MJBizMag July 2021 - 62

SCALE
HOW IT
SUITS YOU
growers, Monaco said. He added that the company would
consider acquiring the growers, as that would increase margins
to 70% or more.
Although with the current arrangement, Gage doesn't have
to make capital or operational expenditures on behalf of
contract growers. " It's a very capital-light model, " Monaco said.
" We basically get our own product on the shelf at zero cost and
split the retail price with that producer. "
DEMAND AND OTHER FACTORS FOR SCALING
When considering whether and where to open a new
cultivation site or bring on a new contractor, Monaco first
considers demand, followed by market potential. He added
that success lies in making sure your cultivation facilities are
producing the right amount for your retail outlets.
PROOF OF CONCEPT
Lume Cannabis * Troy, Michigan
Before joining Lume in September 2019,
Vice President of Retail Operations
Michael Dowdell had spent 16 years
with Bose Corp., a Boston-based soundsystem
company. While at Bose, he
helped grow the company from 100 to
175 stores.
His mandate at Lume is to help the
company reach 100 stores by 2025, up
" You're scaling your retail as you're scaling your cultivation
to make sure that they stay neck and neck based on the
demand that you have from your retail, " Monaco said.
For example, by mid-2020, Gage had opened five stores,
but production couldn't keep up with demand. So Monaco
resisted opening more stores until the company had
launched its third cultivation site and enlisted contract
growers to meet demand. Only then, in January 2021, did
they open their next store.
" We had to slow down a bit when it came to opening
retail because we were buying so much wholesale product, "
Monaco said. " As our cultivation went from two facilities
to now eight sites-soon to be nine-that gives you the
confidence to say, 'OK, now you can open up more retail.'
It's just trying to manage both. "
Michael Dowdell
from around 30 currently.
" We like to go fast. We open a lot of stores, and that's a fun
model, " Dowdell said.
Lume started with a cultivation facility that fed a so-called
proof-of-concept store, both in Evart, Michigan. The purpose of
the first store was for Lume to craft and hone its processes and
procedures so they could be easily replicated in future stores.
" I brought some of that discipline that you need to
standardize things, because w And, as you expand, it can get
watered down, " Dowdell said. " So we just began to better
document our standard operating procedures (SOPs). We
created an employee manual on the human resources side,
and we created a standard operating procedure guide on the
retail side. If I drop an employee from one store off in any
other store, they'd be able to function within 15 minutes. "
But standardization can be limited by the unique traits of
individual retail locations, Dowdell cautioned.
" (SOPs) are the same from store to store, taking into
account the unique layouts and other things about how the
store is designed, " Dowdell said. " It's a constant evolution of
documenting procedures, with the exception of the processes
that are store specific. And that's going to be your curbside
62 MJBizMagazine | July 2021
Lume Cannabis standardizes processes between stores. Courtesy Photo
process, or how you move your inventory in and out of the
store. Because some stores have bigger inventory rooms,
some stores have a separate inventory room. We make minor
adjustments for that, but overall, we try to standardize as
much as we possibly can. "
WHERE TO SCALE
When it comes to choosing where to locate stores, Dowdell
advises executives to seek out markets with " a decent amount
of traffic in the surrounding areas. "
Dowdell acknowledged that not all municipalities will
allow marijuana businesses, and companies might have to
pick towns based simply on whether they are permitted to
operate there.
" We follow the marketplace. And we looked for
organizations that were also going to open up recreational
sales in the near future. It's never a guarantee, but we tried
to target markets that were open and that were going to go
recreational fairly soon, " he said.
MJBizMag July 2021

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