Pot Luck

Darts said:

Some of those pot shop lottery winners are saying they are being offered $3-5 million by large corporations for a partnership interest in their store.

In related news, looks like the "Me Two" movement have caught up to Marc Emery.

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I have not heard that yet but I also was slow and did not think of getting into the lottery.

My neighbour seemed to think that some may be able to ask for a 30% stake of the profits...no way.

Owning a Potshop sounds like a good idea, but I really want to know what the actual profit margins will be. So far I haven't seen any information on what the wholesale price from the LPs will be.

You're not gonna make a lot of money if a grams cost you $8 with labor and overhead and you have to sell it for around $10 with taxes, especially when there is a strong possibility that there will be no limit on the amount of licenses given out..


Thanks


Nicole King

Nicole King said:

Owning a Potshop sounds like a good idea, but I really want to know what the actual profit margins will be. So far I haven't seen any information on what the wholesale price from the LPs will be.

You're not gonna make a lot of money if a grams cost you $8 with labor and overhead and you have to sell it for around $10 with taxes, especially when there is a strong possibility that there will be no limit on the amount of licenses given out..


Thanks


Nicole King

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Its 38% to 40% margins in Alberta. This will all be dependent on what the Ontario government sets their delivered price to your store.

The stores open in major cities like Calgary and Montreal were doing between $70k to $100k a day.

I estimate profits to be 8m minimum for the 1st year in a major city. That's a conservative outlook. That's why 3-5m offers is actually low ball offer. $20m would be fair market offer (ebita x7) value for a store in a major city. Licenses in a mature market like Colorado were selling for 7x where most businesses sell for 3x-5x.

Its actually a nightmare to do the application. Most lawyers get confused. Alberta was 70 pages. Safety requirements are a nightmare also.

Yes, I'm an industry insider.

Darts said:

One pot luck winner said he threw his hat in the ring just for fun. He said he knows next to nothing about the product. (This guy will make more money than some agency owners here. Maybe.)

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He'll likely end up partnering with a major pot retailer for a boat load of money. They'll take all the risks and get him up in April.

Darts said:

This lottery system is/was a horrible idea. People with no qualifications simply threw their hat in the ring.

It is even worse than the federal wireless auction. The one where only foreign players are allowed to bid. Then the foreign winners later sell to Rogers or Bell and take the money and run.

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There are a lot of companies that got burned because of Ontario. They rushed into leases to secure locations. Paying dead rent. Landlords were smart they demanded $200k+ in rent deposits and had a 2x-3x rent rates.

So many companies lost millions when they lottery system was announced. We lost $2m for revenue that was almost earned. Oh well... time to move on.

I actually think they did a good thing with the random lottery. I just wish they allowed 100 stores instead of 25. 25 will do nothing to make a dent in the black market.

So if you won and partnered with somebody, how much could you take?

They could offer you a “buyout” but your name would be on everything or a percentage of the profits.

My guess is 10% and I don’t know what the buyout price would be. Millions really???

Has anyone mentioned that 17K applications were made and each person paid a significant fee to apply. Million dollars or more was generated just from application. Wonder where that money goes? Sure some goes to the cost of processing applications but surely there's money left over.

frankcastle said:

Has anyone mentioned that 17K applications were made and each person paid a significant fee to apply. Million dollars or more was generated just from application. Wonder where that money goes? Sure some goes to the cost of processing applications but surely there's money left over.

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It was $75 to apply for lottery. About 20k people applied so government made $1.5m.

Johnny Utah said:

So if you won and partnered with somebody, how much could you take?

They could offer you a “buyout” but your name would be on everything or a percentage of the profits.

My guess is 10% and I don’t know what the buyout price would be. Millions really???

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Depends on the type of deal, involvement and area you received. If you need advice pm me.

Darts said:

If Canada ever legalize consensual paid adult sex behind closed doors, maybe we can use the same template to award agencies. Let say they cap the number of agencies at 25. Then open the random lottery to anyone (no experience necessary) who throw their hat in the ring. The winners of the lottery will have a license to print money.

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Won't happen for a really really long time.