MJBizMagazine September 2021 - 52

Retail Revoution
One of the first decisions retail
executives make when transitioning
from a medical to recreational marijuana
market is the extent to which they want
to maintain a medical business. The
answer often depends on the incentives
each state provides patients and
businesses to stay in the medical market.
In Colorado, for example, the medical
marijuana market before recreational
legalization was a poorly concocted mess
that businesses couldn't wait to exit, said
Alex Levine, co-CEO of cannabis retailer
Green Dragon. The company has
15 retail locations in Colorado-all but
one of them recreational-and is opening
stores in Florida.
Before Colorado's legalization of
recreational marijuana, Levine said, the
number of plants a vertically integrated
MMJ business could grow was tied to its
patient count. To increase plant counts,
businesses competed zealously to register
patients, resulting in what Levine referred
to as " patient wars " characterized by
" patient sign-up bonuses " such as deeply
discounted ounces of flower.
" Dispensaries were in the background
scrambling with this constant influx and
outflow of patients. ... If your patient
counts were constantly changing, there
was almost no way to be compliant, "
Levine explained.
The result, he said, was a medical
marijuana system that began to " fall
apart. "
Switching to Adult Use
Colorado's adult-use marijuana system
" streamlined " regulations, Levine said,
and eliminated many of the problems
that beset businesses under the medical
program. As a result, Green Dragon,
which had five dispensaries before 2014,
exited the medical market to focus on
recreational cannabis sales.
Cutting its medical business saved
Green Dragon operational costs, while
the sharp decline in the number of
Colorado's MMJ card holders after adultuse
legalization seemed to bear out the
wisdom of the retailer's decision.
52 MJBizMagazine | September 2021
Green Dragon╩╝s new storefront in the upscale Cherry Creek neighborhood of Denver sells medical
and adult-use marijuana. Courtesy Photo
" It was very hard to run medical
and recreational stores simultaneously
because, back then, they could not
be located in the same sales area like
you see today in Colorado, " Levine
said, adding that in the early days
of regulated recreational marijuana,
MMJ and recreational sales had to be
kept separate. " Running both med and
rec operations would have been like
running two stores. ... So that would
have been double the cost. "
Don't Abandon Loyalists
Levine stressed that the choice to focus
on recreational stores didn't mean Green
Dragon neglected its medical consumers.
The company was able to serve
consumers who use cannabis for medical
and wellness reasons with products from
its lineup of recreational marijuana.
And because the expanded
recreational market allowed Green
Dragon to increase production, the
company was able to use economies of
scale to keep costs down.
" We actually were able to offer
products cheaper than we were before, "
Levine said. " We had a wider variety
of products, and we were selling them
at a better price. The only difference in
Colorado was that, on the medical side,
the edibles could be stronger, and you
could buy more of them.
" The high-dose products are pretty
advanced, and over 90% of patients don't
need anything like that, " he added.
Back to the Beginning
While Green Dragon has been all-in
on recreational marijuana, it could be
reawakening to the medical market.
In April 2020, the company acquired
a store in Denver's tony Cherry Creek
neighborhood that was licensed for both
adult-use and medical sales.
Levine said Green Dragon plans to
keep serving medical patients at that
location. The shift coincided with MMJ
patient numbers in Colorado jumping
about 30% between 2019 and 2020.
" A lot of the kinks have been worked
out, and it's a lot easier to operate on the
medical side now, " Levine said. " It still is
more difficult than recreational-there
are definitely more things to keep track
of. But the reason we keep (the medical
license) is, if you ever get rid of it, you
can't ever get it back.
" We don't really know what the future
of medical in Colorado is, so we'd like to
keep our options open. "

MJBizMagazine September 2021

Table of Contents for the Digital Edition of MJBizMagazine September 2021

MJBizMagazine September 2021 - 1
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