This is an article from Cannabis Culture #58. It's an interesting read whether you want to open a cannabis cafe or not. But if you do want to open your own cafe, this is a great guide that has lots of great ideas and tells you what to expect. The original article can be found at: http://www.cannabisculture.com/articles/4590.html How To Open a Cannabis Cafe by Matt Mernagh and Marc Emery (19 Mar, 2006) You can run the hippest joint in town! If you’ve dreamed of having an Amsterdam-like Café in your hometown, it’s not impossible. Of course, you won’t be selling pot; that’s not going to fly in Vancouver or anywhere else in 2005 at anything other than a med-pot club, but you can accommodate pot smokers by providing a sanctuary for them, one that is both self-sustaining, and spiritually satisfying. Your Café is the front line in our cultural revolution! It’s not important to sell the pot. Your café is where our cannabis community comes to be together, and to be who they really are, in unity and enlightenment. You will be the local centre for the cannabis culture. You can make your dream come alive to commercial success and personal reward, which will quickly make you the ‘voice’ of the cannabis community in your area. Are you up for it? Cannabis cafés have quickly become weeds that police and politicians find increasingly difficult to yank. The pot-puffing lounge not only ensures enthusiasts have an amazing come-back-soon time, but it keeps the cash register ringing. To be successful, and to keep the doors open, a well-developed income stream is critical. Unfortunately, grass sales are strictly prohibited unless you’re opening a med-pot store. But this how-to is about a glorified, pays-its-own-way pothead hang out! Enforcement priorities or lack of manpower allow these marijuana toke-friendly places to operate in major Canadian metropolitans, and med-pot friendly US states, unmolested for the most part. Those thinking their smaller or conservative community deserves a place where cannabis enthusiasts can peaceful imbibe the herb should anticipate plenty of body blows. [SIZE=-2] Potheads in Thunder Bay in Ontario, Canada – or in Brisbane, Australia, or even Chicago – deserve to have a liberating Vansterdam-like ganja experience. But you have to be realistic about the local ‘climate’ as you arrange your business plan. With a population of a half million, Hamilton Ontario’s Up In Smoke Café exists in a working class, social democratic stronghold (with both the provincial and federal seats held by the New Democratic Party, Canada’s left-wing representatives), but proprietor Chris “Goodster” Goodwin still counts over 200-plus cop visits, and 35 patron arrests in his first year. And Hamilton likes the Up In Smoke Café; at least, the local populace does. Goodwin has begun limiting arrests dramatically with his members-only room, a lesson learned after allowing smoking throughout the entire facility. Goodwin saw too many of his regulars get popped when police would come in. Punishment for first timers is a fine and a criminal record, but repeated arrests make a place a heat score, not a chill-out space. Still, after over a year open, Up In Smoke Café is the hottest, most happening, and busy hemp store in Ontario, combining radical retail with in-your-face cannabis activism. Goodwin himself has been charged twice: one “possession” of a roach-in-an-ashtray charge, and one charge of possessing a bong with resin. He’s determined to beat those charges with good legal representation. But sales are brisk, and Up In Smoke café has buzz and visitors from all over. The fuzz tells the press that Up In Smoke Café “isn’t a priority”. The reality is that some officers have actually made it their sworn duty to yank Goodwin’s chain. Ten Steps To Opening a Respectable Joint • Developing An Income Stream • Opening Operating Budget • Bylaws, Inspectors & Inspections, Neighbors & Legal • Café & Retailing 411 • Putting Food on the Menu • Competition? Yes. • Free Advertising & Promotion • Membership Has Its Privileges… Yes Pothead, There Are Rules • Pot Partners & Is A Stoned Staff A Good Staff? • The Small Business Sacrifice Developing An Income Stream Until ‘regulate, license, sell’ is instituted via liquor-like control boards, the toke friendly joint needs to earn all its income from non-grass sales. As the owner you’re only providing a liberating spot to engage in intelligent conversation, which sometimes includes remarks such as “Don’t bogart that joint,” or “Here, try this Afghani hash.” But you need to earn dosh to provide the hangout. Munchies make money. However, the restaurant industry has an incredibly high belly-up rate. Basically the only difference between your café and a Thai restaurant is the target market. One proprietor is seeking those who like marijuana; and the other, Thai food. Bongs, rolling papers, bubblebags, cool pipes, and grow book sales are obvious choices to keep revenue flowing from your target market – potheads. Café cannabusinesses like the Hot Box Café (Toronto), Up In Smoke Café (Hamilton), and The Amsterdam Café (Vancouver) are a combination of retail ganja goods and café services (food and drink in a cannabis-friendly environment). Pot patrons have to buy something before toking, even if it’s just a tasty beverage. Opening Operating Budget A fiscally frugal person can get a place up and running for around $15,000 - $20,000 in a small to medium size city. Reasonable rent is critical; pay attention to any add-ons such as property tax, business tax, property management, and utilities. Reasonable rent is determined by foot traffic in front of that business, store visibility to commuters in cars and buses, condition of the premises, whether it’s zoned for café/retail/restaurant already, and what amenities (like plumbing, kitchen, air conditioning) are included. Renovations usually cost double plus 10% what you estimate, meaning if you need to renovate, everything costs more than you planned and takes longer to do that you thought! And that can blow budgets and sink you before you even get launched. An effective way to avoid the massive cost of installing a kitchen (even a basic one) and retrofitting a building that previously didn’t house an eating establishment is to lease a spot that was one. Take advantage of the previous owners’ expensive retrofit. Ductwork alone for a kitchen can be extremely costly. Oftentimes, the building retrofit and grub-making gear is the expense that poisons most new restaurants. It’s better to compromise and retail already-prepared food without the potential nightmare of building an inspection-proof kitchen area. Stock decisions on a tight budget need to be chosen well. Allot sixty percent of total funds to merchandise, no more than 40% of your investment stash for everything else: rent, security deposit, paint, furnishings, alarm, anti-theft apparatus. It’s better to start out very modest, and each day you fix up, add on, paint, and improve while you have cash flow. The #1 thing is get open and sell! Then your concept of a store evolves with the wherewithal to pay the rent and stay viable. Don’t think like a kid in a candy store, or make Santa Christmas lists when buying stock. Be selective. Decide who your market is, and what you think they would buy. Think niche stock on small budgets by finding items not available at competitors. Retail fixtures, store t-shirts, bookshelves, magazine racks, glass counters for glass pipes, all can be costly. With planning and some good knowledgeable and skilled help, it’s possible to decorate and provide fixtures by building them yourself, or combing the classifieds religiously for deals. Look at craigslist.com. You can find anything there, and many good deals. With food, the best thing is to have it delivered pre-prepared. Selling sandwiches can require an expensive capital cost outlay. Baked goods, cakes, and munchies are best prepared in sanitary conditions off-premises and delivered daily (or whenever) to your store. Ask around and you’ll find bakeries, existing sandwich shops, and others in the business of prepared food that will be glad to sell you wholesale. Remember: with food, it’s all about hygiene and consistent standards of cleanliness. Additionally fridges, microwaves, dishwashers, food prep counters, tables, chairs, professional coffee grinders and brewers, blenders, and couches can easily cripple an operating budget. Unfortunately, buying a $30 blender at Wal-Mart isn’t going make the cut. Non-professional kitchenware can’t handle the workload. Without fat funds for equipment, check the auction section of your local classifieds. Plenty of them will have restaurant and retail fixtures up for grabs. Before buying at auction, watch one before participating, and remember to visit the viewing. Alternately, borrow equipment from mom, your own kitchen, or your food-savvy friends. From this moment forward, take a good hard look at every café and food related store you go into. Look at how Starbucks make a great volume out of one cold storage cabinet that has all their cold drinks and baked goods, fruit salads, sandwiches, munchies all in one appliance. Look at how these places use space efficiently. Pick their brains, literally, by learning from them. They have made the mistakes and learned from them, and now you see their most efficient marketing layout for their store. Study every café you visit. Search second hand shops for decor that provides an authentic eclectic vibe. The décor dovetails into your world-view on what a cool pot hangout/refuge would look like. There are always cool historical cannabis artifacts available on EBay, as well as posters, handbills, and other cannaphernalia. Cheap and effective wallpaper can be made from High Times and Cannabis Culture centerfolds. You can’t go wrong there. When providing reading material, make sure customers have to buy the latest magazines or books. Free things lying around tend to get taken. [SIZE=-2]Bylaws, Inspections, Neighbors & Legal Nail down every permit before installing a kitchen and creating the environment. That experience alone may discourage a kitchen installation! For you to get a business license, you usually cannot have a criminal record. And The Man wants to lay more than grass charges. Applying for permits at city hall is tedious pain in the ass. Every inspector that city hall can throw at your cannabusiness – building, food, fire, police – is going to bring their clipboard down. Anticipate serious nickel and dimeing on all the little things. Don’t be hostile. Stay positive. Ask questions. Ensure the handy fellows doing the construction work at the “Opening Soon” site understand the building bylaws. There’s nothing worse than ripping out completed work because it’s not up to code. Read bylaws relating to your cannabusiness. Always open in a place zoned “retail” or “café” (both should permit a retail component, but will only allow you 8 tables and 16 chairs usually). “Restaurant” zoned space is good because it will have a kitchen, and fire standards exist already (as well as handicapped washrooms), but it’s important to make sure you can still operate retail in that space. Food and drink alone cannot pay bills for a cannabis café. Originally, Hamilton’s city bylaws banned indoor tobacco smoke. This has been replaced by an Ontario wide ban, but: “That law doesn’t affect me,” explains Chris Goodwin. “It’s only for tobacco, not marijuana; but there could be something about having ashtrays on the table.” Meet and greet all the surrounding business owners AFTER you’ve signed the lease and are renovating, repairing, and getting ready to open. Explain how big the tourist market is, dispel myths about marijuana, and tell them to anticipate increased customer volume in the entire area. Be excited, but be receptive to their concerns, and be as level headed with them as you can be. No over-the-top behavior or remarks. In fact, you should network deals with them, for your customers. For Goodwin, this has meant Province Pizza and Tony’s Subs cuts a deal for anyone who says, “I’m taking this back to the Up In Smoke Café.” Says Goodwin of surrounding businesses: “I tell the guys with empty patios that they’d be full if they’d just let people toke.” Similarly, out-of-town ganja guests, when making purchases in the nearby downtown stores, should inform sales staff that they came to their city to check out the local canna-café. By demonstrating Up In Smoke Café has a financial impact on other business, especially in Hamilton’s beleaguered downtown, the dollars will begin to outweigh the perceived problems. Café & Retailing 411 Goodwin is blunt about where he makes good his income. His seed bank sales are a big draw; it’s the big ticket, and there is high demand – more so in the aftermath of the DEA bust of Emery Seeds – but it's risky. Plan on not selling seeds for the first year, if you want to eventually do so. There are plenty of other products to sell that put paper in the register. Chris Goodwin explains. “Rolling papers. Oh my god! I go through hundreds of packs a week. People are always buying papers. We restock those every two weeks.” He continues, “The bigger items, we might re-order every few months. Expensive bongs have a long shelf life. You don’t make money when it’s just sitting there for six months.” Goodwin’s correct in stating sandwiches have low mark up compared to pushing seeds. “You need the combo: hemp shop, toking room, food, munchies, hang-out, cultural centre.” Goodwin is a fantastic retailer, but he has enough knowledge of restaurants to understand that it’s a hard road to go. In Garden Park, in Toronto, is The Fine Grind Café, a little haven known more for its role-playing card gamers than its tokers. However, The Fine Grind is a prime example of café operation. Proprietor Rob demonstrates a leisurely work environment (he’s often at the head table geeking it up), an in-expensive one-man operation that can be easily replicated. With a smallish (40 - 60) loyal clientele, Rob has a reliable respectable monthly gross that pays for rent and menu items, and provides a bachelor income. A good setting makes people want to come back. However, the menu is where the money is made. What makes The Fine Grind successful is its fantastic gothic décor, and more importantly, it’s affordable, easy to assemble menu. [SIZE=-2]Putting Food On The Menu “It pays to shop around,” Rob says about finding where to score greens for salads, purchasing coffee beans and stocking the fridge with sodas. “Do plenty of research,” he advises. “Just because it’s at a wholesaler, or even a place like Costco, doesn’t mean that it’s not cheaper somewhere else.” A farmers’ market, even if open only three days a week, is preferred for affordable fresh, possibly organic goods, says Rob. Expect a learning curve when determining food supplies. It’s very important to understand food stock. Good inexpensive items for a menu include grilled cheese, sliced meat and vegetarian sandwiches, spicy chicken or faux meat bagels, tangerine salads, nachos, wraps, subs, and pizza bagels. Rob’s mom bakes his cookies, brownies and cakes at home. Practice your menu on friends first. Honest criticism is needed because screwing up on a customer ensures they – and ten people they know – won’t come back, or even visit. Take cooking classes if you are serious about food. If food preparation and cannabis are your passions then this job is for you. Obviously, as a cannabis café you want to offer THC baked goods. This can easily replace those seed bank sales, and it’s not quite like selling bud. In Canada, pot food is a hard case to prove in court, and since Watermelon was acquitted for selling pot food, it’s a wedge a Café can more safely take opportunities with. But pot food needs to come with warnings of potency, and advisements on how much to consume. Up In Smoke Café patrons buy a lot of Puff Mama baked goods and foods. Creating a well-rounded affordable munchies menu ensures a pothead can buy grass and still afford to hang out at your fine café, a place where like-minded people can meet and eat. At the Fine Grind Café, a full dinner (nacho plate, or spicy chicken bagel) and a drink (coffee or Italian soda) is about eight dollars. A regular might eat twice a week and buy four bucks worth of drinks two other nights. Within months it’s possible to convince 100 potheads to drop $20 - $30 every week to toke and eat with their bud buddies someplace other than their living room, creating a guaranteed weekly gross of two grand. Respectable restaurant revenue! Competition? Yes. All right, so there’s no cannabusiness in your town. Think you open the doors, and resident characters like Norm from Cheers, or a Pot Poet like Chris Lawson, will instantly take up residence? Not so. The fuzz fear factor plays a role. This can be limited via a pot promotional program geared to your cannabis community. With a cannabis café, the enthusiast buys their green, then treks to the joint with a few friends, where the pot posse spend two hours in the afternoon ringing up a $25-$40 bill. Pricing, product, and pot all play a critical role in people spending their money. Goodwin competes with Hamilton’s seven head shops that want marijuana market share too, with their bongs, papers and pipes. But it’s prestigious to hang at Up In Smoke Café. You’re hard-core cannabis culture when you hang there. And there are privileges with membership. In developing your business plan, on three different days of the week, spend several hours outside of a cannabusiness you admire – probably not in your community – and watch the frequency of people going in. Add a column for those who come out with a purchase, noted via a sales bag. Repeat. Know thy competitors. Know their pricing. Know their gimmicks. When do they have sales? How do they advertise? Who are their wholesalers? Finally, spend hours in the neighborhood you’re thinking of renting in. Possibly it’s near a competitor. Are you located around a college or university campus? Who’s already visiting the local businesses? Will people come to the area? If so, what’s parking like? Is there local Transit? Lastly, determine – via the research and a written plan – how your cannabusiness has the winning formula to succeed. Then market it. [SIZE=-2]Free Publicity & Promotion Goodwin has two distinct marketing gimmicks going for Up In Smoke Café that are not offered by his cannabis competitors. Obviously a toking room is the first. A growing number of people regularly trek from within an hour (Niagara, Oakville, Brantford) distance of Up In Smoke Café to spend a few hours in a mind bending liberating environment. Goodwin says people from the USA, Detroit and Buffalo, make the trek of about eight hours to shop and smoke in his place. He’s even had a few customers rent hotel rooms and spend the weekend. The toking lounge adds to the experience tenfold, as does renting out the Volcano Vaporizer. Enjoy providing the glass bongs or heavenly Volcano knowing that some of the money is rolled back into community activism efforts. Note how Goodwin’s seven competitors don’t challenge the law nor promote pot change. Goodwin has furthered the marijuana debate while generating publicity for the Up In Smoke Café. He receives reams of newspaper paragraphs, television time and talk radio based on his knowledge and his local business. Goodwin’s marketing campaign capitalizes on his direct involvement in the community. He’s a leading General in Ontario. This results in media mentions, which are the best advertising that neither he nor his competitors could afford to buy. Even negative media can generate opportunity, if you stay calm in the spotlight. Goodwin publicly declared he’d sell marijuana during the month leading up to last year’s ganja grand opening, gaining a week’s worth of press, leading to a month-long media juggernaut. He made outrageous bold claims, and then appeared to give The Man a little by backing down to an original goal. Goodwin says that had he publicly declared Up In Smoke Café just a toking café, then the police would have stepped back from there, although maybe it antagonized them into harassment mode – 200-plus police visits is a little much! The police, media and politicians believed they had shown him the error of his way, when the reality is that toking-only is fine with him for now. Recently he combined the cannaversary with a protest, creating a double-edged advertising campaign. Until teams took over, Goodwin personally plastered posters all over Hamilton and Niagara Region, promoting a rally and being its sponsor. Coverage cracked Toronto media with local talk radio, and CTV news ran an ongoing blurb on their National Headline channel about the ganja giveaway at Up In Smoke Café. A low-key opening – which Goodwin boyishly smiles as the easier way to go about business – can still build a strong customer base quickly. Bud Buddy sent out a few hundred “Three Free Ganja Cookie” business cards, which were distributed to people who inquired about possible recreational marijuana sales. One person told me they ordered from him for the new experience. Be a friendly stranger, entice people to come buy with a try. To attract geeks, Rob uses a ‘Free Beverage’ business card. Run off 1000 ‘Free Beverage’ business cards or ‘Free Day Pass.’ Then hand small piles to known dealers to distribute to their clients. That’s going directly to the market for members. [SIZE=-2]Membership Has Its Privileges… Pothead Rules Make the Pothead lounge only accessible to members. Prospective proprietors could go so far as creating a gym membership type system. Memberships can be bought for a day pass, a month pass, or a year pass. This toke lounge room – with a buzz door – is off limits to non-members, particularly those sporting badges, tazers and guns. Employees must buzz in members upon checking in. Enforce! With a properly created form, demographics on the members can be gathered, and an email list created, which is only important for making announcements. Do Not Abuse. Roll all this membership money back into the shop. Revoke membership if Potheads abuse the rules. “The biggest rule is no dealing, fishing, mooching, asking, and begging to get a toke off someone,” Goodwin says. “Sometimes these moochers are blatant. Others are subtle. Worst are the people fishing in ashtrays. I’ll throw you out on your head for that.” Goodwin lays down the top cannabis café rule. “Don’t come in here asking, ‘Can I buy a dime bag?’ We don’t sell. No one sells. But I still get asked a 1000 times a day.” Pot Partners & Is A Stoned Staff A Good Staff? Best friends entering a business arrangement, or working for you, can easily destroy both the friendship and the startup. Write everything down, or if need be, draw up contracts. Spell out how the business is to be run, and when the money comes in, how to pay each other. Making no money for a year or operating a failing business can ruin a friendship more fiercely than stealing or cheating with someone’s spouse or significant other. Goodwin did open with a partner, but this resulted in a huge headache. Their disagreements resulted in an “Adios!” after several months. Now Goodwin has teammates (employees) John, Adam and Steve-O. Adam works full time, and is an avid activist still new to handling the cannabis craziness that can unfold at any marijuana moment. Adam isn’t a grubby stoner. He considers his Free Marc Emery t-shirt his work clothing – like a McUniform, but actually cool. Employee responsibilities need to be written out and adhered too. Adam had a court appearance in October 2005 for being caught with pot during one of the several dozen police visits he has experience at the Up In Smoke Café. As employees of Up in Smoke Café and the now-closed Da Kine Café and Emery Seeds businesses know, when you get swept up with the raid on the boss, it means sacrifices must be made. The Small Business Sacrifice If Melissa Goodwin and their newborn son weren’t at home, Chris would live in that store. He admits it. Their business is part of their family life. It was Melissa who encouraged and finally told Chris to write down his store idea, and then go for it. She’s a supportive new mom, who is on maternity leave from her nursing job at the big hospital in town. With Melissa’s income, the family is able to sacrifice the income Chris would make if he drew a typical paycheck. The amazing liberating experience of opening a cannabusiness comes with worry of am ‘I going to financially take care of the family’. Goodster is totally dependent on his ability to generate income with Up In Smoke Café. “In the first month you should be doing $100-$200 days with a retail store, then $500 days by six months. I wasn’t doing that by then. But within a year I had days of $1000.” Like the cannabis plant, new businesses take time to grow. They need passion, nurturing, care, planning and dedication to succeed. The Up In Smoke Café almost consumes the Goodwins. One day during a conversation with a Hamilton cop who came in, Goodwin proudly asserted that he and his wife Melissa “ smoke joints all day”. The next day, Hamilton Children’s Aid came to the Goodwin home to see if the couple were “responsible parents”. The CAS worker boldly asserted that two adults smoking marijuana became unfit parents, and could lose the custody of their child! Any good activist knows The Man will do everything they can to derail the sacred movement of the cannabis people, including threatening families and mothers and children with segregation. The Goodwins responded with a press release and followed that up by radio, TV, and newspaper interviews. No retreat, no surrender. The Goodwins are great parents. Their cause is righteous, and they won that round, with bravery. Prohibitionists are ever vigilant in advancing spiritual and physical control of the citizenry, especially those practicing a peaceful and honest lifestyle that opposes the State. While photographs are snapped outside the now landmark Up In Smoke Café, a tired Goodwin (sporting a few days facial growth) with a glint in his tired red eyes, sends the message combined with his boyish grin and laugh, “I love this”.