Washington’s cannabis industry has more than its fair share of difficulties. Emerald Leaves owner Duane Dunn has faced them all and more.
For six years, Dunn has navigated predatory leasing and licensing practices, ever-increasing pressure from well-financed competitors and the highest excise tax rate in the industry to successfully run one of the few cannabis businesses in Washington that is 100% Black-owned.
“I’m one of the only guys out there swinging the bat,” Dunn says.
In addition to the challenges of cannabis retail, Dunn and his family have battled cancer in recent years. He says cannabis provided vital aid during his own battle with cancer, and it also helped his sister’s end-of-life care before she passed away from pancreatic cancer. Now, his 91-year-old mother, recently diagnosed with ovarian cancer, is using it to help with sleep and pain management.
His experience with cannabis as a medicine and his stake as one of the very few Black entrepreneurs who owns a state-licensed cannabis retail shop make Emerald Leaves’ success a personal mission for Dunn.
Positioned for Success
Emerald Leaves opened in early 2015 as part of Washington’s first wave of recreational cannabis stores.
Dunn found the perfect location for his retail cannabis store in Tacoma’s Sixth Avenue Business District, a nexus of nightlife, restaurants, coffee shops and various hangouts.
Emerald Leaves’ 5,500-square-foot retail location stands out prominently along the popular strip of businesses. Once inside, customers are treated to the store’s selection of products curated from more than 200 vendors. The display cases wrap tightly around the back half of the store’s walls and each contain products from a different segment of the industry. A wide selection of flower and edibles is housed behind a sales counter where employees are waiting to help customers peruse their options, but customers are also welcome to use one of the digital menus near the entrance or flip through a printed catalog of the available products on the leather couches in the store’s lounge area.
Dunn says the store has about 15 employees and is constantly going through upgrades, even in 2020 as it adapted to comply with COVID-19 rules. The company is working with the city on curbside pickup, with one spot in front of the store reserved for customers to park and have budtenders deliver their purchases.
On top of an ideal location and impressive inventory, Dunn says the team at Emerald Leaves vigilantly tracks its competitors’ pricing and “simply offer customers the best value possible.” On Fridays and Saturdays, the store has a 20% off sale on ounces of flower, while members of the store’s loyalty program receive an additional 10% discount.
Dunn also uses his business to support the local community by regularly hosting food drives, coat drives and school-supply drives. While COVID put a damper on his 2020 fundraising efforts, Dunn says he has been using to downtime to establish a new project that spotlights Tacoma’s local musicians.
Once the threat of COVID passes, Dunn plans to remodel the exterior of his store with a mural that pays homage to influential people who recently died, including basketball superstar Kobe Bryant, rapper Nipsey Hussle and actor Chadwick Boseman.
Dunn is also constantly looking for new ways to expand the brand across Washington and he is hopeful that the state’s new social equity efforts will help him land one or two more locations in the Evergreen State.
The ongoing success of Emerald Leaves is largely due to the skillset Dunn brings to the cannabis industry. In 1988, Dunn moved from Kentucky to Washington with a double major in computer science and business administration to start a career as Microsoft’s first African American C++ programmer. He now has about 30 years of experience in IT and C++ programming, having working for nearly every major business in the Pacific Northwest across a wide variety of industries.
To Paula Sardinas, Dunn’s expertise and varied skills are exemplary of what social equity applicants are going to need to be successful in Washington. And as the co-chair of Washington’s newly formed Social Equity in Cannabis Task Force and a commissioner for the Washington State Commission on African American Affairs, Sardinas will provide recommendations to the governor and Legislature for the upcoming social equity program. She is particularly impressed by Dunn’s entrepreneurial ability.
“I don’t think he has gotten the amount of publicity that he is due,” Sardinas says. “To be an African-American male, to be in Tacoma, to having survived everything, I think that when we look at what social equity can become, we are looking at Duane as a model.”
Sardinas says she wants the state to foster a program where existing licensees mentor new social equity business owners as they build out their operations in exchange for a minor stake in their business. Instead of sending new licensees out to compete against each other, she wants to bring in some of the top cannabis business owners and have them be collaborative partners in social equity. Having a license doesn’t mean much if operators don’t understand the business model, don’t know how to run a retail store or can’t get a reasonably priced lease.
“I would rather own 51% of something that is successful than 100% of something that will struggle,” Sardinas says.
Dunn has been looking for opportunities to expand his business, but for the past few years he has found the available licenses and operating businesses to be absurdly overpriced.
“One store, before it hit the market, wanted $4 million, and you are just not going to make that money back in this industry with these margins,” Dunn says. “Those kinds of prices just don’t make good business sense.”
Since shutting down the state’s unlicensed medical dispensaries in 2016, Washington has not expanded its cap on cannabis retail licenses, keeping the value of existing businesses higher than their profits might indicate. For a wide range of reasons, cannabis businesses still face broad misconceptions about how much profit they actually earn. The margins are drastically lower than people realize, so Dunn isn’t looking to make any rash business decisions just for the sake of expansion.
“In this industry it’s challenging because we pay so much in taxes,” Dunn says. “We’re not making much on every dollar and after that you’ve got to buy products, pay rent and staff, and the value of the product has come down so dramatically since 2015, that it’s really a struggle.”
Dunn is hopeful that a new social equity program might provide a sensible pathway to expand his business which could then create economies of scale and higher margins.
“I am hoping that doing this whole social compliance effort, that I will be able to pick up two more stores,” he says. “To be honest, right now this is a volume business game: the stores that have two or three stores have more purchasing power than a business that has one store.”