As Western New York’s first state-licensed pot dispensary Dank turns one year old this month, so, too, does the region’s cannabis industry. And though Dank owner Aaron Van Camp did $9.4 million in sales this year, he’s urging caution among those who would follow in his footsteps.
“People are going by our numbers. Don’t go by that top store in your area that opened first,” Van Camp said. Aaron Van Camp, owner of Dank, Western New York’s first state-licensed pot dispensary, is urging caution among those who would follow in his footsteps.
Being first in the region got Dank a lot of attention – crucial at a time when traditional advertising was not allowed because of marketing laws that are just now being relaxed by the Office of Cannabis Management. “I did over a million dollars in earned media. That’s like me spending a million on advertising that I got for free,” Van Camp said.
Dank was also able to operate when an injunction kept other legal dispensaries out of the market, giving it an artificially large portion of market share. Dispensary openings were halted twice in Western New York by legal injunctions. Even now, Dank competes with just 13 state-licensed dispensaries.
As the region’s recreational cannabis market matures, competition will only get more severe. More than 70 licensees have received proximity protection for locations slated for upcoming dispensary openings across Western New York. “It’s going to be a very different landscape with 70 stores open than one or 15.
So we’re glad we had that time period to really do well. We’ll probably have a bigger cushion than others if things get extremely competitive. We’ll have to try and either withstand this or move along if things don’t go well,” Van Camp said.
Changes from the state Office of Cannabis Management Control Board would make it easier for cannabis firms to offer discounts, advertise, put up more signs at their stores and use brighter packaging. Those are all tightly controlled under the current rules. A major focus of the Office of Cannabis Management has been on shutting down unlicensed shops in the state.
But Van Camp said the free market is doing just as much to shut them down as the state’s increased enforcement actions have. “I think they shuffled out more so from an oversaturation here. There were so many of them that a lot of them weren’t profitable, because just so many opened at once that a lot of them funneled out because they weren’t making the money,” Van Camp said.
With just 14 licensed dispensaries open in Western New York, unlicensed storefronts outnumber licensed ones. But Van Camp said they don’t encroach on his business because gray-market and licensed stores have two different customer bases. “It’s apples and oranges,” he said.
“My demographic’s that 35- to 50-year-old man or woman who doesn’t know anybody who sells cannabis anymore. They just want to go home and smoke after work and watch ‘House of Dragons’ and relax.” Right now, Dank, on Main Street in Buffalo, competes with just 13 state-licensed dispensaries.
As the region’s recreational cannabis market matures, competition will only get more severe with more than 70 additional licensees now in the pipeline. A much bigger threat than unlicensed shops, he said, will be other licensees who enter the market, especially big moneyed interests operating outside of the Conditional Adult-Use Retail Dispensary program. “What I’m worried about is the guy who wants to come in and spend $200,000 a month on advertising and get 30 billboards out here,” he said.
“The guy who’s going to bottom out those prices, maybe a major company, maybe somebody who’s worth $100 million is going to come in and say, ‘OK, we can lose money for three months. We’re doing buy one, get one, free every day for three months.’ Those people are coming.
” The state Office of Cannabis Management has adopted regulations for personal home cultivation of cannabis. The rules go into effect Wednesday. As has played out in other states, it will be a “race to the bottom,” he said, as well-heeled companies undercut prices to corner the market and drive competition out of business.
“We’re scared to see what’s going to go on in that aspect,” Van Camp said. “The black market is always going to be there, in my opinion, but the ones who really got deep pockets and want to run the little guy out, that’s more scary for us than anything.” Cannabis sales on nearby tribal reservations will also continue to put pressure on state-licensed dispensaries.
“You have the three-for-one out there: cigarettes, gas and weed,” he said. “Before, you might not have gone if it was just for your gas. But if you’re doing all three or two of three, now it’s like you’re saving $100 by going out there.
” "My demographic's that 35- to 50-year-old man or woman who doesn't know anybody who sells cannabis anymore. They just want to go home and smoke after work and watch 'House of Dragons' and relax," said Dank owner Aaron Van Camp. New dispensaries should learn from mistakes dispensaries made during the first year, Van Camp said.
“The main problem that people were having the first year was they were taking on way too many SKUs, way too many products, taking on, like, $100,000 orders from vendors and getting trapped with bad products,” he said. They’ll also have to tamp down on luxury build-outs, because there is no luxury customer to support it, he said. “The super high-end connoisseur isn’t shopping with us.
He’s growing it himself or his friend’s growing it. So you can’t try to appeal to him,” he said. The owner of Tonawanda cannabis delivery company Canterra is alleging the state Office of Cannabis Management has retaliated against his company for speaking out publicly against it.
That means running lean. “The idea that you’re going to have a $50,000 chandelier and Kourtney Kardashian at your opening, it’s not working like that,” Van Camp said. “You need to open with low square footage.
You don’t need 20 staff members. You need a couple knowledgeable people.” For as much as Dank has learned in its first year, Van Camp thinks surrounding communities have also learned what it means to have a dispensary in their neighborhood.
“Dispensaries are bringing big spenders to your area,” he said. “If you own a business and you don’t want 3,000 unique customers that are basically an Oprah or Martha Stewart-type demographic – that’s our main customer – if you don’t want 3,000 of them on your block spending money, then you should definitely opt out of having dispensaries, because that’s who’s coming to them.” The business news you need Get the latest local business news delivered FREE to your inbox weekly.
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