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Seattle Retailer Have A Heart Pushes Into New Markets

May 14, 2019

Seattle cannabis retailer Have a Heart has weathered the perils of a shifting market since launching as a medical marijuana shop in 2011. After a long period of regulatory and financial uncertainty, the chain is now in rapid expansion mode, with stores opening in Oregon, California, and Iowa in the last 18 months.

In 2014, when Washington’s Initiative 502 went into effect legalizing recreational cannabis, Have a Heart had six medical stores in the state. But the new law changed the license categories, invalidating old medical permits and awarding recreational licenses in a lottery—and Have a Heart won only a single license. “We had to shut down all our stores,” COO Ed Mitchell tells SNDC. “We had all these patients and revenue, but we basically had to start from scratch.”

Eventually, Have a Heart managed to convert two medical locations into recreational stores. When it couldn’t win licenses, it began forming partnerships with licensees that didn’t have the capital or contacts to launch their own stores. The company is now back to operating six Washington stores, and has taken that partnership approach to California to team up with equity licensees.

Have a Heart now has numerous equity partnerships, primarily in California. Two such stores will open in Oakland, California this July, and each is expected to gross $3-$4 million in monthly revenue. Two more units will open in San Francisco after that—in neighborhoods where pedestrian traffic is heavy. The company is hopeful but remains cautious, as it’s difficult to predict exactly how much revenue a recreational cannabis store will earn. That’s partly due to the newness of the entire market, the rapid advances in product segmentation, and changing consumer tastes.

Since Mitchell joined Have a Heart in 2013, he’s noticed two main trends: a surge in older consumers, and interest in milder products. “Tastes definitely have changed. Our fastest growing consumer segment is now at age 60 and above, and they’re asking for things like topicals for pain relief, CBD products for other health problems, and products with CBN because they have trouble sleeping. There’s a very interesting move to products with a more localized function, instead of just getting high. And we’re seeing a lot more professionals come in looking for low THC products. When I first joined the industry, there was a much younger population coming in, and now basically everybody is there.”

Have a Heart recently won a license to open a social consumption lounge in West Hollywood, where patrons can smoke on-premise. That venue is expected to open in September. The company operated three dab lounges from 2012-2014 due to another quirk in Washington state law that allowed them to do so for a few years, before all on-site consumption was banned in 2015. Mitchell says that experience will be helpful in opening similar venues in California.

“We’re going to provide a great experience, so you’re not just coming in to dab or smoke a joint,” says Mitchell. “You’ll be there for the experience, which will be something really cool that you can Instagram and tell your friends about. We want to to do more than sell product in the lounges. For us it’s all about the experience.”—Danny Sullivan

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