The Donnelly Group is applying the customer experience lessons they learned running pubs and barber shops to their cannabis dispensary chain. Harrison Stoker joins Dan Humiston on the BioTrack Cannabis Dispensary Spotlight Series to explain how they are leveraging their organization's hospitality infrastructure to rapidly open Hobo Cannabis Company dispensaries throughout Canada. Produced by PodCONX https://podconx.com/guests/harrison-stoker
The Donnelly Group is applying the customer experience lessons they learned running pubs and barber shops to their cannabis dispensary chain. Harrison Stoker joins Dan Humiston on the BioTrack Cannabis Dispensary Spotlight Series to explain how they are leveraging their organization's hospitality infrastructure to rapidly open Hobo Cannabis Company dispensaries throughout Canada.
https://podconx.com/guests/harrison-stoker
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Harrison Stoker: [00:01:06] We have an operator quoting your British Columbia store of which will fulfill the next two words that in Alberta I would really out a pretty ambitious expansion plan by way of about 10 development permits that we acquired late last year, of which we were focusing on to a key plus locations.And in Ontario, I think is the hill that will never die out.That's all we really had a tremendous appetite from the get go to expand into. And we plan on opening night 10 to 15 stores there this year.
Dan Humiston: [00:01:39] From MJBulls Media.It's the Raising Cannabis Capital show.I'm Dan Humiston.And on today's show, we're continuing the Cannabis Dispensary Spotlight series with another Cannabis retail pioneer. Stay tuned for exciting insight into the techniques that this entrepreneur is using to expand and succeed.
Dan Humiston: [00:02:08] Today in Raising Cannabis Capital, we are continuing this month's Cannabis Dispensary Spotlight series with Harrison Stoker from Hobo. Cannabis Company. Harrison, welcome to the show.
Harrison Stoker: [00:02:17] Hi. Thanks for having me.
Dan Humiston: [00:02:19] Well, exciting. And I'm glad you're able to take some time out of your day to day to talk to us about hobo dispensaries. You're a Canadian chain, so we're very anxious to learn what's what it's like to run dispensaries in Canada. I guess to get things started, maybe you can just tell us how you got started.
Harrison Stoker: [00:02:34] Yeah, it's funny. You start with chain. We've always really shied away from that word. Despite being in business for 20 years by way of hospitality businesses and public houses, cocktail clubs, barbershops, cafes, restaurants. And we've always taken a pretty unique approach to building our brand and business verticals and that's a sense of independence. And so the 14/15 pubs that we've got. There's no two that are named Sam. And so that's why I said we both shied away from the idea of change.
Harrison Stoker: [00:03:02] They really fit our corporate culture because we never really use the word corporate either. Yeah, that was until we started a men's barbershop brand called Barbara Cohen now got seven locations and a lot of exposure to the idea of a chain or a multi door. But 20 years experience in hospitality certainly sets you up for success as reason, service and human interaction, which was a pretty natural fit for moving it to Cannabis retail.
Harrison Stoker: [00:03:30] On top of that, because at a provincial level, after mandated by the federal government, every province was allowed to figure out their distribution method. Most provinces opted to do it through their current liquor distribution channels, and regulators were the same style regulators as well that had handled liquor. Okay, you're here to kind of distill down our group's core competency, its Donnelley group. We are really good at mining leases and licenses, which is effectively the first hurdle and getting into Cannabis retail. We're also pretty agile and nimble and maybe a little bit masochistic in our work ethic. All characteristics and values that we're absolutely needed for getting into this emerging market, especially in Canada.
Dan Humiston: [00:04:14] I mean, you guys were off to a scramble there to try to get licenses. I know that was. It was a real challenge. Is that which the approach that you use to expand?
Harrison Stoker: [00:04:22] Yeah. Well, I mean, obviously, we were really familiar with the regulators and the negotiations, you know, navigating the waters of licensing by virtue of liquor licensing. But we learned a few hard lessons. The first lesson was, we're all new to this. In Canada, everybody was new to this new legal market. And so there was a real process of learning for everybody, ourselves included, despite having sort of quote unquote, 20 years experience in acquiring leases and licenses. So there were certainly steep learning curve, but as a learning curve that we had sort of put ourselves through before. And we're ready to sort of weather that storm by just staying pretty scrappy and independent is really at the core of our business.
Dan Humiston: [00:05:02] And being in their hospitality industry gives you a leg up because you already are comfortable with that aspect of it. Now, it's just trying to adapt a lot of those principles that you learned in and have perfected in the hospitality industry to the Cannabis industry.
Harrison Stoker: [00:05:18] Yeah, that's it. Exactly. I mean, the first principle really is the customer experience and a real relentless focus on customer. There's really nothing more important than that. So we always kind of hold that high and holy.
Harrison Stoker: [00:05:31] But then operators really genuinely understanding the value of a dollar kind of put us ahead of the pack as well. When you had a lot of other sort of public market macro style companies coming in. There was a little bit more bureacratic and then ready to spend money on places that we don't spend money.
Harrison Stoker: [00:05:48] So every penny counts for our group hospitality. The numbers aren't sexy as we're finding out. The numbers aren't too sexy and Cannabis retail either. But if you know how to operate and you know how to pull out operating income through margin, then you got to be just fine. And that's something we're really good at as well. But customer first, operating second and then differentiation through brand. Third thing that I'd say that we proudly pride ourselves on is really resonate with the audience that we focus on and developing really disruptive and progressive brand. Hoban law. certainly is no exception.
Dan Humiston: [00:06:21] Yeah, when you move into a new market, are you doing that as your company or you're doing it as a partnership with other companies that already have licenses or some combination of the two?
Harrison Stoker: [00:06:33] I mean, if you're taking the license perspective, then it's sort of a hybrid. Hopeful candidates company is fully independent, owned by our Perico DONELLY group for whom I work. But as it relates to licenses, we've got sort of a blend as well. So all of our West Coast operations, that's five stores here in British Columbia. The cold corporate store is fully owned by our corporate entity. License is included. Whereas in Ontario, because of the way Ontario rolled out licenses, this was a lottery allocation. We actually had to enter into brand license and service agreements. Our licenses there, because they were awarded a license through a lottery process. We didn't win that lottery process ourselves. There was a lot of really lucky, lucky licenses out there that came out on top. Thankfully, the ones whom we've entered into agreements with are also smart licenses and they really understand our vision. And so in Ontario, we've got to warn Ottawa location to get three more locations rolling out through Q1 to Q2 this year. And those are all through brand license service agreements with licensees. So that's sort of a hybrid model.
Dan Humiston: [00:07:39] And I suspect that they're very happy to work with you and take advantage of all your experience. I know you're Ottawa store. I don't remember exactly the numbers, but I know I saw someplace it was like one of the highest grossing dispense reason, like within the first six months.
Harrison Stoker: [00:07:54] Yeah, it was you know, we had tremendous opportunity to be able to open our nation's capital. It took a lot of hard work to make that happen. And because of the licensing process there, there was 24 licenses allocated with the opportunity to all open on the same day. And that date sort of.
Harrison Stoker: [00:08:13] At first, I kind of felt like Mission Impossible all was going through this process for the first time, including the regulators. So only about ten or eleven of the twenty five actually opened on that date. That was April 1st and we were one of those. And that very quickly catapulted into the best performing store in the nation.
Dan Humiston: [00:08:30] All right, take a short break to let you listen to a quick preview of our next episode.
Anthony Marsico: [00:08:35] So we are expanding to Massachusetts and also New Jersey, were hoping for this spring, but could stretch out into early summer, putting on some compliance and regulatory approvals. Our Massachusetts locations are going to be in Sheron and the other one is going to be in Plymouth, which is kind of exciting. It's the oldest town in the US on the Rock. And then and the other is Elizabeth, New Jersey.
Dan Humiston: [00:09:00] Tune in on Thursday to hear Anthony Marsico from Zenn Leaf Dispensaries. And now let's get back to today's show.
Dan Humiston: [00:09:10] I think it keeps coming back to that experience that you had in the hospitality industry and taking advantage of the things that you learn there and applying them to this industry. Only switch gears here quickly. Well, we still have a minute in United States. Every state has different laws and it makes it super difficult for multiple multi-state chains. Do you see similar challenges in Canada?
Harrison Stoker: [00:09:32] Absolutely. I mean, if you look at for a glimmer of hope and universal standardize, streamline processes up here in Canada, you're going to find it at the federal level dealing with licensed producers.
Harrison Stoker: [00:09:43] So it's a lot more standardized across the board, but provincially or interstate would be in the US to really dramatically different. And there's two key things that are different.
Harrison Stoker: [00:09:53] One of those is the means of distribution. And that is shared sort of half and half between the producers and the retailer. Most provinces have opted to regulate distribution themselves through their liquor board.
Harrison Stoker: [00:10:05] So using their supply chain, logistics and systems to the liquor, software and liquor facilities. The other thing that's different into parentally is the retailers terms and conditions. And so every province was permitted their own interpretation of the federal Cannabis Act and were allowed to kind of build out their own terms and conditions. And believe me, when I say they all interpreted it very differently, we're now operating in three provinces. So we've got some pretty detailed idea of how different those interpretations are. And so it's been a pretty fun roller coaster ride trying to get creative around all these constraints.
Dan Humiston: [00:10:44] Well, the advantage of going through these barriers is that you're unlocking the code, cracking the code and you don't make it. Well, I mean, it's that easy. And if you do it and other people don't, it gives you an advantage in thinking of an advantage. What are your plans for expansion this year?
Harrison Stoker: [00:11:01] Lots. Let's just go ahead and do lots of that. I think their market really emerging. And what's really interesting is you kind of look back at last year, twenty nineteen start to paint a picture, a little bit of doom, gloom picture. And it was a lovely accountability. There was around a lack of access. So you had a lot of really large public market companies, specifically licensed producers, those cultivated products that kind of really went through the '30s. They came out of twenty eighteen with these spectacular valuations and then they were completely unable to meet it from sales velocity and operating income perspective because there just wasn't enough Cannabis being purchased in Canada because there weren't enough retail outlets. And so one thing that was really slow last year was the role of retail. There's a lot of conditions that kind of factor into this, but obviously policy and regulations really slowed things down. And so now a lot of that is starting the chain and retail starting January rollout. And we now have another opportunity to go back to market and take this first mover status again and drive it home. And so we have an obvious quarter here. British Columbia, eight stores of which will fulfill in the next two months. And then in Alberta, we're rolling out a pretty ambitious expansion plan by way of about 10 development permits that we acquired late last year, of which we're really focusing on five to eight key A plus locations. And in Ontario, I think is the hill that will live or die on. And that's all that we really had a tremendous appetite from the get go to expand into. And we plan on opening night, 10 to 15 stores there this year.
Dan Humiston: [00:12:34] This year. This year. That's a big endeavor. Are you raising money for this or are you guys self-funding this?
Harrison Stoker: [00:12:41] You absolutely are raising money. We've got a handful of business verticals under our umbrella. It's always been really important to us for them to act independently.
Harrison Stoker: [00:12:50] And as such, we operate from day one, less like a public market sell company and more like us entrepreneurial style company as we are, we're still fully independently owned. The two small raises for a whole Cannabis company today we're doing a third raise very shortly to capitalize as Ontario expansion plan to raise a state allowed us to execute on ABC and the upcoming Allbright expansion. But Ontario is really where we want to focus. Keep in mind, we were tied terrible 5 years ago with hospitality. So to build out a pretty robust framework there really great pubs, barbershops, cocktail clubs. So we've got excellent talent pool that we've put.
Harrison Stoker: [00:13:29] Developing over the last almost five years, they're just sort of foaming at the mouth, ready to go because you skill set is highly transferable from hospitality to retail.
Dan Humiston: [00:13:38] When you have boots on the ground, you have already have infrastructure in these markets, which is on the ground. Take it from me. It is very difficult to put in place. It doesn't happen overnight. We could talk forever.
Dan Humiston: [00:13:49] We will have all of Harrisons and hoboes information in the show notes and also on the MJBulls website. So if anybody wants additional information or reach out to them about possible investments, you can get all that information right there. Harrison, this is really exciting stuff. You're killing it up there. Good for you.
Anthony Marsico: [00:14:07] Are you telling me we're picking we're having a little bit of fun, at least one? Well, we're still at it.
Dan Humiston: [00:14:12] Well, thanks for being on the show today.
Harrison Stoker: [00:14:13] My pleasure.
Dan Humiston: [00:14:16] Today’s show was made possible by the generous support of our sponsors like Sentient Pixel the cannabis and CBD Hemp industry’s leading marketing and design agency. For over 3-years cannabis and CBD Hemp companies have trusted Sentient Pixel with all their social media management, influencer marketing, print, packaging and website design, blog and SEO needs. Go to asentientpixel.com or click the link in show note to learn how Sentient Pixel’s “hireable all-in-one marketing and design department” can amplify your company’s communication. Today's podcast was produced by MJ Bulls Media, the industry's premier Cannabis podcast network with original music produced in part by Jamie Humiston.
Dan Humiston: [00:14:44] I'm Dan Humiston and you've been listening to the Raising Cannabis Capital podcast.
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