Several cannabis business franchises enter N.J.’s legal weed market

EDITOR’S NOTE: Interested in the business and networking side of cannabis? NJ Cannabis Insider is hosting a cannabis business networking event on May 18. Tickets are limited.

Wanda James is a legend in the cannabis industry here and around the country — she’s the first Black woman to own a dispensary in the United States.

Now, her Colorado-based company Simply Pure will have a foothold in New Jersey’s year-old legal market as two licensed cannabis retail stores will open this summer under her brand. A third is not far behind.

“We’ve been looking at New Jersey for a few years,” said James, a Navy veteran who opened her first dispensary in December 2015.

Simply Pure Downtown Trenton, owned by John Dockery, and Simply Pure Trenton in nearby Ewing Township, owned by Tahir Johnson, have been working with James for months to open their locations as early as June. A third location, Simply Pure Keyport, owned by father-and-son team Skye and Donald Blanks, are awaiting final approvals before opening.

Johnson said partnering with an established operator — and a mentor such as James — provides his company with support and expertise.

“Simply Pure as a brand means quality, excellence, and it has that history of breaking those barriers,” Johnson said.

James added, “We want to be able to help as many people do as many great things as humanly possible while at the same time benefiting the brand and moving everything forward.”

And while the Simply Pure brand will likely expand in coming years into other parts of New Jersey, don’t call it a franchise.

The legality of franchising remains debated among brands and operators. James and Simply Pure consider franchising near impossible due to the drug’s federal status as an illegal substance.

Instead, the company utilizes a licensing agreement where the flagship brand provides operational support and mentorship in exchange for an undisclosed royalty agreement — neither party exchanges equity.

The definition of a franchise in the cannabis space is complicated, as it depends on the level of ownership and control the franchisor has over the franchisee. In a 2021 FAQ, the Cannabis Regulatory Commission, which oversees the legal market, clarified that franchise arrangements may be considered “management services contracts,” depending on these factors.

“This is the only information available,” a CRC spokesperson told NJ Cannabis Insider when asked if any new information was available now that the adult-use market is open.

And yet, at least three other “franchise” operations are opening or in the process of getting state and municipal approvals. The most high profile brand, Oregon-based Hashstoria, has an application by rap star Raekwon for a location in downtown Newark. Arizona’s Unity Rd. and Maryland’s Sweetspot Farms also have plans to open in New Jersey this year.

Much of New Jersey’s cannabis market is largely made up of multi-state operators (MSOs), including Curaleaf, Ayr Wellness and Ascend Wellness. Others operate under brands held by the parent company, such as The Botanist (Acreage Holdings), Cannabist (Columbia Care), Rise (Green Thumb Industries), and Zen Leaf (Verano).

MSOs usually gain market footholds through mergers and acquisitions with licensed operators.

Licensing and franchising serve as two avenues into the state. Similar at times, the models offer differing deal structures.

Franchising typically covers the complete brand and operations. Licensing applies to specific trademarks, IPs, and products, among other things. Both carry varying fees and payment structures.

In 2021, Unity Rd., the franchise dispensary owned by Item 9 Labs, planned to move into the state. In January 2023, the company announced it had been awarded a recreational license in Franklin Township in Somerset County with plans to open during the first half of the year. Dishen Patel of Edison is listed on the CRC website as the owner.

Sweetspot Farms holds 11 licenses across five states, operating in New Jersey, Maryland, Maine, and Rhode Island, and plans to open in Connecticut this year. The company’s Vorhees medical dispensary opened in November 2022 and received its hybrid license to serve adults consumers last month.

Sweetspot operates the location itself and is not part of any franchise deals. Franchise Director Eugenia Tzoannopoulos said franchising helps grow the brand into new states while supporting operating partners with a “business in a box” approach.

“There’s a lot of folks who are enthusiastic about getting in and raise capital, but they don’t have the tools to succeed,” she said, highlighting legal and internal ops framework creation as part of the deal.

Franchising includes Sweetspot receiving 4% of gross revenue and a $40,000 fee upfront. Sweetspot does not take equity in franchised locations, Tzoannopoulos said.

Unlike Unity Rd. and Sweetspot, Simply Pure say they had established a licensing deal, not a franchising agreement.

“States sometimes don’t understand it due to ownership as they feel we are owning the majority share,” Tzoannopoulos said. “That is not the case.”

Regardless, as the state continues to approve franchisor-owned or operated businesses, expect to see these brands become more recognized as they start dotting the state where towns have opted-in to offer cannabis to their communities.

On May 18, Eugenia Tzoannopoulos and Tahir Johnson will be featured speakers at NJ Cannabis Insider’s business networking event at the Galloping Hills Golf Club in Kenilworth, where they’ll discuss management service contracts and franchise models. For tickets, go here.

NJ Cannabis Insider is a weekly subscriber-based online trade journal and events group produced by NJ Advance Media, which also publishes NJ.com, The Star-Ledger and other affiliated papers. Are you interested in the N.J. cannabis industry? Subscribe here for insider exclusives. Follow us on LinkedIn. Contact us here.

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