The news that High Times is planning to open cannabis retail stores caught my attention. Apparently, a dispensary that is already operating in Los Angeles will adopt the High Times brand in the first quarter of 2020, while an already licensed Las Vegas shop is expected to open later in the year.
Although I’m no expert on its current business plans, opening stores that trade on the storied High Times brand seems to me like the smartest thing the struggling company’s done in a while. The company has lost three chief financial officers in the past year. In January, Stormy Simon became the company’s fourth CEO since 2017. Recent SEC filings indicate the company is more than $100 million in debt and may not be able to continue operations. Its proposed stock deal has seemingly gone nowhere, which is not surprising as the magazine continues to lose money and the cannabis industry as a whole seems to have moved beyond the “bro culture” demographic.
However, opening retail stores that capitalize on the High Times brand makes sense. It’s worked in other retail categories. For example, Hustler, the raunchy adult magazine, now has more than 30 stores around the country and has succeeded where Playboy failed. I don’t know if the stores are wildly profitable, but I do know the Hustler chain has been expanding, and that’s obviously a good sign. My guess is that Hustler hired smart retail managers, spent lots of time researching the right product mix and vendors and then expanded once it knew it had a winning formula.
You could call this “retail 101,” but it’s amazing how many retailers think they’re smarter than they are and go down in flames because they fail to grasp changing landscapes, demographics, and consumer tastes.
I’m not a Hustler shopper, but I have been to its Hollywood location and its Northwest store in the past. They’re well-lit, staffed by nice people and have a “feel” that seems more like Victoria’s Secret than an adult bookstore or raunchy sex shop. In other words, they’re approachable, consumer-friendly and clean.
If High Times executives are smart, they’ll follow the Hustler model and approach retail carefully and with a lot of research. They’ll take their time and not jump in thinking they’re smarter than they really are. The cannabis industry is littered with retailers who moved quickly, misread the market, bought product from friends, got leases in crummy locations, hired snotty budtenders and then saw their sales drop precipitously as consumers quickly migrated to better stores. Invariably, those better stores focused on the basics: happy, smiling salespeople, great prices, good parking, a great selection of products and consumer-friendly merchandising.
In the end, the cannabis business is no different than any other. The winners are driven by the desire to make the customer happy and have an almost fanatical focus on creating a rewarding consumer experience.
I hope High Times takes its time and doesn’t make the same mistakes so many others have. The cannabis retail landscape is still very young, and there is a real opportunity if the cards are played right.