It’s official – you’ve decided to open your very own cannabis store! Now what? Well, before you open the business of your dreams, it’s crucial to develop a detailed cannabis store business plan. It is an essential tool when it comes to raising capital, and it will provide strategic guidance covering every aspect of ownership from operations to financials to human resources.
Whether you choose to write your own or hire our team at Bsbcon, there will be several core elements that should always be addressed in any business plan.
Is it a good time to open a cannabis store?
Many lessons were learnt since the boom from legalization in the Canadian market. Today, in the cannabis industry’s retail market there is an opportunity to create a business for the long haul. Remember, there is still stigma surrounding cannabis, and in order for your business to thrive you will need to develop a cannabis store that is welcoming to all legal entrants.
The following business plan sample is intended to guide viewers through the often complex process of developing a customized cannabis store business plan. As you’re reading through, start to think about how your business plan will differ from this one. The more unique you can make yours, the better. Just be sure to follow all federal, municipal, provincial or state regulations applicable to your cannabis retail store.
1 Executive Summary
Sample Cannabis Company is a quality-focused cannabis retailer targeting a highly populated market in the Greater Toronto Area (GTA). Products include edibles, skin care items, beverages, vaporizers, vapes, dab pens, flowers, buds, pre-rolled blunts, topicals, lotions, oils, and wax concentrates.
We will invest in high-traffic retail locations in the areas surrounding downtown Toronto to tap into an underserved region of Ontario. Our customers will come back to us every time because they know we will always have the freshest products in stock, as well as a continuously updated selection and variety of cannabis products.
The recreational cannabis industry in Canada is in a significant growth phase since legalization. Though it has been fraught with regulatory challenges and low profitability as the industry and governments establish efficient systems and economies of scale, this is only expected to continue improving into the future.
With personalized service, the latest products and education for customers, and affordable prices, Sample Cannabis Company will grow market share. Though there are competitors in this market, Sample Cannabis Company will set ourselves apart by emphasizing efficiencies in supply chain management through data analytics, eliminating spoilage and ensuring a steady and fresh supply of our customers’ favourite products. This way, we pass the savings onto our customers without sacrificing their experience in our retail locations.
We plan to target individuals aged 20-24 through educational campaigns, search engine optimization, and by aggressively expanding into the GTA, specifically targeting cities that do not yet even have one cannabis retail location.
With our bold expansion strategy and ability to manage costs and government regulators, we are confident that Sample Cannabis Company will become THE place to find the freshest supply of buds in the market and a place to try the latest innovative products at affordable prices.
1.1 Company Summary
Sample Cannabis Company is a quality-focused cannabis retailer offering the most popular and latest cannabis products available, including beverages, desserts, and skin care products. The company was incorporated in the province of Ontario on June 8, 2020 by our Chief Executive Officer and Chief Operating Officer.
The company was strategically developed after the initial boom of the cannabis industry, giving us an opportunity to enter a more stable market and to forecast financial projections with greater certainty. In doing so, we were also able to identify cannabis retail as the market segment with the most potential and with the greatest ability to withstand fluctuations in the market.
1.2 Mission Statement
Our mission is to be known as THE place to find the freshest supply of buds in the market at affordable prices.
1.3 Vision Statement
Our vision is a responsible society, where adults can safely use cannabis without any repercussions.
2 Market Analysis
The cannabis industry in Canada has grown steadily for both medicinal and recreational marijuana since legalization. It is currently valued at $3.1 billion and is expected to continue to grow by an annualized rate of 5.6% to 2025. In 2020 alone, the industry is anticipated to have grown by 25.7%.
Although industry profitability is lower right now due to the initial capital costs required to establish infrastructure, economies of scale, and production and distribution channels, it is expected to improve over the next five years to 2025. It will increase as operators enhance efficiency and revenue continues to grow as demand continues to shift away from the illegal market.
According to Statistics Canada, 27% of Canadians aged 16 and over have used cannabis in the last 12 months, which amounts to roughly 8.5 million people. Of those people, 47% or 4 million reported use at least once per week, and 18% or 1.5 million reported daily use. On average, Cannabis users spent $67 a month on cannabis products.
Moreover, as more states in the US and other countries around the world gravitate toward legalization, Sample Cannabis Company will have the experience navigating complex regulatory environments and an established network and brand to effectively move into new markets as they open up. Currently, 15 US states have legalized recreational cannabis, and it is anticipated that more will join in the coming years.
2.1 Key Success Factors
Understanding government policies and their implications: Marijuana legislation is complicated at all levels of the government. Successful operators must be able to navigate the regulatory landscape at both the provincial and federal level.
Development of effective marijuana strains: Growers that can develop the most potent and effective strains can potentially attract greater demand for their products.
Marketing of differentiated products: Dispensaries must properly promote their products given the differentiated nature of edible cannabis products.
Fast adjustments to changing regulations: Regulations are constantly changing. Growers must comply with the latest legislation or endure fines and arrest and they must be able to adjust to changing regulation quickly and smoothly.
Ability to provide testing or thermometers for on-site employees: Dispensaries are considered essential businesses. Staying open and keeping employees and customers safe is crucial to maintaining operations.
2.2 Demand Determinants
Because cannabis is a controlled substance and only newly legalized, government regulation is the greatest determinant of demand at this early stage. However, factors such as price, marketing and availability will likely become increasingly important determinants of consumer demand, as the industry will gradually begin to resemble the market for alcohol and other controlled substances.
Macroeconomic factors that contribute to consumer spending are boons for the industry. For example, rising levels of per capita disposable income, lower unemployment rates and high consumer confidence are positive catalysts of industry demand. If individuals have more money and believe that the economy is doing well, they are more likely to purchase discretionary items such as alcohol and cannabis.
However, health consciousness is a persistent threat to demand as the health effects of cannabis become more widely studied. Nonetheless, most of the detrimental health outcomes are a result of smoking rather than the consumption of cannabis in totality, leaving demand for edibles and other derivatives-based products largely untouched. Moreover, the price of cannabis in the illegal market also determined overall demand for recreational licensed marijuana, since this is a direct substitute for legal cannabis.
The COVID-19 (coronavirus) pandemic is expected to slightly depress the otherwise strong growth for industry services. Rising economic uncertainty and unemployment is likely to result in Canadians spending less on discretionary products, including cannabis. However, this decline in demand is expected to be minimal, as many white-collar workers with higher salaries have maintained their jobs, as they are able to work remotely. These Canadians still have a large amount of disposable income and with job security, may continue normal spending, which also will protect against a large decrease in demand.
2.3 Competitive Analysis
Competition in the cannabis industry is high with medium levels of concentration. However, the significant concentration stems from cannabis producers, whose growing and distribution channels account for a significant portion of the market over retailers. The decentralized nature of the cannabis retail market allows Sample Cannabis Company the opportunity to launch aggressively in areas currently un- or under-served, establishing our brand, reputation and presence before smaller individual retailers enter.
Although the illegal market will continue to remain a threat until efficiencies and availability in the legal market can compete, the number of Canadians who purchased from illegal sources was cut in half from 2019 to 2020. This trend is expected to continue over the next five years as Canadians adapt to the new legal market.
Cannabis retailers typically compete based on price and quality. Marijuana can have diverse properties and qualities, and only dispensaries that can consistently provide high-quality marijuana will attract demand from consumers in the recreational and medical markets. Additionally, dispensaries must be able to provide competitive prices. Customers can purchase marijuana from a wide range of dispensaries, making it easy to only acquire products from the lowest-priced dispensaries. As a result, it is important that dispensaries use promotional efforts to attract new customers.
Though smokable indica cannabis products and smokable sativa cannabis products lack significant differentiation, there is a great degree of differentiation in the edible cannabis products segment. A whole field of cannabis-infused culinary cooking has emerged in recent years with the legalization of medical marijuana and the subsequent advances in cannabis oil extraction methods. It is important that industry operators have access to the newest products and are able to source popular items at competitive prices.
2.4 Main Competitors
Competitor 1 is a provincial government-run cannabis retailer. Its website is the only legal way to purchase all forms of recreational cannabis online. Online orders are delivered to customers’ doors safely and securely, at which point customers must verify their age to accept delivery.
Competitor 2 is a cannabis producer and retail chain that aims to be the most knowledgeable and trusted source of recreational cannabis, offering a premium consumer experience with its own brand of high-quality products. They have locations across Canada and aim to offer legitimacy, reputability, professionalism and a feeling of confidence for their customers.
Competitor 3 is an award-winning, design focused, legal cannabis retailer. They aim to empower consumers to make well-informed decisions about safe, high quality products. With a franchise model, Competitor 3 has been able to quickly build a national presence, with locations in markets where regulations have been difficult to pass.
3 Strategy Summary
Sample Cannabis Company will be a cannabis retailer selling products to an affluent target market in the Greater Toronto Area (GTA). Products include edibles, skin care items, beverages, vaporizers, vapes, dab pens, flowers, buds, pre-rolled blunts, topicals, lotions, oils, and wax concentrates.
Our customers will come back to us every time because they know we will always have their favourite products fresh and in stock, as well as a continuously updated selection of the latest and greatest varieties available on the market.
Unlike the cannabis cultivation market, cannabis retail is at less risk of oversupply. However, with deteriorating freshness and expiration dates on cannabis products, ensuring quick turnover is a key step in minimizing our costs. We will differentiate by offering the freshest product available at reasonable prices, which we will accomplish through our focus on data management and analytics. With an emphasis on data-driven marketing and supply chain management, we can effectively grow our market share by predicting our required stock with higher accuracy, increasing freshness for our customers and eliminating spoilage on our bottom line.
Sample Cannabis Company will begin an aggressive expansion across the Greater Toronto Area, beginning in the York and Durham Regions. We will invest in high-traffic locations, specifically targeting the towns that so far have no cannabis retail stores. This includes Vaughn, Markham, Newmarket, Richmond Hill, Pickering, and Whitby. The area surrounding York University also has no cannabis retail locations. Targeting this area will allow us to capture the student population living near, or commuting to and from, school.
This region is also both densely populated and affluent, requiring high wages to sustain the cost of living associated with being close to Toronto. The entire GTA is home to 6 million people, 1 million of which are located in York Region alone.
Ontario’s cannabis regulations have also become more streamlined over the last six months, making the process for licensing and compliance much easier. These changes make it an underserved market where supply is not yet meeting demand, yet also with a more business-friendly regulatory climate than other provinces like British Columbia or Manitoba.
4 Marketing Strategy
Due to the strict regulations imposed on the cannabis industry, very little overt marketing opportunities are allowed. However, we will set ourselves apart through our aggressive expansion into high-traffic areas, building our brand largely through location awareness.
We will launch an educational campaign, hosting seminars for first-time users, or first-time legal cannabis users, to better understand the products and what to expect.
High Service Standards
By providing exceptional service, coupled with our affordable prices, we will build brand awareness early on before new players enter the market in the GTA.
Search Engine Optimization
We will tailor our online presence to generate higher traffic to our website and social media profiles. This will include working with local influencers by bringing them in to have a private, custom experience in our stores, and providing online educational guidebooks to build trust and legitimacy with our customer base.
We will attend podcasts where we can discuss our business and new cannabis products, and gain insights from industry peers. This form of marketing can better position Sample Cannabis Company in the industry while also building name recognition for interested consumers.
4.1 Target Market
20-25 year old students and young professionals will be our primary target audience.
The GTA has several post-secondary institutions and multi-generational homes. With the high cost of living in the GTA, younger individuals are looking for affordable cannabis options without sacrificing the quality of the product. With our focus on a data-driven supply chain, we can reduce our storage and waste costs and ensure high product turnover, increasing our profit margins and reducing costs to the customers. In doing so, we can provide consistent, affordable service to clients that are currently lacking access to their choice cannabis products.
5 Financial Plan
With an investment of $XXX,XXX, we will cover all expenses for initial setup, staff salaries, operating expenses, and advertising to open three locations in the GTA.
5.1 Opening Balance Sheet
5.2 Five-Year Income Statement
With an underserviced client base in the region and our commitment to focusing on cost reduction and sales growth, we expect to generate sufficient revenue to turn a profit in our third year of operation.
6 Management Team
Chief Executive Officer
Our CEO has fifteen years of experience working in pharmaceutical cannabis, where she led teams responsible for corporate strategy and government relations, giving her the experience required to successfully navigate the continuously changing regulatory environment faced by cannabis retailers. Her commitment to client satisfaction and effective stakeholder management puts her in an ideal position to lead our executive team.
Chief Operating Officer
Before arriving in Toronto, our COO worked in the liquor industry for ten years where he oversaw operations for a private liquor store chain in British Columbia. This experience gave him the opportunity to develop an in-depth understanding of the operational requirements of managing a province-wide retail chain. With an MBA from the University of Toronto, focusing on operations and human resource management, our COO is well equipped to manage Sample Cannabis Company’s operations.
Chief Financial Officer
Our CFO has been an accredited CPA for over twenty years, with eight year’s experience managing the finances for one of Canada’s largest clothing retailers. In addition to her exceptional work experience, she also serves as a board member of the Canadian Retailers for Ethical Finance who advocates for the highest standards of ethics and sustainable finance practices among Canadian retailers. She plans to bring this perspective with her to Sample Cannabis Company to ensure it meets the highest possible standards of ethical finance in an industry already facing significant scrutiny.
Chief Data Scientist
Our Chief Data Scientist will lead our data analytics program to ensure the most effective and efficient management of cannabis supply possible to maintain freshness and minimize spoilage. His early career as an oil and gas engineer in Alberta gave him experience managing data on large-scale, multimillion-dollar capital projects. After completing a Master’s degree in data analytics, me moved into a supply chain role for a grocery chain with locations across Eastern Canada where he was responsible for minimizing waste while ensuring a sustainable supply of fresh produce.
6.1 Key Personnel
Cannabis Store Manager
- Developing and implementing operational plans
- Managing inventory and annual store budgets
- Controlling employment costs and analyzing reports
- Contribute to establishing and improving Sample Cannabis Company image through the implementation and maintenance of policies.
- Hiring and training staff, managing schedules, participating as required in all store duties as well as handling labour relations issues for the work unit.
- A minimum of three years of recent, related experience as a Manager or Assistant Manager leading a team within a customer-facing retail operation.
- Degree, diploma, or certificate in business or retail management is an asset.
- Experience working in a government or regulatory environment is an asset.
- Cannabis knowledge, demonstrated through experience in the cannabis industry or courses from an accredited post-secondary institution.
Cannabis Store Supervisor
- Assign tasks and duties to fellow team members
- Ensure every customer receives a “best in class” customer experience
- Sell cannabis products
- Supervise and coordinate activities of team members in product education, sell-through and visual merchandising
- Contribute to sales volumes and the daily operations of store financial goals, and overall product matters
- Assess customer needs, and make strategic and timely decisions to solve customer issues in the moment
- Organize and maintain inventory levels
- Authorize the acceptable return of product or merchandise
- Ensure the visual standards and image of the store are maintained, such as store displays, signage and cleanliness
- Working effectively independently as well as in a team
- Excellent attention to detail and organization skills
- Reliable and committed to the success of the team and organization
- Operate with a high sense of urgency in a fast-paced environment
Cannabis Store Sales Associate
- Engage with customers to understand their needs and educate them on responsible cannabis use
- Provide information based on ongoing learning and accurate product knowledge
- Convert customer needs into sales in real-time using tablets for order processing
- Cultivate, grow and retain customer base through an exemplary customer experience
- Work with team members to fulfill orders and cash out customers
- Comprehend, apply, follow and enforce guidelines as required by industry regulations
- Professionally and courteously interact with customers at all times
Cannabis Store Cashier
- Oversee the payment transactions of all items
- Ensure every customer receives a “best in class” experience, connecting them with our brand
- Communicate with teammates to ensure optimal customer experience, ensuring fellow teammates do the same
- Build lifelong relationships between customers and our brand by prioritizing connection through authentic product education
- Lead the business with intention in everything done. Each action and task has a purpose to drive the business ahead.
- Be inclusive, genuine and engaging in interactions with customers and team
- Anticipate customer needs, listen intentionally, make informed suggestions and deliver an incomparable experience with every interaction
To Conclude Cannabis Store Business Plan
This cannabis store business plan sample should provide you with a solid foundation for your own store or dispensary. We thought we would leave you with some final thoughts for developing your own store.
Understand Local Legislation
Whether you’re in Canada, the United States, Europe or beyond it is imperative that you understand local legislation regarding selling a controlled-substance such as cannabis. Everywhere is different, and if you’re serious about developing a successful cannabis store business plan you should consult with local government or retain a business plan writing firm that will do this on your behalf.
Offer Something Unique
You must differentiate your cannabis store, whether you offer the lowest prices, target a specific demographic, or develop another defendable competitive advantage. In order to do this, you need to understand:
- The geographic area which you will operate in (are you going to open one store, or compete throughout an entire state or province?).
- Based on that geographic area, who is your competition (break down your competition from government operated stores to niche cannabis stores to corporate chains)?
Get Insights from Industry Leaders
Don’t move ahead with your cannabis store until you have spoken with industry leaders to gauge the market. As exciting as the cannabis industry may be, it is still a young, volatile market. By reaching out to industry leaders you can gain an insider’s look at whether your cannabis store’s location, unique offering, or branding is a strong idea or not. The feedback you receive from reaching out to other cannabis executives should be one variable amongst others that contribute to your final decision.
Make Sure it’s Right for You
Yes, creating a winning cannabis store business plan will undoubtedly answer a lot of questions people miss and, therefore, increase your chances of success, but you still have to execute on your plan.
- Are you qualified to lead a team, or do you know of a regional or store manager to recruit?
- What makes you so certain that owning and operating a cannabis store is right for you? Is it a calculated business decision, or is it a case of FOMO (Fear of Missing Out) on the cannabis market?
At Bsbscon we write a lot of business plans. All of them are exciting and unique in their own way, but writing this cannabis store business plan raised a lot of our team’s excitement to further support the strategic and sustainable development of the industry.
It is humbling to know that by supporting this industry we are championing positive change in our country. By supporting the regulation and taxation of a controlled-substance such as cannabis we de-arm organized crime groups, reduce the burdens on the criminal justice and social welfare systems, and help to develop a safer, more measurable industry dedicated to responsible, educated consumption.
Although the Canadian black market is still robust, we have seen some positive change. For example, studies tracking youth consumption suggest underage cannabis use has actually declined since legalization. Statistics Canada’s National Cannabis Survey, which monitors trends quarterly, even states in its before-and-after legalization numbers that the percentage of those aged 15 to 17 who use the drug has fallen from 20 percent to 10 percent.
Thank you for reading our cannabis store business plan sample. You can absolutely try to develop your own business plan, but please consider reaching out to receive the best business plans available from our team at Bsbcon. We would love to write a fully customized cannabis business plan that is unique to your vision, and incorporates a customized sustainability plan. Thanks, and we look forward to working with you very soon.