Opening a Hempstore


WHY A HEMP STORE?

A High Demand

The marijuana & hemp industry, more accurately called the the cannabis industry,
is experiencing tremendous expansion worldwide. More and more people all over the
globe are using cannabis for recreational, spiritual, industrial, nutritional and
medicinal purposes.


Over a hundred million people worldwide ingest cannabis for its consciousness
expanding abilities. Hundreds of thousands more are working with hemp in an
industrial context, providing millions of people with fabrics, nutrition, oils,
paper and now even lumber, plastics, fuel and medicine.


The demand for marijuana & hemp products is tremendous, yet many communities do
not have a marijuana & hemp retail outlet. There probably isn’t a hemp store in
your community!


This article explains how you can open a complete cannabis store in your
community with only $15,000. I have based this article upon my experiences
over the past year as proprietor of HempBC,
and upon my 25 years as a store owner and manager. Opening a cannabis shop
is the single most effective way to promote the decriminalization of
cannabis, and you will be dealing with a receptive and growing market.

The Retail Store

A retail outlet is the physical manifestation of the movement’s claim to be able
to “save the planet”. The objective of the retail store should be to demonstrate
and display every virtuous aspect of cannabis, while also funnelling the money
from the cannabis community back into further production within the hemp &
marijuana-accessory market.


The retail store is the front line of the cannabis liberation movement, so it
should be welcoming, friendly, neat and tidy. Polite but uncompromised. You don’t
sell the actual buds – but everything else. The store should be appealing to
young and old and everyone in-between.


Everyone who walks out should know more than when they went in, and they should
be carrying some products they have paid for! Likely they will, as one in ten
adults is a cannabis user, and many more are interested in hemp for industrial
and ecological reasons.


Do not open a marijuana only shop (a “head” shop). That is so pass&eacute and
seventies. Do not contemplate an industrial hemp only store, as you will not make
enough money. Consider only a complete cannabis store, catering to the
recreational, industrial, medicinal and all other aspects. (Food, fuel, fibre,
fun!)

LOCATION & RENOVATIONS


You will need a space on a main street in your community. The space should be 500
– 800 square feet. It’s preferable if you can find a location where there is
reasonable foot traffic, but as long as you are within two or three blocks of a
main pedestrian area that’s OK.

The Ground Floor

Your store should be on the ground floor. Second floor locations are a definite
disadvantage, and I do not recommend them. They’re a pain in the ass for your
customers and delivery people, and are very vulnerable to competition. Also,
second story locations in Ontario, Qu&eacutebec and the Prairies get unbearably hot.


If you decide to go for a second story location nevertheless, the rent should be
no more than a quarter of the price of the same space on the main floor below
where you are looking.

Renovations

You have to be realistic about how much renovation your proposed location needs.
Just some paint, you say? Be very realistic. You can probably afford very little
for renovations, but your store must be clean, pleasant, and reasonably sharp
looking on opening day. It can still be a work in progress, as long as every day
sees new improvement. You or friends should do most of the renovations, and I
recommend you buy used furnishings to begin with.


Most of your money should go to stock for resale, so you must hold the line on
expenditures which do not immediately bring salable inventory. You’ve got to have
fast moving merchandise because you will be very pressed to buy more stuff.


Emery’s Renovation Law states that all renovations will cost you double plus 10%
whatever you had estimated in the first place. Renovations are scary things
because the process of repair and improvement reveals further areas that require
work. Your rent, inventory, phone lines, taxes, etc can be safely and accurately
presumed, but renovation is a great black hole. Serious renovation should be
contemplated when you have a decent cash flow, or else are starting out with a
much higher budget.

A Good Sign

Spend $1,000 on a good sign. You’ll need to order it weeks in advance, but have
it delivered after you have been open a week or so. A small overhanging neon
sign, at ninety degrees to a flat paint-on-wood sign would be desirable.


A two foot diameter green neon cannabis leaf would attract the right kind of
attention for blocks, perhaps with a gold/yellow neon circle around it. Since
this clearly indicates the relevant subject matter without words, you don’t have
to change your neon overhang if you ever decide to change the name of your store.


By the way, everyone will call your store ‘The Hemp Store’ no matter what you name it.

Working While You Wait

After you have signed a one or two year lease for your location and paid the
first and last month’s rent, decide on what your opening day inventory will be
and where you will be getting it from. Then place your order.


While you are waiting for your inventory to arrive, you should be working at
breakneck speed to get your location operational. It should take no longer than
fourteen days from assumption of the location to having a presentable store.
Don’t worry if it’s not completely finished, as you will always be making
improvements.


Once the front end of your store is mostly finished and decorated, and you have
at least $6,000 retail worth of merchandise, open your doors. Work around your
customers, work while you are talking to your customers, work while you sell.
There will be lulls at first because your phone lines probably won’t be activated
for a week or so yet, but you need as much money as you can get. Seize upon any
chances to sell, even while your store is a work in progress.

8 Hours a Day, 7 Days a Week

You should be open seven days a week, 11am. to 6:30pm in winter, to 7pm in warmer
weather. Quickly offer mail order to regulars and people in the region.


By the way, many of your opening day customers may remark that its a nice store,
but you need more stock. Just tell them that more is coming. When they return and
it’s true, they’ll be impressed that the store is developing into a growing
concern.

The Competition

What if there is already a hemp store in your community? Whether you open in that
area depends on answers to these two questions:

– Are they doing a good job? If yes, consider another community where there is
not yet a marijuana & hemp store. If no, consider if the community can sustain
two competing stores.
– Could you open near your home but in another market area than the one where a hemp store currently exists?

GOVERNMENT

Numbers

One day must be spent getting all the necessary government numbers. You will need to get, in this order:

  • A GST number (from Revenue Canada)
  • An importer number (Canada Customs)
  • A Sales Tax number (Provincial Ministry of Consumer & Corporate Affairs)
  • A United Parcel Service broker (if you will be bringing in goods from the USA)
  • A Business License (City Government)

Zoning

You must conform with zoning regulations, and you will be inspected by both the
Fire and Health & Safety Departments. If you are not advised of any special
exemptions (‘variances’), then your store must conform to the local by-laws
governing fire and safety. This means an emergency exit, licensed electrical
work, and a licensed professional if renovations involve structural changes or
improvement.


The individual in city government will give you some slack if you can have the
essential repairs done, with the promise to have others completed by a certain
time. They don’t want to hassle you, but their job is to make sure the place is
up to current safety code. You essentially have to do this if the place was
suffering prior to your taking over the location. If you think a location is
going to cost more than $3,000 to renovate, consider other options.

MONEY

Starting Up

You can do it with $15,000, although $20,000 would be better.
It’s great if you have more, but don’t squander it.


With $15,000 to float your store, no more than $4,000 can be allotted for
premises and start up equipment. This should be divided so that about $1800 goes
to paying first and last months rent, and $2200 goes to supplies like paint,
lighting, shelves, cashbox, (no cash register until you open) and materials to
make display cases.


That’s not much, but it can be done if you get qualified friends to pitch in.
Hire a professional in key areas of electricity and signage, although your store
shingle doesn’t need to be ready when you open.


You should open the doors with whatever stock you have as soon as your location
is presentable to the public. More stuff will arrive, signs will get done, phone
and fax installed, but most of this can be done (including pricing and labeling)
while you sell to anyone who comes in.

Reinvest

At first you may not have much, but the $11,000 reserved for inventory is enough
to make a good store. Your $11,000 cost in material will bring about $19,000 to
$21,000 in retail value.


Wait until you are open and showing minimum daily sales of $200 – $250 before
beginning to make cosmetic improvements that in and of themselves don’t produce
revenue. Neon signs and new cash registers should be put off until the money is
clearly available.


It is unwise to draw any income from the store for at least two months. Every
penny should be plowed into more stock, new display cabinets or improvements in
the business. Reinvest!


Don’t buy anything unless it can be resold at a profit and reasonably quickly.
Don’t buy anything on a whim. Buy it because it will sell!

Merchant Privileges

Work on your bank to give you VISA, Mastercard, and Interac merchant privileges
so you can accept credit cards. You must be in business one year to even apply
for credit card service from banks. This is a burden for your first year, but
plug away at this, particularly if your credit rating is unblemished. Try it
after three months, then again at six months.

INVENTORY


Now to the opening days inventory. You should have at least $11,000, (really
$10,300 plus $721 GST) to spend.


I recommend that you spend $3000 on hemp products, $3000 on books, magazines, and
comics relating to marijuana, and about $5000 on smoking devices and accessories.


I also recommend that you purchase all of your inventory (except for rolling
papers) from HempBC and Still Eagle, but you should always be on the lookout for
better deals. HempBC will supply all of your marijuana-accessory needs, and
Still Eagle is Canada’s largest distributor of hemp textiles and a reliable
supplier.


Rolling papers can be obtained from either Forbidden Fruit Products or Philco.
Forbidden Fruit is about 20% cheaper, but Philco is a fast Canadian distributor.

Retail Cost

Remember, the cost of your goods is about 60% of your total sale price. This does
not include PST & GST, which are on top of your final retail price. You do not
pay any PST when buying goods for resale.


For example, if your total cost is $25, (price, duty, and shipping, but not
including GST) then your retail price, not including taxes, should be $41.95 to
$44.95, possibly even $47.95 or $49.95.

Full Refund

By the way, we buy back at full refund any items bought wholesale at HempBC that
do not sell in your store. You can cash them in or trade items for what does
sell. You would just pay shipping to return them, intact of course. We are
confident when we recommend something.

ORDERING & SHIPPING

Have Cash, Be Thrifty

If you buy much of your starting inventory from HempBC (as many new stores in
Canada do), then you have a fair base price (40% off the suggested retail) for
many products. Now you can search for people who might offer material we do not
yet carry, or that you can obtain directly at a price preferential to ours.


You must always be thrifty, especially at the beginning. One reason for this is
that everyone who sells to you will want cash up front. You are unknown in the
industry, so you better have credit cards or ready cash because you will need to
send money orders to your suppliers before they will send you the goods. Credit
cards, couriered money orders, and direct bank deposits are best because of
speed, so that your order will be shipped within 24 hours.

Save Time, Send Money

Save time and send your money orders for material over $500 by Federal Express,
which is $9 within Canada, or $21 to the US, for overnight service. This shaves 5
– 10 days off your delivery time, as that is how long the mail would take to
deliver that money. Any good wholesale company handling a broad range of goods
will get your order in transit (likely by United Parcel Service or CANPAR) within
48 hours, and certainly no later than 72 hours.

Shipping Times
from BC to destinations in:
BC: 1 or 2 working days.
Alberta: 2 to 3 days.
Saskatchewan or Manitoba: 4 days.
Ontario: 5 days.
Qu&eacutebec: 6 or 7 days.
the Maritimes: 8 days.

from California to BC: 6 days.
from Washington or Oregon to BC: 5 days, maybe 4.
from Central or Eastern USA to BC: 8 to 10 days.
East coast USA to Ontario or Qu&eacutebec: 5 days.

Importing

When you import things you will need a ‘broker’ at the border. A broker is the
person who fills out B3 Entry Forms (in triplicate), which the Canadian
government requires every time and for every different type of commodity you
import. B3 entry forms and brokerage Hassles may cause you to seek a Canadian
distributor to avoid import duties, brokerage fees, GST and other paperwork.
These fees are all factored into the price when you do buy from a Canadian
distributor, but it’s very convenient this way.

Buy Canadian

Although it is certainly self serving to say so, I recommend that every would-be
cannabis store owner buy their opening inventory from reliable Canadian
suppliers. This is because you’ll get it faster and on-time. If you are
inexperienced and your store is opening in two days, you will be quite anxious if
there is a problem at the border and your inventory is held up at Customs.

Backorders

When dealing with any Canadian supplier, insist that no back order be longer than
seven days. Ask them to quote what is immediately in stock or will be in stock
within no more than seven days.


You don’t want your money out there being held for stuff that will be in stock
“soon”. Use that money to buy something saleable from your wholesaler that is in
stock now. Have them call you when backordered items are in stock, but pay only
for what is going to be shipped out immediately.

CREDIT

Good Credit

After you deal with these Canadian wholesalers with cash up front for about three
or four purchases, they may extend you credit. Basically, most businesses that
seem trustworthy will get a $500 – $1,000 credit limit, or the average value of
their last three cash up front orders.


This credit will be tremendously helpful.It allows you to receive up to $1,000
worth of goods, and your obligation is to send a cheque for the amount within
seven days of the goods arriving at your store. This is equivalent to a 10 – 14
day grace period, and will be a tremendous help at month two or three.


This will also encourage further business with that wholesaler, because usually
the wholesaler acts as a revolving banker. Once you pay off the outstanding bill,
common custom is to re-order immediately so that your wholesaler is constantly
owed about $1,000, but you always pay on time. This will improve your credit and
earn you good credit references.


Good references are useful when you apply for seven days net terms with other
suppliers, who will ask the key question, “who do you deal with now?”

Bad Credit

Not paying on time is a very limiting factor. At HempBC we are reluctant to
increase credit or even give any credit to chronic late payers, and credit
limits, being arbitrary, can easily be scaled back. Falling more than 30 days
behind, or particularly 60 days, will see credit revoked, and (ulp) collection
agencies assigned your debt.


This is very bad, because if you do not pay you will show up as a deadbeat at
your local credit bureau. This will mean no leases for faxes, photocopiers,
equipment, and supply houses, as well as no credit card, and possibly refusal of
banking privileges.


Don’t get in too deep! Bad credit injures your credibility and is expensive and
difficult to erase. Everyone talks to everyone else in this business, and people
are always willing to say who is paying promptly and who is not.


On the note of credibility, I have bounced cheques in my time at HempBC. You can
soothe the anxiety of your debtor by wiring the money to their bank, or Federal
Expressing a money order upon being informed of the problem. This will reduce
their inconvenience and help to restore trust, but it is a fact that my
credibility suffers a little each time. It is a sign of sloppy management, and
possibly evidence of a lack of financial control.

SHOPLIFTERS

Be Secure

Do not underestimate the destructiveness of shoplifters! Unfortunately, marijuana
and hemp stores are favorite targets of shoplifters. They will clean you out and
devastate your business.


The following items have a high potential for being shoplifted and therefore must
be displayed in a secure way, like in a glass cabinet, attached securely to a
wall, etc.

  1. Any and all pipes.
  2. Hemp wallets and In-Line Hemp Cards.
  3. Marijuana grow guides & small formula books.
  4. Lip balms and tiny cosmetics.
  5. Female clothing. This is the favorite of female shoplifters who can stuff over $300 worth in one bag!


Things to put on display that are not popular with shoplifters:

  1. Hemp soaps.
  2. Hemp books and magazines.
  3. Hemp paper.
  4. Very large items.

Be Suspicious

Keep your eyes peeled. Be suspicious. Ban outright any group of three or more
teenage boys (age 12 to 19) from your store if they wear baseball caps or baggy
skateboard pants, particularly if they idolize rap musicians. Their lifestyle
choice thinks it’s cool to shoplift. You can always tell these types: asking lots
of questions, buying nothing, touching and handling everything to distract you
while they drop pipes into their pockets.


At the risk of being offensive, you must also beware of drunk people, coke/heroin
junkies, skateboarder/rapper teenagers, and anyone who doesn’t buy something from
your store. (Why are they there?)

Be Merciless

Have a pair of handcuffs ready. If you catch a shoplifter, handcuff them, tie
them to a solid object (with handcuffs or hemp rope) and call police. If you are
severe and tough with these scumbags, word will get out and you will be left
alone. No mercy for shoplifter miscreants!

THE POLICE

No Problems

Police problems can be minimized or eliminated by taking the following actions:

  1. Be up front about all of your activities. A veil of secrecy or an
    ‘underground’ feel at your store will make your neighbours and police think that
    you are doing something wrong, which is much different than merely illegal.
  2. Be polite to police at all times.
  3. Make sure you follow all municipal by-laws, and send your sales tax
    remittance, GST remittance, and all other government paperwork and fees on time.
  4. Keep your store uncompromised. Don’t ever have signs saying your products
    “are for tobacco use” or “we don’t encourage the use of marijuana”. That is
    totally wussy and hypocritical. If you are that gutless, go into another
    business. No-one will respect you if you compromise like that.
  5. Show away any layabouts who are loitering near your store. Loitering creates
    a negative public image, so be tough early and eliminate any potential problems
    before they occur.
  6. Be a good spokesperson in the media. Media exposure is protection against
    police action. If the community likes you and is supportive, the actions of the
    police will reflect that. They talk to folks too, and they’ll find out if the
    community likes you or not.


Police actions are based upon whether what they do enjoys community support.
Responsible, uncompromising behaviour on your part encourages both good sales and
good public relations.

Smoke & Seeds

Do not permit marijuana smoking in your store (while it’s open) for the first few
months. Then you can test the waters.


I also recommend that you don’t sell viable marijuana seeds at first. Get hemp
seed treats, Hemprella, and a barrel of bulk hemp seeds, which will look
interesting and sell like a bulk food item.


After six months or so, introduce a few varieties of viable marijuana seeds, and
see if anything happens. Remember, any legal problems are potential publicity
bonanzas.

Busted

If the police do approach you, it may be to intimidate you into not handling
something (most likely High Times, Cannabis Canada, or maybe pipes).
Refuse to be intimidated and call HempBC
for advice. If you do have legal problems, or police bust you, then you must be
prepared for a legal battle. This will produce excellent media exposure,
publicity, and increased sales.


A principled defence of the rights of Cannabis Canadians will endear you to your
customers and increase sales significantly. This should be more than enough to
offset losses if police seize $1,000 – $3,000 in merchandise.

Of course you will
restock and continue. The crown will lose in court and you will likely see
your material returned. HempBC and Cannabis Canada
will help you with your legal battle, in fundraising and media.

ADVERTISING

Free Publicity

You will not need to pay to advertise, except perhaps in Cannabis
Canada
and any other widely distributed cannabis culture media in your
area. A quarter page advertisement soliciting manufacturers and
distributors to send you their catalog or contact you is a good way to keep
your costs down and stay on top of the new products available.


Your novelty value and huge potential audience will quickly make you news in your
community. Media will come to you for the scoop on the new marijuana and hemp
store in their community. Let’s face it, there has never been one before, and all
your cool stuff and the amazing variety of things related to hemp will make you
popular with tourists, hempsters, smokers and environmentalists. You will draw
people, and your business neighbours will like that very much.


When BCTV did a TV news story on HempBC, they went to all the neighbours for
blocks around to find someone who objected to our business. They told us they
couldn’t find a single one, because we drew many people to nearby restaurants,
record stores and other businesses.

The Movements

Make sure you quickly get involved in the marijuana legalization and industrial
hemp movements. They are slightly different strands of the same thread. This will
lend you credibility and should really be why you have chosen to open a hemp
store in the first place.


Approach environmental organizations and donate hemp stationery. Point out the
many potential jobs in the marijuana & hemp industry if it were legalized. Point
out the eco-friendly aspects of hemp.

The Net

If possible, announce your business on the internet. Solicit catalogs from
suppliers there, sell goods there, and network with others in the industry on
alt.hemp and in the World Wide Web. This is a very fast growing area, but keep
your expenditures very modest.

EXPECTATIONS & IDEAS

Potential Sales

Depending on your location and circumstances, you will reach a daily average of
$200 in sales by day ten, $300 a day by day fifty, and possibly $500 – $1,000 a
day by the end of your first year.


It will help dramatically if you do a good job promoting cannabis in the
media, put ads in Cannabis Canada, and offer your regulars
mail-order service.

Booths & Brochures

Get a booth at Lollapalooza, Another Roadside Attraction, and whatever other big
tourist draws and fairs go on in your community.


After a little while, make a brochure (on hemp paper, of course) describing what
your store is all about. Give it out to customers, or to interested people at
those fairs. Remember to emphasize that you’ll do mail order!

Seasonal Highs

Best sales times are July, August, and December. Christmas sales are spectacular
in the marijuana and hemp trade! Have lots of good stuff on hand for between
December 8 to 24, because you will sell it all!

Good Luck!

Good luck on your business plans. For any individual concerns, or a complete list
of a suggested opening days inventory, contact me through HempBC at
1-800-330-HEMP.




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