Expect a boom in pot shop franchises thanks to B.C.'s new cannabis framework
Province's business-friendly rules could open the market to big companies
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Expect to see a boom in pot shop franchises, says lawyer Tony Wilson.
Although Vancouver is dubbed the ‘wild west’ of the marijuana market and already home to several pot franchises, new business-friendly regulations could mean that big franchise companies will swoop in and grab some of the market.
In the lead up to the federal government’s plan to legalize marijuana on July 1, the B.C. government announced on Monday that it would operate government-run pot shops but also grant business licenses for private retail stores.
“I get cold calls all the time from people who are interested in franchising their marijuana business,” said Wilson.
Until now he has told them he can help them get geared up, but had warned them that B.C. hadn’t yet announced whether it would allow private companies to open pot shops.
Regardless, Wilson said he knows of several companies that have been making legal preparations for when marijuana is legalized.
“Those companies that have been interested in franchising have been engaging their lawyers to prepare their agreements and the disclosure documents before this moment,” Wilson said.
“The smart money has been 'let's get it all ready to go, so that if and when we're allowed to franchise we're ready.’”
Because pot shops have been operating in a legal grey area, B.C. has yet to see the real boom in franchise shops, Wilson said.
“Legally, the problem with a franchise agreement for a marijuana retail outlet today is that it's an illegal contract,” he said. “You cannot have a contract for an illegal activity, so what's the point of doing a contract at all.”
Despite Wilson’s assertions that contracts for pot shop franchises are unenforceable, franchise stores do exist and have already seen success.
Don Briere is the owner and operator of WEEDS, which currently has 19 franchise stores in B.C., and three more on the way. So far, he’s had success with the franchise model, which requires less up-front capital from individual shop owners and allows multiple stores to share in the same branding.
“The person who is involved in it (as a franchise shop operator) has a great incentive to be successful, and I have great incentive to make them successful,” he said.
Another marijuana business lawyer, Greg Beniston, said the latest regulations will shake up the cannabis market.
“I don't know if (independent) pot shops have to worried, but the market is going to be going through a growth period and there will be winners and losers,” he said.