Since the earliest stages of the legalization movement, cannabis entrepreneurs have been apprehensive about the “big players” entering the market. But in light of the $4 billion Constellation Brands invested in Canopy Growth in August, it’s clear that the big players have already arrived and the explosive growth of the cannabis retail sector is a siren’s call for many investors.
As hundreds of businesses jockey for position in this emerging industry, it seems as if cannabis retail and dispensary chains like MedMen, Columbia Care, Rise and Harvest of Arizona have been built overnight. But that is far from true. Each company has followed a strategic path to expansion and raising capital to set them apart from the smaller players in the space.
Ultimately, only time will tell who will become the largest retailer in North America, but these four companies — plus LivWell International, an intriguing upstart with connections to one of Colorado’s largest chains — are early frontrunners in the race.
Columbia Care
Columbia Care is growing into one of the largest cannabis companies in the world. It already has dispensaries and cultivation facilities in eight states and licenses in place to expand into another four.
“We’re expanding quickly and over half the portfolio are in the late stages of opening or are already opened,” says CEO and co-founder Nicholas Vita. “We’ve been very fortunate in going through the licensing and application process and we feel very good about the trajectory of the organization.”
According to Vita, the company’s mission is simple: “To develop products that improve lives, to provide a better, consolidated alternative that doesn’t exist in the marketplace.”
Nicholas Vita.
Nationwide Operations
Columbia Care currently has multiple dispensaries open under several brand names. The two Arizona locations operate as SWC Tempe and SWC Prescott, the three Massachusetts locations are branded as Patriot Care and the company’s first dispensary in Washington, D.C. operates as Capital City Care. The company also has a single dispensary in Delaware, another in Illinois, three in New York, one in Pennsylvania (where the company is building two additional dispensaries) and soon it will have three in Puerto Rico, all operating under the Columbia Care banner.
The company also has a dispensary license in Maryland and cultivation licenses in California and Ohio. Vita estimates that Columbia Care will have more than 50 total retail outlets by the end of the year.
“We have operations all over the country, in every major jurisdiction with the exception of Colorado, Washington and Oregon,” says Vita, adding that the rate of growth is a source of pride for the company and “makes us want to work harder and do a great job.”
Proving Grounds
Vita has more than 20 years of experience as an executive in finance and health care from his time as a strategic advisor at S.G. Warburg and then with the Healthcare Investment Banking Department at Goldman Sachs. He moved into the cannabis space with an early investment in Washington, D.C.’s medical cannabis market and opened Capital City Care.
“We’ve always looked at D.C. as an interesting step and learning curve, but we’ve obviously grown far beyond the D.C. stem,” he says.
With proof of concept in hand, Vita and his team went on to create Columbia Care to capitalize on a much larger, national opportunity.
Raising Capital
Since its inception, Columbia Care has raised more than $100 million and plans to raise another $100 million before tapping into public markets, Vita says.
“The way we thought about capital raising was really based on our own strategy and our requirements for resources,” Vita says. “We’re fully integrated in most of our markets. Throughout our entire national system, over 75% of what we sell is manufactured by us, but we have multiple brands and multiple product strategies. It’s a very diversified revenue stream.”
Disciplined Development
Vita says Columbia Care has avoided setting up operations in the nation’s long-standing, adult-use states, as they provide more risk than reward. Vita says Columbia Care selects markets where it has a competitive advantage and where the regulations are well-suited for its business model.
“We have found that in markets where they don’t have real controls — regulations that monitor closely the participation in those markets — you have almost an indiscriminate aspect to the way the market evolves that becomes unproductive,” he says. “We think about our state-selection process in a very methodical way.”
That critical approach to expansion has also kept the company out of Canada, which, despite its geographical size, only has a population of about 36 million. Vita says Canada also doesn’t have an oversight program established to protect the integrity of the operating environment, meaning there could be 100 operators or 100,000 operators in competition for a market slightly smaller than California.
“Canada, for us, is about the same size as Florida,” Vita says. “If we have California, New York and Florida, then we have three Canadas right there.”
On the Horizon
Florida is one of several big prospects on the horizon for Columbia Care, as it plans to open 30 dispensaries across the state. Currently the business in the Sunshine State is operating as delivery only, but once the barrier for retail sales dissolves, Vita anticipates a huge upswing in sales.
As legal cannabis sales across the country boom, Columbia Care is poised to continue its tremendous growth.
“We handle over 40,000 individual transactions a month right now,” Vita says. “By the end of this year, based on our expansion organically in markets where we are already licensed, that number should track north of 200,000.”