Earlier this month cannabis entrepreneur Tony Birch opened his fourth retail store, Broadway Cannabis Market, in downtown Portland.
For anyone reading the headlines lately on the state of the cannabis industry, opening a new retail location might seem an unlikely choice — prices are down and the banking and tax reform that could buoy the industry have yet to materialize.
But, for Birch, scale is the strategy.
“Without a doubt sales are back to pre-Covid numbers, whether it’s retail or brand sales,” he said. “Our strategy is that we need scale to keep up with that.”
The newest store is in the former U.S. Outdoor Store, 219 S.W. Broadway. The five-story, 30,000 square foot building is also the company’s new headquarters. The store will employ about 20 people.
“I think downtown is uniquely difficult in that a lot of people don’t want to deal with it at all,” said Birch about the decision to open a new downtown location. “Having our first store (on Northwest Broadway) open (and survive) through Covid in 2020, we can do anything. If we can do anything, why not do it in the most difficult area in Portland?”
Birch has been in the Oregon cannabis business since 2014, when he started on the medical side. His formal background is in renewal energy. But he had been dabbling with a small cannabis grow. He went full time on medical cannabis growing and sold that company in two years.
He then went on to start Karma Originals, which produced cannabis products like pre-rolls and infused concentrates. Products were sold in more than 300 dispensaries. He sold Karma at the peak in 2019, he said.
That same year, he launched Broadway Cannabis Market with its first store on Northwest Broadway in the Pearl. Then in 2020, he launched a cannabis products company that makes pre-rolls, edibles and extracts called Fire Dept. Cannabis. Not done yet, he then launched a high-end retail store called Mint Cannabis Co. That store is located on S.W. 10th Ave. in the shadow of the new Ritz Carlton Hotel.
In total, he has four retail locations, a manufacturing site in Tigard, and 84 employees. The Tigard manufacturing facility makes 250,000 to 300,000 pre-rolls a month, and it has a commercial kitchen to make cookies and gummies.
When Birch moved into the retail side of the industry, he tapped into his experience building Karma.
“We sold at 300 different dispensaries and I saw 300 ways not to do it,” he said. “I thought I could do it better.”
Birch’s stores carry the in-house brand Fire Dept. Cannabis and a line called Feel Good, along with other brands.
“Stores are the safety net for being vertically integrated. The margins on house products are larger. It’s nice to have. But, I see retailers relying on it and they lose out on customers who don’t want house brands.”
The other big takeaway he has applied to his retail businesses is organization.
“Back of house organization is pretty lacking with a lot of retailers,” he said. “What is the flow of product? How long does it take to hit shelves? Are you paying the bills? We are in a spot with Fire Dept. Cannabis and Feel Good where we still see what not to do.”
He noted that paying vendors on time is of utmost importance for his companies. The current challenges facing the industry will cause less savvy operators to go away, but Birch expects people who know how to run a business will filter through.
He has funded everything organically and expects to continue to do so. He doesn’t have a target size in mind for the business in terms of numbers of stores, but “we’ll continue to grow as fast as we can comfortably grow.”
He noted that he has thought about going multi-state but has opted not to.
“The Oregon market, people look down on, but I still think there is meat on the bone,” he said.
