Justin Livingston, the vice president of franchise development for Unity Rd., has plenty of experience when it comes to growing a brand. So what led him to hop on board the cannabis train, and why are investors everywhere starting to see green?
Interview by Kieran McLoone, deputy editor for Global Franchise.
KM: What drew you toward Unity Rd. as a concept, and the cannabis industry in general?
JL: So many things, and honestly it isn’t something I thought I would do. It wasn’t on anybody’s radar.
The reality is this: I’m a firm believer in the franchise model. I’ve been in franchising for a very long time, all over the globe, and franchising at its core is about helping people get into an industry that they otherwise couldn’t get in to or would struggle with some of the complexities of running the business. That’s what we’re charged to do as franchisors, is provide that roadmap to success.
When it came to cannabis, here’s what I saw: an industry that has unbelievable amounts of money. The money is life-changing for people. Opening a dispensary can do more for you than multi-units of almost any other industry.
It’s also an industry that was unbelievably fragmented. There was no consistency, branding, or consistent customer experience from one location to the next. You might have a good experience at one place and a bad one elsewhere, and this is a product that people are still educating themselves on; a bad experience can be really bad!
“Opening a dispensary can do more for you than multi-units of almost any other industry”
There was an opportunity for me to implement and help to develop the first franchise that could take all of the things in franchising that we love – consistency, branding, processes, systems, teams, support – and implement it into an industry that had none of that.
On the flip side, bringing cannabis to franchising was equally exciting. Franchising is made up of amazing franchisors and people doing really innovative, cool things. But, let’s be clear, there are typically different versions of something that already exists. The new gym, the new way to make a chicken wing. They’re great, but it’s new spins on existing industries. This is a totally brand-new industry.
KM: Let’s talk COVID-19. What kind of impact are you seeing the health crisis have on the cannabis industry?
JL: I think there’s a couple of industries that are really resilient in times of recession. Coffee thrives, alcohol thrives, and cannabis thrives. I think we’re seeing that amongst the franchise system with folks that are prepared for this.
Cannabis is being deemed essential. Not only are people using it to cope from a recreational standpoint, but medicinally, there are so many people who use this from a medicinal standpoint. It’s a really key element in our society.
From a retail standpoint, I don’t know if it’s business as usual where we’re having to adapt to curbside pickup and some things that have never existed in this industry, but from a retail topline standpoint? Business is good.
I almost feel bad saying it because I know that everybody’s hurting, but business is largely going on as usual. There was even a threat here in Colorado of cannabis not being deemed essential, and immediately people stopped what they were doing and they went to dispensaries and liquor stores. There were these crowds of people which defeats the purpose of social distancing, so they said ‘Wait, go home, we’re not going to close these’.
Business is, albeit a different normal, good. Topline revenues are good, and I think we’re proving the point here that as a legitimate business across multiple platforms, states, and methods of delivery, this is a pretty recession-resistant industry. And who knew: cannabis is also a worldwide pandemic-resistant industry.
KM: That’s great to hear. With so much regulation surrounding the cannabis industry, how feasible do you believe a wide franchise network truly is?
JL: It’s really interesting because the regulations here in the States are really intense. They make it complicated from city to city, state to state, province to province, or whatever the case may be.
It’s not unlike other markets; there are complexities in food and beverage that vary between markets. I come from a background of bars where the way that alcohol and staffing are handled varies wildly from one location to the next. The differentiation from one market to another isn’t necessarily specific to cannabis, but it can be really magnified by the fact that the compliance issues are intense.
”It’s not unlike other markets; there are complexities in food and beverage that vary between markets”
You go from being flat-out illegal to being completely recreational. The extremes are extreme, but I think navigating those complications to put together a brand, system, and processes to help understanding those nuances of each individual market will certainly over time be a real global phenomenon.
The money we’re talking about here is generational wealth. It’s a decision that a business owner can make that will leave money to their grandkids’ grandkids.
KM: What kind of franchisees are you looking for right now?
JL: The reality is that this is a very expensive thing to do; this is not a concept where if you’ve saved a few bucks, you can get a loan to finance the rest – there is no financing in this. That’s one of the big hurdles.
What we’re looking for are real players. Multi-unit franchisees or business owners who want to diversify and have the liquidity to do this and take a bit of a risk. It’s high-risk high-reward, in that it’s a lot of cash injection, but the AUVs are unlike anything anybody has ever seen.
KM: What kind of challenges are you coming up against and factoring into the Unity Rd. franchise offering?
JL: There are lots of pitfalls and complexities, and that’s why there are not any franchisors yet.
The first complexity from a franchisor standpoint is that here in the U.S., this is federally illegal. Franchising is federally regulated and just being able to navigate the complexities of that, to even be a franchise, is number one. The number one thing that’s hurting new franchisor entrants is figuring out how to actually be a franchisor in this industry.
The other thing that, once you get past that, you get franchise guys who say that they can franchise anything. Any industry, any concept, because the recipe is the recipe. It’s not true in cannabis, and personally, I don’t think it’s true at all. It’s certainly not true in cannabis.
“The number one thing that’s hurting new franchisor entrants is figuring out how to actually be a franchisor in this industry”
You really need deep industry expertise in cannabis, and also in franchising. That’s how we’ve been able to get where we’ve gotten, because we have 10-plus years of legal cannabis experience within our team. 10 years might not seem long, but that’s day one in legal cannabis here in Colorado, which was the pioneer in the country.
We’ve then got around 45 years of franchise experience. It really takes having the best of both of those worlds to navigate each individual complication. So the requirements and issues on the franchise side, and the compliance issues and tax regulations on the cannabis side.
KM: What changes do you think will occur within the cannabis industry within the next 12 months, or even this decade as a whole?
JL: I think it’s really exciting. We’ll have to take coronavirus out of the equation, so let’s pretend the world is normal for a moment.
All signs point to cannabis having sweeping states coming on board. Before, we were moving at a clip when states were coming on board at a rate of maybe one or two a month. Predictions had cannabis going from $13bn in five years to $80bn in 10 years. You’re talking about just ridiculous numbers, it’s bananas.
I think in the coming months and years, you’ll start to see more and more states and countries adopting the ability to open dispensaries. Some are going to go medical and really conservative at first; that’s okay.
Most, even the medical states, like Illinois here in the U.S., went from nothing, to medical, to recreation, to even more licenses within a year. You’re going to see more states adopting this. You’re going to see the stigma begin to change, as more people see that this is just part of the decision making for what comes into the house. People are going to Whole Foods, and then the liquor store, and then the dispensary on the way home.
“People are going to Whole Foods, and then the liquor store, and then the dispensary on the way home”
For the decision-makers who are choosing what comes into the house from a recreational and medicinal standpoint – it’s just becoming the norm. That stigma will begin to change and people will really begin to recognize the benefits of cannabis. Not just recreationally but medicinally in dealing with a myriad of symptoms; be it PTSD, or chemo, or MS, or some really intense things that this product has been a real lifesaver for.
You’ve got the whole spectrum in one store that can help you have a great golf weekend with your buddies or a concert with your girlfriends, or help to deal with serious medical issues.
KM: And for Unity Rd., what does your next year of franchising look like?
JL: Well the way it works here in the states is that you apply for a license and then that state awards those licenses. It takes a long time; the thing I will say is that in this industry, things don’t move very fast.
We’ve got 31 partners on board so I think you’ll see a lot of Unity Rd. locations across different states start to pop up this year, even with the craziness that’s happening right now. Perhaps even into Canada and some other markets that are on board.
You’re going to start to see a real household name and a brand which is the world that we all love in franchising. You’ll see that Unity Rd. logo, and you know that you’ll get the highest quality product and staff, and the ability to let franchisees impart real change within their communities.