Buffalo’s first Cannabis Dispensary nears $5M in sales
Aaron Van Camp opened Dank 716 – Buffalo’s first legal adult-use dispensary – on July 17, 2023.
During its first six months in business, the store has grossed nearly $5 million in sales and cultivated a larger-than-expected customer base.
But while business at Dank 716 has been good, Van Camp recognizes some problems in New York’s legal weed industry that could harm the statewide market. There are issues with product quality, regulations – ranging from potency-based taxes to requirements for many cultivators to grow outdoors – and business acumen among marijuana entrepreneurs, to name just a few.
Decisions made in 2024 could have wide-ranging effects on the viability of New York’s legal adult-use cannabis market, and Van Camp sat down with NY Cannabis Insider to talk about what the statewide industry looks like right now, and what issues need to be addressed.
When it comes to federal policy, what are you keeping an eye on in 2024?
Everybody’s basically looking to see if they reschedule. I mean, that should free up a huge amount of write-off opportunities moving forward. That’s basically the biggest thing for us as a retailer.
What policy changes should New York regulators seriously consider in 2024?
The potency tax. It’s not going to disappear, but it has to be adjusted to meet the needs of the processors, growers, retailers and consumers alike. It’s not exactly working out. It’s causing an unnecessary amount of tax to get put on the products right now. They’re making it harder for us to compete with the unregulated market.
You’ve been in business for almost six months now. How is business?
In terms of volume, we’re about to cross $5 million gross in the first six months – that’s including a showcase that we had running that was fairly successful. Sales-wise, we’re seeing average basket sizes in the $70 to $80 range. I’ve heard stores in Manhattan are closer to $100, so I guess we’re a little bit lower. We carry eighths that are cheap, so I try to stay competitive with the unregulated market. Not everybody’s carrying eighths in the $20 range, and that seems to be like our best seller, the lower price flower. Basically, what we’re seeing is 300 to 500 people during the week, and maybe like 500 to 600 on the weekends, typically.
How does that compare to your projections before opening?
Much higher. We were basically hoping we’d be doing around $10,000 per day, which is like, less than half of what we’re doing now. But at the same time, the injunction and things like that have helped us where they’ve hurt other people, because it’s been just us with the city for a long time. Strangely, we’ve actually seen an uptick in business when other legal shops have opened in the area.
The new stores that have opened here haven’t really affected us so much, thus far, but we’re going to see what happens. I think maybe when there’s like 10 or 15 open, it’ll be like a more accurate portrayal of how things will go. Where we live in Western New York, the reservation is probably our biggest competitor, more so than the illicit sticker stores.
How do you think sales will look as more retailers join the market?
I definitely anticipate our numbers greatly going down as time goes on and things continue to open up. We do feel like we’re providing a very good use of the product. I’m not taking every product that people are pushing on everyone. We actually are consumers here, and we’re trying to only carry good products. I’ve been around to maybe 17 stores that are open, and I feel like we have the best customer service in our store than anywhere else in the state, as far as bud tenders’ knowledge of products, and things like that. So first, we will retain more people, who may feel comfortable with us.
I’m plopped in between five hotels, we have like 600 apartments going in behind us. We’re in – I don’t want to say a very wealthy area, but there are lofts around us that typically rent for $2,000 to $3,000. So we’ll be able to still maintain customers. We’re more worried about stores creating a race to the bottom. The guy who decides, ‘I’m only going to make $5 instead of 50%,’ that’s gonna pose a problem in general, because with the race to the bottom, no one wins. We’re more worried about that than stores just popping up.
Regulators and cannabis businesses have said legal retailers are having problems competing with the illicit market. Are these shops creating a race to the bottom for prices?
A lot of the products that were involved in a race to the bottom in the illicit market aren’t doing so well. The legacy operator is somewhat less involved in the sticker store market here – there aren’t many people left who are genuinely old school cannabis people who care about the market. They’ve been replaced by a different batch of people that we don’t really know where they come from. It’s just like a simple business transaction, they don’t care, they’re putting out the lowest products for the cheapest price, just trying to get it out of there, and they’re not dealing with any sort of quality control.
At this point, many of those people have gone back to traditional routes – like delivery services, or just taking care of your people in the living room, like you used to out here.
Regulators were going to phase out the grower showcase events this year, but decided against it. How important are the growers showcase events to New York’s legal market, and how should regulators handle them moving forward?
A bunch of us – myself included – exploited the regulations to do pop-up dispensaries through the Cannabis Grower Showcase program, and that’s a problem that the state didn’t want. I had three stores open here during an injunction, so people were very upset that that happened.
There’s other people who had five stores, seven stores, and they were advertising as if these were dispensaries in different locations. That wasn’t the intention for the showcases, the showcases were intended to basically create a farmer’s market for cultivators to go out there, educate the consumer on their product and get their product out there. I don’t feel bad for what we did, as far as creating dispensaries – we got rid of a lot of products for a lot of people who needed to.
It was the right thing for that moment, but overall, that wasn’t the intention for that program. The intention for the program was to create more farmers markets, individual events, maybe a weekend thing here or there. You could be at the concert, or things of that nature, but it wasn’t designed for pop-up dispensaries. I don’t think I did anything wrong – or that other people did anything wrong – because the product needed to go out, and the businesses didn’t break any regulations, but it wasn’t exactly what they intended.
Since before any licensing started, people have been worried about competing against the medical cannabis Registered Organizations, once they expand to adult-use. Now that some are starting to expand, are you concerned?
The only worry with them is that they’re funded to do really dumb lead loss things. I’ve heard that at some medical dispensaries, when their products are close to going bad, instead of getting retested like someone would in our market, they’ll drop the price to something like near absolute cost – like a $50 vape could go to $10. That’s something that we can’t do.
As far as quality of products, I’ve seen the flower they’re putting out, and it’s not good – they’re already in some of the dispensaries, which makes me sad that people are already selling out to those companies like the third week, when they’re in like the social equity program. But as far as ROs go, I’ve gone out there and bought it at one of those medical dispensaries in Rochester and it’s not good indoor. That’s not what we’re worried about
What have you been seeing, in terms of quality, from local growers?
I’m trying my hardest to support local small businesses. But at the same time I’m a retailer, and I have to run a business here and my consumer isn’t asking for mid level local, they’re asking for the best quality possible. So if someone who’s more equipped to produce the quality – might be a larger firm that has a larger setup putting out a better quality product – I kind of have to deal with them. And it’s been upsetting.
I’d like to take everyone’s product, but it’s not helping to take everything, and a lot of people have stuff that should have gone to processing that they’re holding on to. They want crazy prices, or they don’t understand the gap of what goes on in between them and retail. They’re seeing the product go out of the store at a certain price, and thinking, ‘out of $30 why can I get $20?’ and it’s because it doesn’t work that way. There’s the cost of doing business here, there’s employees that have to get paid, and the smaller farmers aren’t quite as well versed in business.
What’s a major issue in New York’s legal market that’s not getting enough attention?
Most of these stores are going to fail because they’re listening to these consultants, and they’re signing on for $700,000 build-outs with $1.3 million funding and financing with a security company. This means you’re going to have to be wildly overstaffed, and then they’re signing on to horrible deals. You can sustainably open one of these upstate for under $100,000 very easily. People are signing deals based on relationships and lots of bad advice, and it’s going to be the destruction of a great number of dispensaries.
All the DASNY stores are going to die, you’re not going to be successful if you have a DASNY store. Aside from maybe Housing Works or Union Square Travel Agency, I’d say 90% of those stores are going to die because they’re going to be caught in such wild build-outs with wild costs that they’re never going to be able to make it.
We got open for $36,000, and my girlfriend and I are both millionaires off this now. We didn’t give any money to anybody; everybody else is. There are people who open stores for cheap, but most of these people are still buried in debt and they’re going to be buried in debt, and some of the stores are doing awful and they’re licensed, but are probably going to get taken and put in receivership.
They have to start opening these more sustainably cheaper. You don’t need 3,000 square feet – we’ve got 500 square feet, and we could do $30,000 per day here.
