Staking a Claim in the Valley

Territory’s successful expansion into the greater Phoenix area marks the culmination of a transformative journey

While the Territory brand is technically only two years old, the vertically integrated business has been evolving under the same license since 2013.

Over the past seven years, the company has grown up with Arizona’s medical marijuana industry, rebuilding itself to reflect the modern, active cannabis consumer and cultivating a distinct corporate culture, a transition that included expanding from the small city of Winslow into the Phoenix Metropolitan Area, where an estimated 4.8 million people call home.

“When we moved to the valley, we were ready for a change,” Territory co-founder James Christensen says. “It’s so cliché, but we were ready to grow up a little.”

Now with 107 employees, two cultivation sites and three retail locations, the business aims to continue its growth trajectory without losing the close-knit corporate culture it developed during its early years.

 

Maturing Market

Although there are only about 130 licensed cannabis companies in Arizona, competition is incredibly high, particularly in Phoenix and its surrounding suburbs.

When the Arizona Department of Health Services established its licensing regulations in 2011, the agency limited each Community Health Analysis Area (CHAA) to one license apiece, meaning only a handful of licensees would have the opportunity to start in the greater Phoenix area, where more than half the state’s population lives.

Despite numerous milestones, Territory co-founder James Christensen says the company’s biggest accomplishment is keeping its corporate culture intact.

Christensen says the business, which at the time was named The Medicine Room, was awarded a license to operate about 200 miles north, in Winslow, a city of roughly 10,000 residents. In Arizona, each cannabis business license permits the license-holder to operate one retail location, one cultivation site with an unlimited canopy and an adjacent manufacturing facility in an assigned CHAA. State regulations also specify that after operating for three years, companies are allowed to relocate their dispensary to another CHAA.

At the end of 2017, The Medicine Room changed its name to Territory. With the new branding in place and the three-year waiting period over, the company won a license in the Phoenix suburb of Chandler, allowing Territory to keep its Winslow dispensary, in addition to opening a second shop and a second cultivation and manufacturing facility.

Christensen says opening that store in the valley — and earning the trust and loyalty of local patients — is one of the company’s biggest milestones to date.

“That was so huge for us,” he says. “It made everything else we wanted to do possible.”

The Territory founders fought hard to carve out their share of the market in Arizona, but Christensen says they weren’t the only ones working their way toward Phoenix.

“I think everyone had the same idea we did: get your location near the largest population center and find the best location within that and see how it does,” Christensen says. “Everybody has come into the Phoenix market from the outskirts, in the smaller towns.”

Christensen says the market is currently in a race to the bottom “which a lot has to do with the availability of the lower-quality flower in the area because there’s no canopy cap.”

“There’s a couple operators in Arizona that have more than a million square feet of canopy,” he says. “They’ve aided that price drop, unintentionally I’m sure, since they were aiding their own retail stores too.”

The Territory brand was inspired by the co-founders’ shared appreciation of the outdoors.

Staking a Claim in the Valley

Developing the Territory brand has been crucial to the company’s success.

To create a unique consumer experience, the company had to grow up fast and part of that process meant leaving The Medicine Room in the past. After years of operating in the medical market, the Territory founders felt that Arizona consumers had their fill of green, herbal, leafy brands. They wanted something new and exciting.

“I think the market has matured enough that the patients don’t just go to the nearest dispensary,” Christensen says. “They go to where they feel comfortable, where the price is right and the quality is on point. They’re not just looking for the next shop, they are really looking for those experiences and those differentiators.”

Territory was emblematic of the active, outdoorsy lifestyles enjoyed by the company’s leadership team.

“People are catching on that you can get the full benefits of cannabis and still have a healthy, active lifestyle,” Christensen says. “Territory was meaningful to all of us. We’re out and about and we’re hiking, and we’ve actually done a couple board meetings where we are literally hiking a trail and discussing our goals and our finances on the trail. It’s what we like to do.”

That passion for outdoor activities comes alive in the store’s retail design: a topographical map is etched into the glass wall separating the waiting room and the sales floor (as required by Arizona regulations); maps painted on the floor feature coordinates of the store’s longitude and latitude; and if the petrified wood cabinets, oxidized-rock accents and slate front desk and display cases weren’t strong enough indicators of the company’s reverence for the Southwest, then the framed map of Arizona and six flat-screen TVs displaying outdoor vistas from across the state should remove any lingering doubts.

Shortly after opening the Chandler dispensary, the company acquired a license to open a shop in nearby Mesa. This third store was a chance for Territory to really get everything right. Christensen says he was happy with the design of the Chandler store, but a blank slate of land allowed the company to craft a traditional Southwestern exterior to match the interior design used in Chandler.

The Mesa Territory’s combination of rusted metal and concrete pays homage to façades from the Old West, complete with a railing outside the front door that could easily be mistaken for a hitching post. It’s a simple combination of elements that signifies the brand’s identity.

Christensen says the store’s retail design “is what would happen if REI and Apple had a dispensary.”

Connected to its Past

In just a little more than two years, Territory tripled its store count, doubled its production capacity, roughly quadrupled its number of employees and successfully entered the largest market in the state.

By all accounts the company was meeting its goals and heading toward success, but amid the expansion and significant increase in competition, Christensen became wary of losing the corporate culture that had been built in Winslow and Chandler.

Even as much of Territory’s operation has moved closer to Phoenix, Winslow remains vital to the company’s continued growth. The company is expanding its Winslow cultivation site by roughly 23,000 square feet, which will give Territory about 50,000 square feet of canopy by the end of 2020.

“We’ve got a good team up there of people who really care and have been with us four, five, six years, and they just want to see it grow and they love being a part of it,” Christensen says. “For us, it wasn’t a decision of location, it was talent. We already have what we want there so let’s give them more square footage.”

Territory co-founders (from left to right): James Christensen, Rodney Hu, Dixon Oates and Nic Peterson.

When the company opened its Mesa dispensary, it was staffed with a mixture of new employees and transfers from the Chandler location. Christensen says it became a balancing act during the first few months of operating the third Territory store.

“Losing that synergy was absolutely a reality for us as we grew,” Christensen says. “Our biggest accomplishment, that I think all of us would hang our hats on, is the company’s culture and how we’re still able to maintain that small business, family-run organization. We try to make sure that’s palpable in the retail location so when you walk in you get a sense of welcoming. Through the growth we’ve been able to maintain that, and I think that’s a big win for us.”

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