbors to attend community events at the dispensary.
Still, Luse was surprised by the opposition he faced in the new community. While opponents have not forced Berkeley Patients Group to out of the community, Luse said he believes that additional outreach could have prevented naysayers from speaking against his business at community meetings.
“Neighbors appreciate it when you come to them early and take their input,” he said. “Work your way into the community; don’t act like to have a right to it.”