This article is based on a video originally recorded on Vetted Biz Youtube Channel
Colorado and Washington became the first states to legalize recreational cannabis in 2012. Since then, 16 other states and D.C. have followed suit, and recreational cannabis sales for 2021 are estimated at around $26 billion. Cannabis has grown in popularity over the last several decades, and the legalization movement has been gaining momentum. Cannabis sales data platform BDSA estimates that the industry will grow by about 15% annually over the next several years, reaching $41 billion in sales by 2026.
Listen to this article
Cannabis Industry Growth
As of now, most banks in the U.S. do not extend loans to recreational cannabis businesses (since cannabis is still illegal at the federal level, doing so would cause the banks to lose their FDIC insurance), and recreational cannabis businesses are not able to apply for SBA loans. Additionally, recreational cannabis businesses are not allowed to conduct business across state lines due to their legal status at the federal level. This all makes it very difficult for recreational cannabis franchises to exist in the U.S., so there is only a handful in business at this time.
An additional obstacle is that recreational cannabis is still illegal in many states. If your state has not legalized recreational cannabis, you will not be able to open a franchise at this time.
Read on to learn more about some of the businesses that have overcome these obstacles to become some of the leading recreational cannabis franchises in the U.S.
Franchise Opportunities in US
Unity Rd.
Founded in 2018, Unity Rd. is one of the first recreational cannabis companies to franchise in the U.S. Unity Rd. places special emphasis on the customer experience, whether they are new to cannabis and need someone to guide them or they know what they want already and want to do their own thing. They also brand themselves as a “neighborhood” shop, where each dispensary’s employees are from the area and want to contribute to the community.
Unity Rd. recognizes that the recreational cannabis industry in the U.S. is still young and that regulations are always changing. To support franchisees, Unity Rd. gives them access to their proven practices, such as a vigilant compliance strategy, marketing support, their proven processes, and purchasing power.
The total initial investment cost of a Unity Rd. franchise ranges from $1 million to $2.5 million. There is a franchise fee of $100,000 (or $250,000 for 3 franchises). Additional costs include a 5% royalty on gross revenue, and a 2% ad fee. Unity Rd. requires potential franchisees to have a net worth of at least $1 million. They must also have $1 million of liquid capital.
Eufloria Dispensary
Eufloria Dispensary is another one of the first recreational cannabis franchises in the U.S. It values the customer experience, high-quality products, knowledge-driven consultation, inviting and comfortable store environments, and regulatory compliance.
It supports its franchisees by providing them with a strong brand, legal guidance, marketing support, area exclusivity, a proven operational model, 24-hour lifeline support, and purchasing power.
The total initial investment cost of a Eufloria franchise ranges from $256,186 to $639,297. There is a franchise fee of $90,000. There is also a 6% royalty fee, 1% marketing fee, and an additional monthly $500 digital marketing fee.
Miracle Leaf
Miracle Leaf operates medical cannabis health centers across Florida and also offers Telehealth and medical marijuana cards in 30 states. It differs from the previous two franchise models in that it does not operate any recreational dispensaries. Miracle Leaf focuses on health, employing state-certified cannabis doctors to evaluate patients and treat their ailments.
They offer two types of franchise opportunities: a single unit franchise or an area development franchise. The single unit option allows franchisees to operate their own Miracle Leaf in a protected territory. The area development option grants franchisees a larger area with the expectation that they open a series of Miracle Leaf locations. Miracle Leaf supports franchisees by providing them with industry knowledge, support, and a comprehensive and hands-on training program.
Investment Opportunity
MedMen Dispensary
MedMen is another leading recreational cannabis retailer, operating 24 stores across California, Nevada, Illinois, Arizona, New York, and Florida. While all of their stores are company-owned, Medmen is a publicly-traded company. Investors can purchase shares in the company rather than opening their own store. MedMen aims to de-stigmatize cannabis by offering a welcoming shopping environment and pushing for safer and healthier products. It is also committed to giving back to the communities they operate in, and has partnered with non-profit organizations in those areas.
MedMen shares trade on the Canadian Securities Exchange (XCNQ) and in the over-the-counter market. According to its most recent earnings call, it increased revenue by 13% from last year to $40 million, and increased retail adjusted EBITDA by 17% to $7 million.
U.S. CBD Industry
The CBD industry is significantly smaller than recreational cannabis, with sales in 2021 estimated to be around $4.7 billion. CBD sales in 2020 totaled $4.6 billion, so the industry’s growth has been slowing over the last year. However, there are fewer legal barriers to owning a CBD business, as CBD has been legal in all 50 states beginning in 2018. Additionally, many in the industry are hoping that the FDA will define CBD as a dietary supplement. This would result in CBD products being able to enter more stores and overall growth in the industry.
Franchise Opportunities
Your CBD Store
Your CBD Store offers CBD-based herbal and nutritional supplements such as capsules, dissolvable supplements, medicated cosmetics, dietary supplements, and others. As of 2021, there are over 160 Your CBD Store locations across 39 states. They focus on sourcing high-quality ingredients. And they differentiate themselves from other CBD retailers in that they use ingredients from the entire hemp plant.
The total initial investment cost of a Your CBD Store franchise ranges from $66,350 to $82,450. There is a franchise fee of $5,000. Your CBD Store franchisees must also pay 3% of wholesale product purchase costs, at least 3% of gross sales per quarter, and 2% of the wholesale cost of products in advertising fund, local advertising, and royalty fees, respectively.
CBD American Shaman
CBD American Shaman is one of the largest CBD retailers in the U.S., with over 350 locations. They aim to promote health and wellness with their products. They separate themselves from competitors with their proprietary nanotechnology. It allows the body to absorb their products faster and more efficiently.
CBD American Shaman supports franchisees by providing marketing support and an expansion program for franchisees to increase locations.
The total initial investment cost of a CBD American Shaman franchise ranges from $30,000 to $50,000, and there are an initial franchise, buildout, and inventory fees totaling up to $45,000. Each month, franchisees must also pay an $800 advertising and marketing fund fee and a $200 tech support fee.
Conclusion
The cannabis and CBD industries are still in their early stages in North America. For bold investors willing to take risks, it might be a good time to investigate further cannabis or CBD franchise opportunities.
