News and Best Practices

Time to Expand or Add a License?

August 16, 2016

Business is good, perhaps even booming. So you begin considering expansion of your retail cannabis business, either opening another store or expanding your existing one. It seems like a simple equation at first, but the devil is in the details—and that’s where the arithmetic morphs into calculus.

Obviously, the first consideration is legal. Does your state have any licenses/permits left?

According to the Washington State Liquor and Cannabis Board’s website, it is not accepting applications for the production, processing or retailing of cannabis, although that could change. (A cannabis license is an endorsement on the business license issued by the Washington State Department of Revenue.) The board lists 1,862 retailer applications, of which 357 are issued and active, 1,414 are pending and not issued, and 38 are closed.

The Colorado Department of Revenue’s Marijuana Enforcement Division says the state has 440 licensed retail cannabis stores. (It leaves the issuing of licenses up to the city or county.)

For Anthony Owen, who owns both The Hidden Bush just east of Port Angeles, Wash., and Karma Cannabis in Sequim, Wash., expansion might be helpful but it may be down the road a little bit. The Port Angeles store opened Nov. 12, 2014, and the Sequim stores opened Feb. 26 of this year.

Port Angeles, population 19,000, is the county seat of Clallam County and its largest city, located about 75 miles west of Seattle across Puget Sound. Sequim, population 6,600, is Clallam County’s retail center and second-largest city, located 15 miles east of Port Angeles.

Opening at another site would require another permit and, since those all are taken, that’s out of the question, Owen said.

Expansion could help, but other priorities take time

The Port Angeles store has space constraints but the Sequim store does have room for expansion. However, Owen said projects such as setting up his online store and expanding his Squatch-Mart convenience store leave him with little time to work on an expansion.

Potential locations are limited because cannabis businesses, like liquor stores, cannot be within 1,000 feet of K-12 schools, playgrounds, recreation centers, childcare centers, public parks, public transit centers, libraries or game arcades.

“Nothing is out of the question. We will be looking at onsite expansion within a year if Sequim keeps its ordinance,” he said.

On Aug. 9, 2015, the Sequim City Council voted 5-1 to end the city’s 18-month moratorium on the sale of legalized recreational and medical cannabis. However, the city has only two cannabis businesses, with two pending applications for businesses near Sequim but outside the city limits.

“We also want to wait and see what happens with the state and federal governments,” Owen said.

On Aug. 11, the federal Food and Drug Administration announced that cannabis would remain classified as a Schedule I drug under the Controlled Substances Act. Schedule I drugs are those determined to have no legitimate medical use. So states that allow recreational or medical cannabis continue to be in defiance of federal law.

David Ahlpern, owner of Nature’s Gifts in Sequim, said expansion of his existing space is the only possible avenue at the moment, but he doesn’t feel that’s necessarily for him. “In Washington state, it’s all about the licenses. So unless you can rent the space next door or move elsewhere, you can’t expand.

“We don’t need to expand, and besides, we have Domino’s on one side and the furniture store on the other,” he said.

Ahlpern said some landlords don’t want to rent to cannabis stores since it remains a Schedule I drug. “Landlords are afraid if they rent to a cannabis business, they could lose their entire shopping center.”

Some cannabis business owners are holding off to see how the presidential election turns out, he said. “Obama has taken a hands-off approach, but who knows what the next president will do?”

By Brian Gawley
Dispensary Management Today articles are for informational purposes only and should not be considered legal guidance or advice on dispensary operations. You should contact an attorney or a qualified cannabis consultant for specific compliance and dispensary/retailing advice.
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