Skipping The Growing Pains: Why A Franchise Can Make Sense For Cannabis Entrepreneurs

Cannabis is an attractive industry in which to invest and work — but it's also a complex and highly regulated one. Aspiring entrepreneurs often don’t know where to start when it comes to launching a cannabis business, and building a cannabis brand from the ground up can be difficult.

One solution that can help entrepreneurs kickstart their cannabis business is becoming a franchisee.

The franchise model has worked well in industries such as fast food, fitness and retail.  

Given the novelty of the legal cannabis industry, franchising is still somewhat uncharted territory.

The only company offering a retail cannabis franchise is One Cannabis Group, and Benzinga spoke with founder, chairman and CEO Christian Hageseth and COO Mike Weinberger to gain a better understanding of the company, its business model and what it means to franchise a cannabis business.

About One Cannabis Group

One Cannabis Group was founded in 2017 by Hageseth, an industry veteran, who prior to going into franchising spent eight years founding and developing Green Man Cannabis, one of the most successful dispensaries in Denver, Colorado.

Hageseth teamed up with John Darwin, a private equity, corporate and startup development expert who serves as the company’s co-founder and president. They hired Scott Sterling as CFO and Weinberger as COO.

Weinberger has over 18 years of experience in franchising and has contributed to the growth of a number of national and international brands, including Maui Wowie Hawaiian Coffees & Smoothies.

One Cannabis Group has three locations in Colorado and is working on enacting a number of other franchise agreements.

The company plans to go public in Canada, and investors could be able to buy shares as soon as April, the executives said. 

How A Cannabis Franchise Works

Obviously, launching a cannabis franchise is different from any other industries, largely because cannabis is illegal on a federal level in the U.S. And each state where cannabis is legal has its own application process.

One Cannabis Group worked around the licensing issue by developing a franchise offer for each state separately.

“We don’t cross state lines. We follow the same system in each state,” Weinberger said.

Aside from legal issues, the company follows the same standard operating procedures of any other franchise model: for example, One Cannabis’ franchise model includes a training component and helps franchisees set up supply chains.

Licensing is an important step for a cannabis business. One Cannabis Group works both with companies that already have received all necessary licensing as well as those who haven’t yet started the process.

For the latter group, One Cannabis has a team of application writers. 

Franchises Vs. Going Solo 

Entrepreneurs looking to enter the cannabis industry might be asking themselves why they should become a franchisee rather than starting their own business from scratch.

After all, to obtain a franchise with One Cannabis Group, a franchisee has to pay single fee of $100,000; be able to invest between $750,000 and $2.5 million; and have $750,000 in required liquid capital.

The costs bring benefits, according to the company.

Those who don’t have a license are provided all the necessary help with the application process. Entities with licenses also need a lot of help, as operating in the cannabis industry is much more complex than it might seem at first glance.

" ... With us, you make sure that you don't make mistakes out of the gate,” Hageseth said. 

Suggested Read: What Nearly Losing My Business 15 Times In 9 Years Taught Me About Persevering

The questions a cannabis business owner faces include what products to buy, what employees to hire, the requirements for those employees, training, standard operating procedures and point-of-sale systems, the CEO said. 

"There are a lot of these things that we have a lot of experience with.”

The cannabis industry is evolving and shifting and from “will there be a legal industry?” to “OK, there’s a legal industry — but how do I manage my business?" Hageseth said.

For that reason, the executive said cannabis franchising represents a great opportunity for entrepreneurs who want to take a slice of the market, but also want to make fewer mistakes and learn how to navigate the space.

One Cannabis Group attended Benzinga's cannabis event in Miami in January and are slated to join at our upcoming conference in Toronto in April. Click here to learn more about the event and buy tickets.

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