Cannabis Is The Most Powerful Product In Retail According To Sales Per SF
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But a new study may have them changing their tune.
Cannabis dispensary chain MedMen, which operates in states with both legalized recreational and medical marijuana, posted $6,257 in sales per SF in its California stores in this year's third quarter, The Motley Fool reports. In a CoStar study reviewed by the Motley Fool, Apple Stores were the leading retailer in sales per SF at $5,546 — meaning that MedMen would have taken first place by nearly $1K if included in CoStar's numbers.
Lululemon was the leading apparel retailer in the CoStar study with $1,560 in sales per SF. Apple and MedMen outpace the apparel industry in sales per SF due to the small products they sell at premium prices, which allow for smaller footprints and high margins.
While MedMen has been labeled "the Apple Store of weed," TMF reports it still operated at a considerable loss throughout this period of aggressive expansion. Its $682M acquisition of Chicago-based PharmaCann expanded its reach to 67 stores across 12 states. The acquisition also more than canceled out the revenue from its stores, which operate at a healthy 33% gross margin, according to the Motley Fool.
The story of marijuana's success goes beyond MedMen; the Marijuana Business Factbook reports that sales per SF average $1,773 at recreational dispensaries and $1,143 at medical dispensaries, well above mainstream retail brands, according to TMF.
Meanwhile, cannabis continues to be legitimized at the statewide level. This past election, Michigan became the 10th state (plus the District of Columbia) to legalize recreational cannabis, and the first Midwest state to do so. While North Dakota voted against a bill that would have allowed for the recreational use of marijuana, Utah and Missouri joined the ranks of states allowing medical marijuana, which now stands at 33.
Every November, the "green tide" of legalization surges over more shores, leading at least one Philadelphia-based real estate attorney to conclude that federal policy changes are "a matter of when, not if." For such a profitable business, it seems equally inevitable that the flood gates will open for investment at some point.