Cannabis company to start franchising

DENVER — Nine years ago, Christian Hageseth was on his own, opening a cannabis business with no prototype to follow.

Now, after running the successful Green Man Cannabis business, Hageseth is hoping to help others in the marijuana business not have to go it alone and is franchising his business model.

The cannabiz entrepreneur is partnering with a longtime franchisor to begin franchising dispensaries under the name ONE Cannabis, which will become Green Man Cannabis’s new name.  

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Hageseth said he is speaking with franchisees who want to open five stores along the Front Range, including Boulder and Fort Collins.

“I had to make a lot up and figure it out over time,” Hageseth said. “I learned a lot of lessons over nine years. I recognized there’s a huge amount of value to others getting in the industry or those struggling, with all the lessons we’ve learned and systems we’ve perfected. It was evident to me something like this was necessary. I wish I could have franchised when I started; I would have saved millions avoiding costly mistakes. There’s a clear need in the market for a franchisor in the cannabis space. It’s a difficult business.”

Although Hageseth has heard of other businesses considering franchising, ONE Cannabis is a first mover in the field. Cannabis is still a new industry, and it’s taken since the beginning of legalization to figure out how to run a business, before the model can be franchised to others.

“To be a franchisor, you have to demonstrate your success operating multiple units over time and have that track record,” Hageseth said. “The industry is so young still, it’s now getting to the point where a franchisor legitimately has that experience. My guess is we’re going to see this model pop up more as people have been doing it successfully for 5 to 10 years now.”

Green Man has seen success in cannabis: Its two stores bring in $6.5 million a year collectively.

He said the brand is looking at both first-time dispensary owners and mom-and-pop shops that might be struggling. The initial investment is about $100,000, plus a royalty fee of 5 percent of revenue and 2 percent for marketing. First-time dispensary owners will also have to get all the proper licenses.

Hageseth said franchising a marijuana business makes sense: Rather than having to completely boot strap the business alone and figure out where to source cannabis, how to market and how to be in compliance, franchisees can plug into ONE Cannabis’ strong business system, tenured management team and its marijuana supply.

“They’re not alone anymore,” he said.

ONE Cannabis has plans to open its newly branded stores in the third quarter this year. The plan is to have 50 stores opened in the next 36 months. Along with opening stores on the Front Range, they’re also looking at opening in other states, such as Ohio and Michigan.

Opening a franchise in other states in a business that hasn’t been federally-approved has created its own challenges, but Hageseth said the brand has found a solution.

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Typically, franchises will register on a national registration and a state will be put on notice that it will be operating in the state. ONE Cannabis, however, is operating as an intellectual property company that owns its operating methods which are being licensed to a franchisee. Then that franchisee can only operate in the state it’s registered in.

“It’s more difficult, more expensive and takes more people to do it that way, but it’s legally complying and not violating any federal laws,” Hagaseth explained.

The decision to franchise also sparked a rebrand, from Green Man Cannabis to ONE Cannabis.

“Green Man has been a great name and served us well,” he said. “But if you look at the future of cannabis, the world is going to change.”

He explained that Green Man worked as a name when the marijuana industry was for die-hard fans who had been smoking when it was illegal. But the future of cannabis will be unexpected users, such as suburban mothers who make all of the household consumption decisions of what food is bought, whether it’s organic, if it’s vegan, etc.

“When soccer moms, which I say with respect, are in favor of marijuana and would rather have their kids smoke a joint than drink a beer, when that shift happens cannabis will go from a $50 billion industry to $100 billion or even $300 billion,” Hageseth said. “Our rebrand commits to the core of marijuana users, but also creates a brand to talk to the new cannabis consumer.”

He said that as the market starts to change, it makes sense to make the rebrand now before the brand goes national.

“Now is the right time to make the switch, before we get even more brand equity,” he said.