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MJ Research: The 2015 Front Runner/MJBA Washington Marijuana Retailer Report

By Brian Yauger and Joe Armes
Front Runner

WASHINGTON: The story of recreational marijuana’s first fourteen months in Washington state is a story of supply and demand imbalances, with recreational price points impacted by competition from medical and black markets unfettered by high taxation and strict regulation.

By all accounts the first year of I-502 was successful, with retail sales now topping $35 million a month. Still, recreational marijuana only accounts for approximately 30% of the projected $1.3 billion industry in 2015, with the black market and medical marijuana representing the remaining 70%.  I-502 retailers have tried very hard to bring the out-the-door price of the recreational marijuana down to be competitive with the black and medical markets. However, those markets remain robust, in part because they have not been handcuffed by the high taxes and cumbersome regulations put in place for I-502.

Front Runner/MJBA 2015 Washington Marijuana Retailer Report

Front Runner/MJBA 2015 Washington Marijuana Retailer Report

When I-502 retailers were allowed to open in July of 2014, there was a major supply shortage resulting from an inadequate number of licensed producers and processors.  This caused the initial cost of a gram of recreational marijuana to be sold out the door for over $25 dollars, in contrast to less than $10/per gram for the medical and black market consumer.  However, over the course of the year, the number of licensed producers and processors grew at a much faster pace than that of I-502 retailers.  This caused supply to heavily outweigh the demand, as there simply were not enough retailers open for business to accommodate the increased amount of product in the marketplace. Over the course of the year, prices began to drop to under $4/per gram wholesale, allowing retailers to lower their prices to the end consumer.  Retail prices dropped quickly – more than a $1/per gram each month from August 2014 to February 2015 – before they began to stabilize, dropping less than $.50/per gram from February through June.

In June 2015, the average cost of a retail gram of flower was $12.66.  On July 1, a new law, HB 2136, went into effect replacing the existing 25% excise tax at all three levels of I-502 – producer, processors, and retailer – with a 37% excise tax applied at retail.  Producers and processors were no longer forced to give up 25% of their revenue to the state tax system.  The result: wholesale prices dropped 10%, to a low of $3.39/per gram.  Retailers followed suit, and the average cost per gram of flower at the retail level dropped to $9.22, under the magic $10/per gram price point.

The average cost per gram of flower at the retail level dropped to $9.22, under the magic $10/per gram price point.

The average cost per gram of flower at the retail level dropped to $9.22, under the magic $10/per gram price point.

 

The drop in prices starting July 1 caused the first drop in retail revenue since the opening of Washington’s recreational marijuana marketplace.  Dropping from $25 million in June to just under $24 million in July, revenues fell even while the amount of product purchased increased from 4.8k pounds in June to just over 6k pounds in July – thus showing that the drop in prices directly caused the drop in revenue.

The monthly growth rate of recreational marijuana retailers is an astonishing 29.5% a month.  This growth rate, due to an increase in the number of new retail stores opening monthly, will not be sustainable over the long term.  However, we do expect a high growth rate to continue throughout the rest of 2015 and most of 2016, as more recreational retailers come on line, and medical marijuana is integrated into the I-502 system.  Individual retailers have seen an average of a 5.63% growth rate each month.  This equates to each retailer increasing their revenue approximately $10 per day.

While recreational pot sales are robust 7 days a week, Fridays and Saturdays are the highest selling days, averaging just under $1 million sold each Friday statewide and just at the $1 million mark on Saturdays.  Mondays are the lowest-selling day of the week, at just above $600k, while Sunday, Tuesday, Wednesday, and Thursday are hover at ~$800k.  Retailers that are closed on Sunday may be missing out on a decent day of sales, and should consider opening on Sundays.

The number of recreational retail customers has increased dramatically, while the amount they are spending has stayed constant.  We saw a growth from 1,000 retail customers a day in August 2014, to a high of 40,000 customers a day in July 2015.  The average ticket price balanced at approximately $40 a day for several months until dropping to just over $30 a day after the implementation of HB 2136 and the subsequent drop in prices.

The majority of all sales in Washington State are concentrated in only four counties.  Western Washington sells just under three times more recreational marijuana than eastern Washington.  Forty six percent of the weight sold comes from King, Pierce, and Snohomish counties, with Spokane County making up fourteen percent of all sales. The remaining 40% of sales comes from all other counties.

The outlook for recreational market remains strong.  With the medical market set to be folded into I-502 in 2016, we predict that the gap will start to close between the black market and the legal market.  As an added factor of prices rivaling that of the black market, we will continue to see large increases in the number of customers making purchases in I-502 retail stores.

As of early October 2015, there were 182 retail stores recording revenue in Washington. We project that by July 2016 that number will grow to between 288-294 retailers, ensuring that the high growth rate that we have seen will continue into 2016.

Washington Legal Pot Prices Fall To Under $10 In July

WASHINGTON: The price of legal marijuana at Washington’s legal recreational pot shops has fallen to an historic low of under $10 per gram of flower. Industry insiders place the cause squarely on the state’s newly rejiggered marijuana laws. Consumers and retailers are happy with the new low price points; while many producer/processors are struggling to differentiate.

“The impact of HB 2136 was dramatic on the price of marijuana in the WA retail shops,” said Brian Yauger, CEO of Front Runner, formerly TetraTrak, a leading provider of business intelligence for the legal cannabis industry.  “The average cost of a gram of flower dropped almost 25% a gram to under $10.  That now puts i502 recreational prices on par with medical.”

HB2136, signed into law on June 30th by Washington State Governor Jay Inslee, consolidates cannabis excise tax, and allows local jurisdictions to share marijuana tax revenues to encourage more cities and counties to allow for legal pot shops.  It went into effect on July 1st, and the result was an immediate drop in retail sales prices. 

In response, Front Runner and Marijuana Business Association have teamed up to present the 2015 Washington Marijuana Retailer Seminar on October 5th at the Red Lion Hotel in Bellevue, WA.    The MJBA Professional Seminar will feature presentations from Yauger and TetraTrak CDO Joe Armes, who will provide a comprehensive look at the WSLCB wholesale and retail sales data to date, with an eye toward giving 502 retailers actionable business intelligence.

“I want every retailer who attends this seminar to feel that they’ve gotten the value of the ticket price back in the first 15 minutes of the event,” Yauger told MJNN.

Leading Retailer Uncle Ike’s founder Ian Eisenberg will be a featured speaker and panelist. He’ll be joined by an impressive lineup of top retailers including Evergreen Market, Satori and The Joint.  Top cannabis brands Zoots, Mirth Provisions, Evergreen Herbal, Buddy Boy Farm and Monkey Grass Farms will participate as featured panelists.  Event sponsors include Green Bits, PayQwick, Visual Options, CannaVentures and Sky High Gardens.   

The 2015 Washington Marijuana Retail Seminar: Becoming A Front Runner, October 5th in Bellevue, WA

WASHINGTON:  Front Runner (formerly TetraTrak.com), a leading business intelligence resource for Washington’s licensed cannabis industry has teamed up with The Marijuana Business Association, to present: “The 2015 Washington Marijuana Retail Seminar: Becoming A Front Runner” on Monday, October 5th at the Red Lion Hotel in Bellevue, 1-5PM, with a VIP Reception to follow at the hotel bar.

The MJBA Professional Seminar will feature presentations from Front Runner’s  Brian Yauger and Joe Armes, who will provide a comprehensive look at the WSLCB wholesale and retail sales data to date, with an eye toward giving 502 retailers actionable business intelligence to help them build sustainable profitable businesses.

“I want every retailer who attends this seminar to feel that they’ve gotten the value of the ticket price back in the first 15 minutes of the event,” Yauger told MJNN.

Leading Retailer Uncle Ike’s founder Ian Eisenberg will be a featured speaker and panelist. He’ll be joined by an impressive lineup of top retailers including Evergreen Market and The Joint.

PayQwick CEO Kenneth Berke and Green Bits Business Solutions Director Matt Beckley will join Brian Yauger and Joe Armes for a roundtable discussion on retail trends.

Listen to the keys to Romancing the Brand with top executives from Washington’s leading CannaBrands: Zoots, Mirth, Evergreen Herbal, Monkey Grass Farms, Buddy Boy Farm and Sky High Gardens.

Event sponsors include: TetraTrak, Green Bits, Visual Options, PayQwick, CannaVentures and Sky High Gardens.

Reserve your Front Runner spot today. 

Brian Yauger on stage at MJBA Meetup in Seattle.

Brian Yauger on stage at MJBA Meetup in Seattle.

New MJ Research Report: Washington Canna-businesses Plan To Grow Organizations By 200% In 2015

Last month the Marijuana Business Association (MJBA) hosted the first ever cannabis job fair in Spokane, WA.  As part of our MJ Research’s effort to provide business intelligence to participants in the legal cannabis industry, we surveyed more than 110 hiring managers, employees and job candidates online and at the event.

From analysis of this survey, conducted by Analytically Correct and the MJBA, we learned that the Washington State companies who responded to the survey plan to grow their companies by 200% in 2015.  The majority of these positions will be operations positions such as growers, trimmers and bud tenders.  Over 50% of these positions will pay under $30,000 per year.

Washington State companies who responded to the survey plan to grow their companies by 200% in 2015.

Analytically Correct CEO Joe Armes presents the MJ Research Jobs Report to industry participants at the Marijuana Business Association

 

Spokane’s First Cannabis Job Fair Draws Huge Crowds

WASHINGTON: Nearly 900 eager job seekers turned out for Spokane’s first ever cannabis job fair this past weekend, many of them lining up as early as 7:30 to drop their resumes off and meet some of eastern Washington’s leading cannabis industry employers.

Organized by the Marijuana Business Association, and presented by Washington NORML and the Islander, MJBA Job Fair Spokane was held at the Spokane Convention Center and featured employers and exhibitors included leading cultivators Washington’s Finest Cannabis, Blue Roots Cannabis, Triple T Farms, Kush Comfort Farms, and Buddy Boy, who were looking for trimmers and agricultural help; leading cannabis brands including Evergreen Herbal, Cannabis Training Institute, 420MEDIA, Analytically Correct, Mosaic Insurance, PayQwick, BioTrackTHC, Miller Soils, WeedTraQR, and Dope Magazine.

The Inlander publisher Ted McGregor delivered the keynote address, using the occasion to look back on the first year of Washington legal cannabis (the state’s first recreational shops opened on July 8, 2014).  Ted gave a shout out to Spokane resident Mike Boyer, the first recreational pot consumer in the state who subsequently lost his job after a workplace drug test confirm his legal consumption, who was in attendance at the fair optimistically seeking employment opportunities.  He drew parallels between the end of alcohol prohibition and today’s unravelling of the failed war on drugs.

[youtube http://www.youtube.com/watch?v=pz6ENqeR8Dc&w=560&h=315]

Business Intelligence expert Joe Armes, Analytically Correct, preceded the keynote, and delivered the MJ Research Jobs Report in which Analytically Correct estimates WA State recreation cannabis direct industry jobs to be 3,000 – 4,000 by the end of 2015 and 5,000 – 6,000 by the end of 2016.

MJ Research Jobs Report

MJ Research Jobs Report

420MEDIA and Kerri Accardi were in the house, hosting an open casting call for their upcoming web series, Hmm…Did You know.   A panel of cannabis cultivators from Washington’s Finest Cannabis, Farmer Tom Organics, Kush Comfort Farms talked about careers as a pot farmer.  Other featured speakers included Luc Nelson, Cannabis Training Institute; Kevin Oliver, Washington NORML; Melissa Braddock, Eden Labs; Norm Ives, Mosaic Insurance; Dan McMahon, BioTrackTHC, Aubrey Armes, Analytically Correct HR; Eric Ogden, WeedTraQR; Isaac Curtis, UFCW; Crystal Oliver, Washington’s Finest Cannabis; Terry Polyak, PayQwick; Kerri Accardi, 420MEDIA; Heather Gehrman, Evergreen Herbal; and Jon Hofer, RMMC Consulting.

[youtube http://www.youtube.com/watch?v=fG7Fqt_G_Zg&w=560&h=315]

 

MJ Research Report: Washington State Rakes In Over $10M In Single Month From Pot Tax

By Joe Armes

WASHINGTON: The legal cannabis industry has been rapidly growing in Washington State since the implementation of recreational sales under I502, and along with them so too have the tax revenues due to the state. Washington’s hefty 25% excise tax, which is applied to each stage of the supply chain (, processors and retailers), has alone resulted in accrued tax obligations of nearly $10.4M due to the state from May.

 

june mj research 2

The excise tax is the largest of several revenue streams legal cannabis is bringing to the state.  Additionally, the state collects tax revenues from retail sales and business and occupation taxes generated from cannabis businesses.  All the while, the market continues to shift toward retailers capturing an increasingly larger portion of the revenues generated by the industry leaving many industry insiders pleading with the state to pass legislation to modify the excise tax structure to a retail tax that maintains the state’s tax revenues and provides relief for producers and processors.

Here are some other insights from the Washington State Recreational Cannabis Business Intelligence Dashboard:

      • Washington set a new record single day sales with $1.88M in Sales on May 29th.
      • The state now has 163 licensed retail stores with 146 recording sales as of May.
      • Combined Producer, processor and retailer sales were $215M through June 1st.
      • Average daily sales for the month of May were $1.31M, up 8.3% from April.

If you are a producer, processor or retailer who would like to be a confidential data provider for the dashboard and receive custom business insights or would like more information about business intelligence and analytics feel free to contact Joe at joe@analyticallycorrect.com.

About Joe Armes: Joe is the founder of Analytically Correct, a data analytics services company that provides custom analytics solutions that transform data into insights to allow decision makers to focus on what adds most value. His passion is to work with organizations with deeply rooted causes to help them gain access to the knowledge needed to make timely and informed decisions.

MJ Research Report: Washington’s Average Daily Pot Sales Jump To $1.21M For April

By Joe Armes

WASHINGTON: Legal marijuana sales in Washington State broke the $1M per day mark in April, averaging daily sales of $1.21M.  The expanding commercial market reached this milestone on track with Analytically Correct’s predictions.

Here are a few additional key insights from the forecast:

  • Washington set a new record single day sales with $1.84M in Sales on May 1st.
  • The state now has 153 licensed retail stores with 135 recording sales as of April.
  • Combined Producer, processor and retailer sales were $176.8M through May 3rd and are on track to surpass $200M by late May.
Combined Producer, processor and retailer sales were $176.8M through May 3rd and are on track to surpass $200M by late May.

Combined Producer, processor and retailer sales were $176.8M through May 3rd and are on track to surpass $200M by late May.

If you are a producer, processor or retailer who would like to be a confidential data provider for the dashboard and receive custom business insights or would like more information about business intelligence and analytics feel free to contact Joe at joe@analyticallycorrect.com.

About Joe Armes: Joe is the founder of Analytically Correct, a data analytics services company that provides custom analytics solutions that transform data into insights to allow decision makers to focus on what adds most value. His passion is to work with organizations with deeply rooted causes to help them gain access to the knowledge needed to make timely and informed decisions.

MJ Research Report: Washington State 2015 Legal Pot Sales On Course for $450M

By Joe Armes

WASHINGTON: After another quarter of legal recreational cannabis sales on the books for Washington State cannabis businesses are still faced with many unknown factors that will impact their businesses in the upcoming months. Legislative changes, surplus inventories and continuation of local bans and moratoriums are a few of the major factors that will be driving forces in how the market grows this year.

With so many pieces of this complex puzzle at play it is highly critical for businesses to understand the market performance, the current dynamics and the insights that can be gained from what we do know.  At the end of 2014 Analytically Correct conducted the only market forecast for the Washington State Cannabis Industry,  published in the MJ Research Report in January.  Let’s take a look at how the market has performed to this forecast through one quarter of the year.

Overall, the market has performed well on a strong, predictable growth trend.  Analytically Correct’s forecast for 2015 was for $350M to $495M in combined producer processor retailer sales and through the first quarter the state in on course for $450M.

First quarter 2015 sales actuals totaled $73.5M which is right in line with of the forecast range of $56.7M to $81.8M.  While actuals for the quarter came in well within the expected range the surprise for me is how well it performed in the first quarter coming off of fall harvest with surplus inventories, not enough retail stores and an expected down season cycle.  Given these factors it would be reasonable to have expected the quarter results to be towards the bottom end of the range.  These results give an optimistic outlook for the year could result in an upward revision of the forecast if it continues through the second quarter.

MJResearchReportApril2

It is important to note that he forecast assumes that sales continue on the current track within an unchanged state legal structure. Action from Washington State legislature or federal government, unstable/unobtainable pricing, change in the rate of license approvals from the LCB, prevention of business operations by counties or municipalities, etc. all could have an impact on actual sales (some of which could be positive impacts).  Here are some other key insights from the forecast:

  • The forecast predicted over $1M in average daily combined producer, processor and retailer sales by July 2015 (95% statistically confident).  March averaged ~$970K per day in sales and it is highly likely that by the end of April average daily sales will surpass $1M per day.
  • The forecast predicted approximately 250 active retail stores in operation by the end of 2015 (95% statistical confidence interval for the forecast ranges from ~225 to ~275).  With 137 licensed stores and 120 with recorded sales the state is on track for 250 by year end.
  • The volatility in daily sales has stabilized so far this year. We are seeing normal day of week sales swings following the pattern of most sales on Friday and least on Sunday and have not experienced drastic swings that were seen in 2014.

If you are a producer, processor or retailer who would like to be a confidential data provider for the dashboard and receive custom business insights or would like more information about business intelligence and analytics feel free to contact Joe at joe@analyticallycorrect.com.

About Joe Armes: Joe is the founder of Analytically Correct, a data analytics services company that provides custom analytics solutions that transform data into insights to allow decision makers to focus on what adds most value. His passion is to work with organizations with deeply rooted causes to help them gain access to the knowledge needed to make timely and informed decisions.

MJ Research Report: Washington Recreational Marijuana Sales Grow By More Than 20% In February

By Joe Armes

WASHINGTON: Combined Producer, Processor and Retailer monthly sales in Washington State grew at its fastest rate since November, growing by 20.5% from $18.5M in January to $22.7M in February, a month with 3 fewer days.

Retail sales grew at 22.2% from $12.7M in January to $15.52M February while Producer/Processor sales grew by 16.6% from $5.77M to $6.73M.  Both are great news for producer/processors sitting on surplus inventories left over from last fall’s big harvest and are indicators surplus inventories will continue to burn down over the coming months.

Here are some other insights from the Washington State Recreational Cannabis Business Intelligence Dashboard:

  • Year-to-date combined producer, processor and retailer sales as of March 9th have totaled $49M, resulting in $12.3M in excise taxes due to the state.
  • There are currently 127 approved retail stores in Washington State and as of March 9th 107 of these retail stores had recorded sales.
  • A new single day sales record was recorded on February 27th with $1.55M in combined producer, processor and retailer sales.

If you are a producer, processor or retailer who would like to be a confidential data provider for the dashboard and receive custom business insights or would like more information about business intelligence and analytics feel free to contact Joe at joe@analyticallycorrect.com.

 

About Joe Armes: Joe is the founder of Analytically Correct, a data analytics services company that provides custom analytics solutions that transform data into insights to allow decision makers to focus on what adds most value. His passion is to work with organizations with deeply rooted causes to help them gain access to the knowledge needed to make timely and informed decisions.

MJ Research Report: Washington State Legal Pot Sales Reach $100M

By Joe Armes

WASHINGTON: The recreation cannabis industry has surpassed $100M in sales in the first 33 weeks of legal sales in Washington State. Two months into the year the market is on track to hit Analytically Correct’s 2015 forecast published in the MJ Research Report’s Market Outlook. According to the forecast there is a 95% likelihood that it will take only another 12 to 18 weeks for the industry to quickly rake in another $100M in sales, reaching $200M between the weeks of May 17th and June 28th.

If you are a producer, processor or retailer who would like to be a confidential data provider for the dashboard and receive custom business insights or would like more information about business intelligence and analytics feel free to contact Joe at joe@analyticallycorrect.com.

 

About Joe Armes: Joe is the founder of Analytically Correct, a data analytics services company that provides custom analytics solutions that transform data into insights to allow decision makers to focus on what adds most value. His passion is to work with organizations with deeply rooted causes to help them gain access to the knowledge needed to make timely and informed decisions.