Medical Marijuana Dispensaries In Bellingham: Evolution Of Profits
Swarms of college students and medically-assisted residents seek solace in medical
marijuana. The green bud that invokes unprovoked giggles and numb faces. Marijuana is
everywhere in Bellingham, where locals can trade a quesadilla for a nugget of weed if they so
But medical marijuana dispensaries like High Society and 2020 solutions are faced with a financial revolution, where shops must either conform to a new business model or close up shop. Black market marijuana sales are diminishing with more cannabis users switching to recreational outlets.
According to 502data.com, Whatcom county accumulated over $25 million in tax revenue with over $100 million in consumer sales, with Bellingham being the largest cannabis retail city in the county. 37 percent of these sales go to Washington state taxes. “There are two-thirds the number of dispensaries as the number of Starbucks in Washington,” said Economics professor Adam Wright. “It’s exploded since 2014 when the first dispensary came out.”
Although retail sales are rising, the cost to maintain a dispensary sum up to a hefty maintenance fee which requires 24/7 surveillance and cash-only transactions. Wright along with John M. Krieg have researched and constructed an in-depth study called “Getting Into The Weeds: Does Legal Marijuana Access ‘Blunt’ Academic Performance in College?” on how marijuana affects student performance and the correlation with sales after legalization.
Wright explains that with the increase of dispensaries, the lower the cost would be for the product, where starting a medical marijuana dispensary is not as profitable as it used to be. “I’ve seen just looking downtown some places open up and shut down,” Wright said. “Inevitably there’s going to be more usage essentially—whatever drug, it doesn’t matter what drug you’re talking about, if it’s marijuana, cocaine, or alcohol, or anything like that—the cost of legalization is more people but less cost more ramifications of using, so probably more people are going to use.”
“It’s probably demand-driven,” Wright said. “I assume people are wanting stronger and stronger products.”
With cannabis shops competing to brand themselves and one up the other, shops seeking product infusion models, or multi-use shops. Wright thought that shops may be selectively distributing more potent cannabis, although he does not have strong evidence to prove a correlation between potency and popularity. “Any business where the product is very similar, businesses have to find a way to differentiate,” Wright said. “Like Coca-Cola for example, there’s a lot of soda products that are almost identical, and the way they make themselves look different is through branding.”
Lacey Wallace has been a medical consultant at High Society for over three years. “We just keep an accordion folder full of receipts from all of our medical patients and then at the end of the year we organize them and put them away because I think we’re supposed to keep them for three years or five years.”
“The owner has not taken home a paycheck yet,” Wallace said. “People think that we’re making all this money.”
Aaron Nelson is the Director of actualization at 2020 solutions, who sings a different tune when it comes to revenue. “Sales actually continued to increase,” Nelson said. “Even with the decline in prices, they are still going up.”
2020 solutions does “can pay,” which connects to the customers checking account, which pays directly to the retailer. “We’ve looked at many credit card options,” Wallace said. “They are either not legitimate—they’re asking you to basically ‘miscode’ your business as something different to be able to accept the cards or the rates are between six or 10 percent, which we’re not willing to pass that cost on to our consumers.”
2020 solutions launched in 2014 when recreational businesses were becoming legitimized with currently four locations within Washington state.
Like High life, 2020 solutions has surveillance all over the store, along with people monitoring the store. “We’ve experienced a couple break-ins in the past but we’ve actually caught people in the act of breaking in,” Nelson said. “So, with the security we have in place, we keep safety at the top of mind.” Wallace explains that the law requires documentation of the entire lifespan of a certain strain, which is dubbed “seed to sale,” where High Society has to have security cameras all over the premises.
“For retailers it’s really expensive, but for growers it’s insanity,” Wallace said. “We’ve had people steal stuff off the counters.”
The cost of cannabis has dramatically decreased because of the influx of dispensaries in legalized states, forcing shop owners to update their business plan. “When we first opened, a gram of cannabis was $36 and now we have grams less than $10, so you got a 75 percent reduction in cost,” Nelson said. “we’re seeing a transition of people who used to be buying off the illicit market transitioning into the regulated stores.”
Nelson explained that through stable cannabis shops, customers know what they are getting from the store and they know what is in the product. “The unregulated growers, a lot of them are getting out of the business because the money is not there anymore,” Nelson said.