Starting up in the Industry (with Chris Jones of Cannabis Xpress)

Chris Jones joins us in this podcast for a business-savvy conversation on his experience thus far starting in the cannabis industry and making his own space within it.

Jones started his career operating in semi-legal cannabis markets in Canada and the US. When lucrative buyouts and acquisitions started occurring on the brink of Canadian legalization, he saw it as a great time to pierce through the market with his own venture: the forthcoming Cannabis Xpress. Undeterred by the Covid pandemic, Jones is confident his localized, consumer-friendly approach to the marijuana market is just what the industry needs.

Visit Chris's website: Cannabis Xpress
Follow GrowerIQ's podcast to learn more about the marijuana industry, and check out our website to learn more about cultivation tips, market news, and GrowerIQ's seed-to-sale platform.

Transcript

Steve Looi: 0:00

Hey everybody, it's Steve Looi here with another podcast from GrowerIQ. Today we have Chris Jones with us who has a really interesting story in cannabis from his start at Origin House to selling off his first dispensary chain. And to doing it all again right now. Everybody please welcome Chris Jones. How you doing?

Chris Jones: 0:26

Hey Steve I'm oing well. How are you?

Steve Looi: 0:28

Not too bad. Not too bad. Why don't you give everybody a little intro to yourself. And tell us about your whirlwind story this year?

Chris Jones: 0:36

Great, I'll give you a background going back, I guess to the beginning of when I got into the cannabis industry, it gives a little bit more insight into what I'm doing now. Yeah. While I was finishing my MBA, I was investing in a couple public companies as Canada around the time of Canadian legalization. Then I got a job right, just above right before I finished my MBA at a company called Canna Royalty. So it was a small, small office small team, there's about six or seven of us, I started a we work on Richmond Street in Toronto. And our company was focused on acquiring and investing companies primarily in the US. Pretty much all Cal only in California. So at the time California was passing, like recreational cannabis use was going to be legal there. And they had California was interesting, because they had a really long standing Medical program. So the infrastructure of the whole industry was was pretty much built, it was just, you know, flipping the switch to, you know, allow people to open up rec stores instead of medical stores, because a lot of them in California had medical licenses. So at the time there was there was retail stores, there was cultivation, there was there's brands advertising, so then once it once it flipped over, like the brands and products and you know, access to everyone really, really exploded, and a lot of brands started rising to the top. So from Toronto, we were looking at some of these companies and we we acquired five companies during the time that I was there for about around two years, we invested in about three, but it was interesting to travel back and forth. So my role at the at the company was evaluating different companies that we were going to either you know, invest in partner with or acquire. And then I would work with our finance teams, legal teams to get the transaction completed. And I traveled a lot back and forth from here to the US. And I saw a lot of trends that were happening over there even even just as we hit, we hit legalization in Canada. And you know, obviously, it's taking a long time for infrastructure to develop, but it was interesting looking at, you know, a place in the world where it wasn't that far away, a lot of the trends that are set in California usually spill over into, you know, other regions. So looking at looking at what's happening over there gave me a good, just good insight into what was going to be happening, you know, in Canada eventually. So then, you know, we had, we bought a retail company in, in Ontario called 180Smoke and we're gonna open up cannabis retail stores with that, then obviously, the government announced there was going to be two lotteries. So right around the time when they announced that our company actually got acquired by a much larger US company. So we went from, you know, having a few employees to acquiring five companies, you know, expanding to like 40ish people and and having a couple hundred employees and us, right, being acquired ourselves. So when that deal was announced, it was the largest, US m&a transaction, like, you know, up until that time, for cannabis. Yeah, for cannabis for 1.1 billion, all stock deal. And, and that was the first Anti-Trust suit. But it was interesting, because I believe around that time, if the whole the total deal value was over something like 250 million, then the US Department of Justice could look into, you know, just look into the transaction to make sure everything's, you know, everyone's playing by the rules. And there were a lot of big deals that were announced, like, you know, around around the same time and afterwards. And it's interesting because I think a lot of these cannabis m&a deals are usually done a lot quicker, like deals announced, and then it closes, you know, one to two, right? So because of this, what happened with the DOJ these transactions that were supposed to take two, three months ended up taking, you know, well over a year so our transaction took took a long a long time and a lot longer than what people thought and it's tricky when you're, you know, twopublic companies and you're, you know, all stock deal and you have to wait a year and you're you know, your stocks are going up and down with each other right.

Steve Looi: 4:42

yeah, not to mention the difficulty multiplier of being in a semi legal industry.

Chris Jones: 4:49

Yeah, exactly. So it was, it was the it took a lot longer than then a lot of people thought but it was a lot of a lot of just information gathering and waiting right like we you know, they would ask you questions, you respond, and then there'll be a period of waiting. So that that took up a lot of time. Right. Anyway, the deal close, that was the first one that went through the whole process.

Steve Looi: 5:09

That was no problems, right, like zero problems. I feel like I've read a lot of opinion that it was the the feds just having a chance to take a look under the hood, one of these companies.

Chris Jones: 5:19

Yeah, exactly. Exactly. So yeah, it closed. And then after that was done the lottery in Ontario, and I was looking at retail pretty closely. So we weren't, we were in the process of doing a deal with one of the first round lottery winners. So I went through a lot of the AGC to early licensing process, right, we'll try and from that, I, you know, I saw a lot of value in the retail stores, like I saw some of the M&A deals that were happening in, in the US. And you know, some of these retailers are being bought for like two to four times revenue, which is, which is pretty crazy, right? or retail store, especially right. So seeing that I was like, you know what I've been through this process, the government announced, I believe that the the end of 2018, sometime in 2018-2019, that they were going to change after the two lotteries, they would change it to a first come first serve process. Right. So what happened was on January 2, everyone was able to apply for the first licensed retail operator license. So just before the end of the year, are starting a start of the new year, I was talking to former a colleague that I used to work with and I was like, Hey, you know what, let's let's apply for this license form Corporation. And just you know, worst case, we lose a couple thousand bucks, like best case, we you know, turn it into something special. So we formed a corporation, applied for the first license, we got it pretty quickly. So we got it sometime. I believe it was in February. So just just a month after we applied, which is pretty quick compared to like, I know people that are still waiting to get it today, you know, from the apply that date. So...

Steve Looi: 6:54

Oh, dang.

Chris Jones: 6:57

Yeah, we got it pretty quick, obviously having a you know, very simple corporate structure like two partners, right? Like not, you know, no other shareholders. Yeah, yeah, exactly. So we got it pretty quick. Then. From that point on, we had a couple months where the, the government said on March 2, you can apply for the second license. So the second one is the site specific license called the retail store authorization. So basically, to apply for that on March 2, you needed to, like submit the application, fill it out, pay a$4,000 fee, and you needed to attach a lease to the application. So so we had a couple months between, I guess, February when we got the license in March. So pretty, pretty quick, where we needed to think of like find a location, get a lease signed, or at least some sort of conditional offer. Signed, and you know, think of a store name, like we're going to call it where is it going to be? And then who's going to pay for it right? Just because I opened up retail stores it is a lot of money, especially at the beginning. So for the further for about a month we were I was just looking around, every every contact I had, I was asking them, Hey, you know, I have this idea for a retail store. I can you know, I got my first license quick. I understand the licensing process. But obviously, I don't have a very strong retail background, but I can I can make this work. So right. I asked a lot of people everyone said no. And then finally, I found one company who was interested in putting in some cash, they saw the value of what we could bring to the table and obviously they had cash. So we did a deal with them where we raised close to a million dollars. me my partner, we got diluted down. And yeah, so Okay, so I was like I said to him, I was like, Look, we have you know, we just we have a million dollars we put in we put nothing into this. Like this is you know, it's gonna be fun. Right? So yeah, so right. When we got the cash, we're like, Look, we need to find locations. We want to stay at Toronto, because I was just like, I spoke to some real estate, or some landlords in Toronto and just the things that these landlords were asking for was almost criminal.

Steve Looi: 8:59

Like, oh man, any examples?

Chris Jones: 9:01

Like like $50,000 like non refundable deposits like oh cheese, six months of rent up front party, old

Steve Looi: 9:09

cannabis tax a,

Chris Jones: 9:11

it's just craziness. And then even the even the the the rent per square footage, just like doubles, triples, like, just right. just crazy.

Steve Looi: 9:18

And meanwhile, just to set the context, this is all during COVID. Right?

Chris Jones: 9:23

Yeah, so like, this was happening. Yeah, just at the beginning, pretty much just the beginning of COVID. So okay, so it was it was a very, very weird time, especially like, trying to go out and see locations like trying see people it was just, it was very difficult to really, really do anything. So we we decided to avoid Toronto, we're like, Look, we only have a million dollars. We can, you know, we can build maybe one two stores in Toronto, or we can try and build many in you know, cheaper places and places that there are that many stores. So that that was our plan from the beginning. Just because I you know, opening up a store in Toronto. It's the people were up against have a lot more cash and you know, they just it just made no sense.

Steve Looi: 10:05

And Toronto's popular I mean we chatted about this my there's like five cannabis dispensaries that have opened up within two kilometers of my house in this last year

Chris Jones: 10:14

yeah, yeah big competition. Yeah looking at it and now obviously is very different than then looking at it then like at that time the there was only like 40 stores that were I don't even think all 40 had their license. So it was right. It was 25 winners from the beginning and then I think there was around 40 from the second lottery so there was there wasn't that many stores open the market was still completely pretty much open. Right when so we ended up putting in a few applications we got we put in two for Barry, one for Bradford and then shortly after and or afterwards, another one in Asheville. So we applied my reapply marks second same time as everyone else. We got our first store opened in June. So we are open three was that one in berries the first three which so that store was the second one and berry to open. So from you know, we go to see how basically we got the store completely built staffed and open in three months. Wow. You guys with no retail background during COVID. So amazing. You.

Steve Looi: 11:17

So you're in COVID to boot. Yeah,

Chris Jones: 11:18

yeah, yeah, exactly. So yeah, I was chatting with the challenging enough trying to open during COVID. So that yes, that store opened in June, the second one open in July. The third one, the Inisfil store got licensed a couple of weeks ago. And same with the fourth store. So basically two operational stores open. And for four total licenses in less than a year. And most importantly, for very little money like the stores, right are built very, very cheap, like people people nowadays are right now we're spending upwards of I'd say 300 thousands low. So 300,000 to like 2 million people are spending right now on stores. And I don't even include like I don't, I don't know if that's just like the like the floors, the ceiling, the walls like, like, bins. I don't know what it includes, right? So, right. Our stores were built for all around, probably less than I believe 100,000 each. So we built them for cheap.

Steve Looi: 12:13

What was the footprint of your stores?

Chris Jones: 12:15

Whether they were like me, they were medium to large. So the first one, it was an interesting time as well. Because getting, like leases from landlords at that point, time is still very difficult, right? Because just you know, two guys that want to open up a cannabis store in your case, it was just, it was a much different time than it is now. So what's more difficult to at least is back then. Now it's still difficult, but you know, easier in a way people gotten used to it. Yeah, so the first store, it was 1000 little over 1000 square feet. The second one was 23 2400. But it was like it had an upstairs as well. So that place was huge. Third place a bit less than 2000. The fourth place. Yeah, around like around 2000 as well. So pretty like me, I'd say medium to large. But they're doing well. So the first store, I believe when their financials came out, just because the company that invest in us was a public one sort of financials come out. So that store, I believe, is on a run rate of like 5.5 million. And then the second store was around three 3.5, I believe. And then the other two are obviously TBD, they just got licensed recently, but pretty good, pretty good for you know, two, two guys, or, you know, no retail background during COVID. While we were both, um, you know, we're also balancing our full time jobs as well. A lot. Yeah. So we're both working full time as well. Yeah,

Steve Looi: 13:43

that's incredible and good for you. I feel like a lot of people went the opposite direction and calmed down during COVID. Whereas you've, you've amped up and punch through and got all this done during that period.

Chris Jones: 13:55

So it's an interesting time. Like, I think a lot of people you know, right now is, you know, with COVID it's, you know, it's terrible for a lot but there's, you know, a lot of business opportunity for some right so it's really it's like the timing the timing of us doing everything was very important to the truth is like people there are people who applied for stores the same time as us and still don't even have them open today. And so basically leading in leading into what what happened with the business was my partner's made me an offer over the summer to buy my, my shares of the company and I sold it to them. So that deal closed almost at the end of this September, so fairly fairly recently. Congratulations. Yeah. So they bought out for a little over half a million. So then then from that I you know, just from speaking to customers being in the store, seeing like the evolution of all the stores and how everyone, everyone tried to open up stores in Toronto are just getting destroyed right now. So I'm looking at, you know, what's happening today and speaking to customers and like, you know what these large stores these expensive stores and they just don't make any sense. They don't make any sense. And even as a customer, I go into them and I'm just is confusing, right? Like, like you walk into some of these these stores are first are huge. Secondly, they have iPads everywhere, like people don't want to touch iPods right now.

Steve Looi: 15:17

Right.

Chris Jones: 15:18

And if you do have an iPad out, that means you have to have an extra staff member just standing there all day with a little squirt gun, like spraying the iPad with sanitizer and wiping it all day. So each iPads, multiple more employees, right? Yeah. Then just the layout, like you walk around these sores, there's menu boards on one side menu boards on another, they have to 300 skews. It's just it's very confusing and complicated. And I don't think it's very consumer friendly, whole lot of these stores were built and how they how they come off.

Steve Looi: 15:49

Right.

Chris Jones: 15:50

So from seeing that I was like, You know what, I have a better a much better way that I can provide a legal cannabis retail store and you know, the customer service and the, in the you know, the interaction and just the speed. So my plan right now is to open up a chain of one in the process of it, but a chain of tiny or very small cannabis retail stores. So my first location is going to be in the queue for licensing very soon. I just got all the cameras and everything. Everything recently installed, but this whole this whole store is 353 square feet. washer in mind, so the washroom takes up about 100 of it. So washrooms are the actual retail square footage, like retail space for customers is probably 100 square feet. It's very small. Right?

Steve Looi: 16:41

Yeah, I think that's perfect. That's what the industry needs. When I go to these dispensaries like both South border and up here. I feel like most of the money, a lot of money is spent spent on aesthetic, making things beautiful and Apple store like etc. and the size is also part of that aesthetic. And so they they make these gigantic stores where they have no, they have some but very little product on the floor. And so like in retail, you have an idea of sales per square feet. And a lot of these guys have poor poor performance because they just have so much space, not doing anything for them. Yeah, you're going the opposite, which I think is refreshing and amazing.

Chris Jones: 17:27

Yeah, there's a lot of problems with those stores, though. So I think a lot of them it's you know, obviously they think their store needs to be huge. So they're huge. That's that's the first thing, right? They're just way too complicated. And they they spend money on like, I went to a store once 100 Waterfall, and it's like, Who's paying for that? right? Exactly. Then the stores also have they have hundreds, hundreds of skews. And I think that the final problem is that no one really thought you know where a good location was going to be. So you have stores in Toronto, specifically where it's, you know, that you walk down Queen Street or anywhere downtown, there's done dancing, there's their stores beside each other, the stores are dried like that. I remember I tried to take a panoramic photo, I could see five stores just

Steve Looi: 18:12

spinning in a circle. It's crazy. I mean, that's endemic of Toronto, though, and I feel like a lot of the major cities, especially in Canada,

Chris Jones: 18:19

yeah. So I don't know, I think a lot of people just want to open stores in Toronto, just to you know, say they have a store in Toronto, but I don't think you know, I don't think those people are going to make money. So I've

Steve Looi: 18:29

definitely run into those guys. I don't know about you, Chris. But I've definitely run into guys and conventions and trade shows and whatever in the business. People that quite often it's people who have a bit of money and they just want to be in the weed business to say they're in the weed business.

Chris Jones: 18:44

Yeah. Those are good people to sell your company to.

Steve Looi: 18:51

Fair comment, fair comment, sorry I cut you off there.

Chris Jones: 18:54

Not to work with though

Steve Looi: 18:57

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Chris Jones: 19:20

So yeah, my first store 353 square feet the name of the company or chain of stores is going to be CannabisXpress. Okay, well the look and feel is that you walk in I have one to two employees working they check your ID I have two three menu boards limited number of skews less than 40 and then just you know grab and go items exact rolling, you know other Rolling Papers, lighters like that and we have a couple of flower skews a few pre roll skews a few a little bit of everything right but we pick we pick the best things so we pick what local people in the area want and we keep our inventory costs down. So if if we think that you know someone doesn't happen to like we brought stuff Holding like 3040 $50,000 worth of a, you know, an oil that no one wants, right? Yeah. And will never be promoted again or marketed and yeah, just exactly. So my inventory carrying cost is a lot lower and it just makes it for you know, a cheap setup of these stores. So my first store like start to finish rent included everything like like TVs, signs, everything will be done for about $30,000

Steve Looi: 20:25

Yeah, that's incredible. Is that is that one gonna be in Toronto? in Brampton?

Chris Jones: 20:29

So that one Brampton? Yeah, yeah, that one's in Brampton. And then I have a few other locations right now that I'm negotiating leases for. But this time around, so I just last week, so I guess mean, you were speaking a couple weeks ago. But we, we I raised I raised a bit of money to fund the build out of these stores. So I have right now close to close to a million in cash right now to open up to open up the store. So

Steve Looi: 20:55

the next letter stores the expressive.

Chris Jones: 20:57

Exactly. So there's a lot I can do with that, like, you know, but for some

Steve Looi: 21:01

My gosh, yeah,

Chris Jones: 21:02

me. Yeah, for some, they think, Oh, it's just one store. But for me, I can I can build an empire without amount of money. So the plan is together, I have five operational stores by the end of next year. And then, you know, we'll be generating enough cash flow to expand. So you know, your business is in a good a good position, when you know, generates enough free cash flow to, you know, for expanding

Steve Looi: 21:23

Yeah, you don't need to dip into loans or investors. Is it the same group that has invested in express

Chris Jones: 21:31

different people? So this one, I'm working with all completely different people, the last people from the last business? They're all they're all the same? And still still with the last one. But yeah, it's a completely different team. And are these cannabis people? Yeah, so some of them that people so the one person that I'm working with more operationally, he has more of a cannabis operations background. And then the others are more silent silent investors who can be helpful, you know, they, you know, give input when right

Steve Looi: 22:06

outside of that retail cannabis, sort of,

Chris Jones: 22:08

yeah, exactly. Just, you know, people yeah, just to just investors who want to, you know, they'll help out, but they're not going to be, you know, in the store, checking for checking IDs. Gotcha. Maybe they will be I'm gonna, I'm gonna invite them to the grand opening. So, actually, that actually will come I know, look, yeah, I

Steve Looi: 22:29

mean, that's a great investor that would come in check IDs,

Chris Jones: 22:32

you have to get in the weeds like people there's just so disconnected from the business like then throw it in the store, they're not talking to customers. They're not seeing what people like like you really, you know, the best person at the company to get advice from is the bud tender. Right? They know what a guy Yeah, exactly. And if you're not, if you're not there in the store, day to day like working with, with, you know, working with meeting the customers meeting the suppliers, you know, getting getting feedback from, you know, just from everyone, right, even our employees, they you know, they provide really good feedback on assortment of products. So, if you don't if you're not in the store, that's also another problem. You know, another big problem that people have is this they're very disconnected from the business like they're in three either, you know, they go to the store once a month, or they just they don't even live here, right?

Steve Looi: 23:17

yeah. How can you imagine if you don't know what's Yeah, going on there? So I want to ask you during COVID cannabis has the consumption in Canada in the US has increased sales have increased legal side and I believe on the illegal side as well. But the legal side continues to take a bigger and bigger bite out of the illegal market on the on the from your retail POV what what do you think needs to change for the legal market to really catch up and put the gray guys out of out of business?

Chris Jones: 23:53

Yeah, well one interesting thing happened very recently so because of the lockdown in certain areas that just happened I guess the beginning of this week. retailers are now a temporarily again, allowed to do curbside pickup and delivery but only in the affected regions. So that took that came into effect a couple days ago. This is the second time so first what happened in the summer was they allowed it for everyone but only for about a month. Okay, yeah, so it's both temporary. I saw retailers I saw one retailer that bought three Tesla's and their plan was to do their their unique like value proposition was delivering cannabis in a Tesla like that there are people like that right then right? The government takes it away and it's like what do you do you just say oh my god just bought like logic delivery software. You have a two year subscription. You've Tesla like what are you gonna like, I guess you could drive the cars yourself but still

Steve Looi: 24:48

or sell them but like such a waste of time and money. Like that's exactly what we're saying about those retail the other retailers.

Chris Jones: 24:57

I really hope that people don't just don't go too deep into the into the delivery, you know, seeing too much right now. So that that's one thing that's happened. But

Steve Looi: 25:05

you're right. That's a huge one. I mean, I think the fact that these guys will deliver and quite often in the city anyway, like within a day, within an hour, some places, it's very hard to compete if you can't do that on site.

Chris Jones: 25:16

delivery is very important, especially with the way people want to consume things right now. And even right, under a lot of people who don't even want to leave their house. Right. So probably come to them. I you know, though the OCS does deliver. So the only other legal delivery company in Ontario is, is that our distributor, which is the OCS So, they do have a pretty good or decent delivery option, but it's not like on demand. Right? Same Day, right?

Steve Looi: 25:43

Right, right. Yeah, no, it's through the post and stuff.

Chris Jones: 25:48

So, first thing, then the second, the second thing that I think could could change, that would actually take a much bigger dent out of the, you know, illegal market is just allowing, allowing companies to change the limits on a lot of the products. So for example, edibles are capped at 10 milligrams, you know, per per unit. So, you know, removing, like their products you can buy right now in the illegal market that are like, thousand, you know, thousand or five or eight. Worse, and those chocolate bars cost like 30 bucks. So it's like, you know, that's tough when you're competing with like a $30 chocolate bars. 500 Meg's and like, I don't know what's the cheapest one at the OCS is right now like it in diva in divas chocolate like bang or legend. So those are like maybe six bucks for five milligrams. So it's like six bucks, five milligrams, 30 bucks. 300. And, you know, so that product category needs a lot of a lot of work.

Steve Looi: 26:44

Can you for the listeners, can you go over the limits that are in place right now for Ontario?

Chris Jones: 26:49

Yeah, so it's, well, the first thing is you can only buy 20 I believe 30 grams at a time. So 30 grams total. And then they have a they have a kind of wonky way of calculating the equivalency like it's 30 grams of dried flower. But then you could have like, you know, a lot more milligrams and certain edible it's kind of strange the way they calculate it basically out 30 grams, the limit, and then flour, you can buy whatever, whatever, there's no cap, obviously on the on the flowers and with pre rolls. And then the edibles, he adds 10 milligrams of THC per per product, which is which is a challenge. And then the concentrates and extracts are a little bit different as well. I think the flour and the pre roll categories right now are very, very strong, like you can get some really good flour for like$4 and 20 cents a gram, which is pretty good, if compared to you know, the illegal market. So I think those categories are doing well obviously, you know, there's a lot more producers and a lot more, you know, companies that are licensed for production that are you know, there's a lot of flour, just a lot of flour on the market. So it's you know, that's a very competitive category. Yeah. But obviously the you know, the more competitive it is between them the you know, some people just drop their prices to get to get sales, right. So it's good for customers. But I think, yeah, the edibles category, the concentrates those two need a lot of work concentrates is really just starting.

Steve Looi: 28:11

Right, right. Is there. Is there a limit on how many how much edibles you can buy. Period, like in a transaction?

Chris Jones: 28:18

So it's Yeah, so it's, it depends on it depends on which one but it's like 30 the equivalency is 30 grams of dry flour. So it could be

Steve Looi: 28:27

Oh, that's what you meant. I see I see. an edible, you can only have the THC equivalent of about 30 grams of

Chris Jones: 28:34

candy. Yeah, it's kind of strange, though, because I bought products that are five and another one's five. But then one counts is like two and the other one counts as five. So it's kind of strategy. It's kind of I was fully clear on like,

Steve Looi: 28:47

the format in and of itself like that confusion. I could see turning away a lot of people too. I mean, it's not clear what you can do.

Chris Jones: 28:53

Yeah, but most people that like some of these products are kind of expensive. So most people like most people aren't going to get up to the 30 gram limit, like our average basket size was, you know, well over well over $50 previously. Oh, amazing. Yeah. Oh, you know, people aren't buying like 400 most people aren't buying$400 500 at a time we're in

Steve Looi: 29:12

right now. That's fair.

Chris Jones: 29:15

The product categories, I think, could could use some work and then obviously concentrates a lot more. That's a huge one. Yeah, the market and then just generally speaking, like the total amount of retail stores like right now, obviously Ontario has a lot in queue to be to be licensed. I believe there's like six 700, something like that. In Ontario. So there's two I think there's 250 or 200 that are that are licensed right now. I don't know how I don't know if all of them are operational. Probably like 70% are operational. 65%. Right. You're having access right? More retail stores like Absolutely. where I live. There's there's none around me.

Steve Looi: 29:53

The Do you have an idea of a number that is that Ontario should settle on in terms Have a number of descemet dispensary's I think if we look at LCB O's, which in Ontario all our liquor sales is government is done through a government monopoly. And they the liquor stores have about I think 400 to 500 stores in Ontario and and you know, provides 100% coverage. Do you think that numbers feasible for for for dispensary?

Chris Jones: 30:23

or How many did you say? Around

Steve Looi: 30:25

400? To 500?

Chris Jones: 30:27

Oh, yeah. So there's people calculated differently, like people say, you know, one store per 10,000 people. It is in some places like, I'm like Colorado, but if we did one per 10,000, in Ontario, we probably be, you know, around 1400 and 50. stores. That's right, at too many. But I think there's probably going to be like that. And I know, the government's going to speed up the amount of licenses that they're issuing. So they went from five per week to 10 per week, in this this past September? Uh, well, I believe they're going to either double it, or at least go up by another 50% in January, February. So by the end of 2021, there's going to be like, you know, there could be five 600 stores that are licensed. I don't know how many will be open. But we that are that are licensed to open. So

Steve Looi: 31:14

that's interesting. That's good to hear. I mean, like, yeah, as you mentioned, that'd be just having access is a huge deal.

Chris Jones: 31:20

Well, let's see what it'll be similar to what happened in Alberta, right? They just, you know, a lot of stores opened up and there there's towns of like, there are cities of like, 20,000 people with, like, 11 stores. In Egypt, you're just like, you're all you're all fucked, like, all right. I

Steve Looi: 31:36

mean, it's to me, I guess when you when you just let things go go unregulated, I guess.

Chris Jones: 31:45

The thing is, like it you know, as long as Yeah, I don't think there should be limits on like, you know, how many I don't, I don't like when certain places I've seen in, not in Canada, but in the US where there's like a certain limit on like, how many stores can be in a city or like, a certain distance that they need to be from each other? Like, I don't, I don't think those things are good. It just ends up putting people who are like, I could be really good at getting licenses, but just like a shitty business. Right? And then I just own this town. Right? So I don't think that's fair. And it just ends up being like, not good for the consumer. So I think it should be I definitely think it should be open, but there's gonna be a lot of people with very, like, unrealistic expectations of the return that we're going to make on the store actually.

Steve Looi: 32:26

I mean, I feel like it saves regulating it saves a little bit of well, not a little bit, but saves people from bankrupting themselves, like that onslaught of, or deluge of store openings in Alberta. You know, they're not all gonna last everybody was allowed to get in. But businesses, business laws, or like, you know, the universal laws of business are not going to allow all these sources to keep open. So they'll have a natural calling.

Chris Jones: 32:53

Yeah, but I don't think the government should put a restriction on like, wait, like, what kind of business do they like? Where did they said? Yeah, like, what if it applied to other other categories? Right? Yeah, no, I'm not.

Steve Looi: 33:05

I'm not saying it's wrong, right. I just saying like, if you don't, if you just let it go, it's gonna do the normal like, it'll roll.

Chris Jones: 33:11

People like it will be people who make a lot of money and most people will lose a lot. Yeah,

Steve Looi: 33:16

exactly.

Chris Jones: 33:17

That's how it's gonna be. And that's already happening right now. Like I, I get calls on a daily basis from retailers who have like one or two stores, their half built out their contractors, they haven't paid their landlords are trying to, like terminate their money. Because what happened was a lot of these people that are like trying to open stores right now. A lot of their leases were pre COVID.

Steve Looi: 33:39

So yeah, especially Ontario stores who bought before? Yeah, before,

Chris Jones: 33:45

most of them, most of them are before COVID. So you just see all people pre COVID terrible leases, terrible locations. And then now they're still trying to open them. And it's like, you guys missed the boat.

Steve Looi: 33:56

Right? I mean, in perfect storm for your opportunity. Right? And that's

Chris Jones: 34:00

Yeah, yeah, exactly. Like I opened, like, the thing is, we all applied, or at least most of us at the same time, right. But I just I got them open quick. And then people now we're all in just a terrible, terrible position, which makes, you know, the business model that I want to do right now make make a lot of sense, right? Like, if I can pop up right beside your big store. And my store costs me less than, you know, like, less than 30 40,000 to build. And we're selling products like every retailer in Ontario,

Steve Looi: 34:28

we all the other big advantage you have would be wait times like people would are probably cycling through the store very quickly. Oh, in

Chris Jones: 34:36

and out, in and out very Yeah. You know, under three minutes, and then we'll get we'll get discounts. We'll give rewards to people to order online and come for pika.

Steve Looi: 34:45

I mean, that's one of the things I look for when I shop like I try to stay away from crowds and long lineups. That's a big deal. I hate that. So I'll go to

Chris Jones: 34:53

the place. Even if the lcbo had that. Like how nice would that be if they were right? If there was a tiny LCD CBO near your house and you could just order online, walk over pick it up, obviously, they don't have, you know, three 400 items, you know, they're limited because they're, you know, they're a small space, but if they had all the good products you wanted you, like people are not going to go there. You know? Yeah, yeah. You'd cannibalize lsps lcbo. Yes. In that guy. Yeah, exactly. So, and, and looking forward as well, like, one thing I was thinking about was just what happens when, you know, delivery becomes permanent. And you want to have delivery hubs all over a certain city, right? Like, maybe I don't need to be a retailer in in two years, maybe I just want to have delivery hubs all over the city, right. So there's a lot more flexibility that I have in this business model, then people are spending like, we know, over$500,000 to open up just one like flagship store in a certain area, right? Like they're putting all their you know, all their eggs in one basket. And this approach, just D pretty much doesn't de risk me completely. But you know,

Steve Looi: 35:58

a lot more than everyone else. Right? That's for sure. One thing I wanted to ask you about the future of dispensaries or like the retail marketplace for cannabis was the eventual I think edition of consumption, consumption lounges, and two dispensaries. I saw I had had the opportunity to visit a couple in the US and of course, and Amsterdam and stuff like that. And I just find that experience incredible. What do you see happening in Canada? And are you looking forward to it, etc.

Chris Jones: 36:30

Well, I love them. I've been to a few in California and in Nevada as well. And I really enjoyed one of them in California was like a is in a nice, nice part of La they had half the restaurant was open half was outside, obviously a very warm day. They come up with the menu, they have their food menu, pub style food, and then they have their cannabis menu. You can order pre rolls, flour, you cannot Oh, that's so nice. You can rent a bomb obviously right now you're probably not renting. Yeah, you just you pick your item. And then you can you can you can smoke your join, you can eat your pizza. It was it was a great experience. So that that was a lot of fun. But obviously, right now, do I think it's feasible here as much? Like I guess generally speaking because of COVID? Probably not. But Ontario and other provinces are having public consultations about this. To figure out, you know, who's gonna be able to do it? Is it going to be someone who's currently licensed? Like, I know, I know, your comment before. Like, I've been to some consumption lounges where it's attached to a dispensary. And I think that's kind of strange. Mm hmm. attached to a part of a dispensary like, right, I rather more be like a standalone, like, kind of lounge, like, restaurant type of place. I don't think that like I don't know, the point of it being attached to a dispensary. But that scenario, like I would love it, if they were, you know, if they were available here, but it's just challenging looking at, you know,

Steve Looi: 37:54

would that be something you'd look at?

Chris Jones: 37:57

Oh, yeah. Oh, yeah, definitely, I would, I would definitely look at it. Obviously, the plan with my current business is, you know, grow it to a point where it's, you know, a really, you know, good asset for sale. And then after that, just obviously, take the cash and look for new opportunities. Right. So, right. Consumption could be something that's, you know, interesting to me. Obviously, I have no experience in consumption, but I you know, I didn't have any in retail and

Steve Looi: 38:26

Oh you mean consumption lounges. Yeah. It's consumption consumption. Oh, no.

Chris Jones: 38:33

No, I have a lot of experience in consumption.

Steve Looi: 38:36

Awesome. Awesome. I The last thing I want to ask you, Chris was what kind of software are you running at the stores? Are sorry, what kind of software Did you buy at your previous stores? And what kind of stuff were you looking at? Picking up for your current stores?

Chris Jones: 38:51

Yeah, so there's a few different options. Obviously, you need to work with a bunch of suppliers and one challenging thing for you know, any cannabis business is that a lot of traditional suppliers for certain things aren't really available to cannabis like even like banking is very challenging, right? as well. But in terms of suppliers, so for a retail store, you need obviously your point of sale software then if you want to do clicking collect like people come in, you know, do curbside pickup where they pick up in store that's another software provider. If you want to have specially designed menu boards that integrate with your POS that's another provider it back to delivery like there's delivery logistics software that you can that you can purchase. Security. Are you running software for security? Yeah, well, first security obviously you have to abide by the regulations. But as long as you are, you know, they're high definition you have at least 30 days worth of storage capability and they're running 24 hours a day then then you're good. There's a couple other you know, little smaller, smaller rules associated with it, but now then I do have to like so I guess software for my Security Systems, but it's not like it's just very, like a generic type of works for security cameras. Yeah, previously we did work with, we had Cova, for our POS. Dutchie for our clicking collect. And then you also need payment a payment processor as well. So there's, there's a lot of different offer providers that you do need. But in terms of my stores right now, the POS, I'm still deciding on I'm negotiating with a couple companies for that deal. Oh, cool. My clicking collect is Dutchie, I think Dutchie has a really good platform, I like them. Okay. For many boards, I'm also negotiating that so a lot of that a lot of the contractors and people I'm working with this time around maybe maybe different than last time, just because I, you know, I learned the ins and outs of you know, who's good to work with what's right, and what doesn't, you know, fuck up when you need it. So yeah, some of my providers I'm going to be changing. And then the ones I am, you know, staying with is definitely a third, those are going to be more more attractive deals than the last one they made.

Steve Looi: 41:00

Gotcha, gotcha. And how has shopping for that software been? Like? Is there a lot of names? Are there brand names surfacing now, or?

Chris Jones: 41:08

Yeah, there's every, every month, every week, there seems to be more like, you know, service providers that that pop up. But in terms of how many like real like, options, someone has, I'd say, there's probably five, you know, five, three to five top ones for each category. So it does take time, right, like you have to learn learn what your needs are, and then just try and see what you know, what provider has has what you need, and then you know, does it for the right price and obviously doesn't doesn't go down because I've had experiences with you know, you have a provider and then all of a sudden one doesn't integrate with the next and then you know, you can't you can't your debit card terminals not working people can relate. And it ends up leading to a lot of problems. So you have to one important thing is is making sure that everything's going to integrate together before you start signing deals, because you could have, you know, like I found a really good payment processor recently who was willing to work with me for significantly less than what the other one was, was was charging. And I break down talking to them about integration because they need to integrate with everyone that I'm going to be working with. Right? That's one important things, then you sign up some of these deals. And it's like, you know, you're like, Oh, they tell you they don't work together. It's like, what do you do? And you got to, you got to, you know, kill one contract, pay them out and then find a new provider. So that's one important thing that retailers need to need to do or any I guess generally speaking, any, any business is just making sure that's like, you know, pretty basic. They were all integrates together.

Steve Looi: 42:38

Right, right now that's a that's a good point. All right. Well, thank you so much, Chris, for hanging out and doing this recording again. Um, do you have a website for cannabis Express yet?

Chris Jones: 42:50

Yeah, it's up right now. We're still, we're still tweaking it. But it's www.cannabis-xpress But with an x-p-r-e-s-s-dot-com. So yeah, the first store will be in Brampton. We're excited to be open, hopefully, in the next in the next few months. We got to we got to build pretty quick and inspected so we're excited for that one.

Steve Looi: 43:13

And then when are you targeting for that one to be open?

Chris Jones: 43:15

I can't say the exact date as of yet. But just okay. In the in the new year and you know, obviously before summertime, okay. Oh, yeah, that'll be the first one and there'll be a few more that'll be announced in the next

Steve Looi: 43:27

Awesome. Everybody in the new year. Go visit Chris in Brampton, after his new Cannabis Xpress, Chris, thanks so much.

Chris Jones: 43:35

Perfect. Thanks a lot. All right.

Steve Looi: 43:37

Take it easy man.