ONE Cannabis Brings Franchise Model to Cannabis Retail

ONE Cannabis Brings Franchise Model to Cannabis Retail

With partnerships in multiple states already, the company’s January launch offers a hint of what’s to come.

April 5, 2018

In January 2018, longtime marijuana entrepreneur Christian Hageseth launched ONE Cannabis, a franchised dispensary brand that is quickly planting roots in legal markets on both coasts. Like the food service titans before him, he’s seeing an opportunity only now for a franchise business model to flourish in cannabis.

While many in the industry share dynamic visions of where the adult-use retail market may lead, Hageseth has one of the more visible vantage points. He’s been in the game since 2009, partnering with five dispensaries in Colorado and helping to build seven cultivation outfits.

For years, he helmed Green Man Cannabis in Denver.

“We got very good at operating compliant and profitable marijuana operations,” Hageseth tells Cannabis Dispensary. “And I say that in that order for a reason: To be successful in this business, you first have to be compliant. And then you have to be profitable. And after you do those two things in that order, you can do whatever you want.”

These days, Green Man is led by a professional management team and is a prominent partner in ONE Cannabis’s franchising portfolio.

Over the years and across nine states, Hageseth says he honed his business chops in a fragmented industry that’s only now beginning to coalesce. As Green Man grew into a compliant and profitable brand, he and his team scanned the horizon for the next challenge to overcome. Denver was one thing, but Hageseth was interested in seeing his company touch further corners of this burgeoning domestic marketplace.

“We were getting more versed on what was happening in other states and we were looking at our options,” Hageseth says. “‘How do we really scale this business? How do we take a successful model and transfer it into other states?’”

Because that marketplace is stitched together without the benefit of interstate commerce, his team inevitably turned toward the franchise model—where all roads lead in U.S. industry, Hageseth says.

Now, on top of its filing in Colorado, ONE Cannabis has partnerships in Ohio, Michigan and California. The company is working on deals in Nevada, New Jersey and Florida: a variety of locales, a blend of adult-use and medical.

“We’re really just looking to continue to do what we’ve gotten good at,” Hageseth says, “which is operating compliant and profitable marijuana businesses and helping other people to do that and be successful with it.”

There are several prongs of business with which ONE Cannabis will work. Most commonly, Hageseth says, he’s seeking the new entrants, the entrepreneurs just now looking to get involved with their state’s newest industry.

The profiles of those entrepreneurs are changing as the industry evolves, making the timing of the ONE Cannabis launch particularly keen. “The new entrants are more sophisticated and have more money now than they did five years ago,” Hageseth says, pointing to the rising start-up costs of cannabis business applications in many states.

Where initial application costs once demanded $100,000 or so in the bank, competitive business owners are now prepared with at least $1 million (oftentimes much more) when the state licensure process begins. The baseline capital requirements vary from state to state, but, for example, Massachusetts’ new market insists that operators have at least $500,000 in cash before even thinking about applying for a dispensary permit. It's another sign of a maturing industry.

“The new entrants … are willing to acknowledge what they don’t know,” Hageseth says. And, more often than not, he adds, they’re interested in owning and operating multiple dispensaries.

Along with newer dispensary owners, ONE Cannabis will partner with existing operators and the growing class of capital groups with no real operating capacity. Companies that are hoping to improve their internal systems—to reach that compliant and profitable playing field—are ripe for the ONE Cannabis touch.

With the spectrum of financial costs levied on the cannabis industry, it’s no easy task to hit those qualifiers. “There are certainly a lot of people out there operating that would appear to be profitable on paper,” Hageseth says, “but when you take the full accounting of what [IRS Code] 280E really costs, they’re not profitable.”

The ONE Cannabis launch puts Hageseth’s experience front and center for potential franchisees. For an industry as dynamic and unsettled as cannabis, those years of work in Colorado and elsewhere are a boon to the rookie entrant. Hageseth says he’d have liked to see something like ONE Cannabis when he was getting into the industry..

“There are very few situations that we haven’t seen or been challenged by—and successfully overcome,” Hageseth says. “Only now does the cannabis industry have players like us that have enough experience to be a franchisor.”

And, on the other side of these partnerships, Hageseth believes that the franchise model will lift the industry in the U.S.

“I do think that the evolution of the franchising model in cannabis is inevitable,” Hageseth says. “That’s just because I observe what happens in the rest of industry in the Western world. The franchise model is very popular, and I think the marijuana industry is in need of those types of operations.”

Hageseth says the linchpin of the franchise model is the same for consumers as it is for business owners. Brand consistency begets brand loyalty and, even better, brand affinity. “They get a brand that they can believe in and become loyal to and have that repeat experience of, ‘Hey, last time I got Super Lemon Haze here it tasted just like the next time I got it. My experience is consistent. So, I know that the next time I want Super Lemon Haze I can count on getting the same thing.’”

Top photo courtesy of Green Man Cannabis