We have 2 retail locations in San Francisco that have been in development for about 2 years. This is a great opportunity for a retail operator to step into our shoes and take over where we’ve left off in a great market.
There have been discussions in SF to put a moratorium on additional dispensaries in the city. If this happens stepping into another application will be the only way to operate in this market due to ownership/license transferability rules.
North Beach - Well located in affluent North Beach area. 2,200 square foot split between basement level, retail level, and upstairs office. Back entrance for delivery staff. 4 blocks (just over 1,000 ft) from popular Fisherman's Wharf which see's over 12 million visitors per year.
SoMa District - 2,200 square foot split between 3 levels (including basement). Separate side entrance for delivery staff. Busy thoroughfare for commuters. Up and coming SoMa area with development on the way. Large office/mixed use development coming across the street.
For both locations we are seeking:
- $330k initial payment at close ($10k non refundable deposit towards $330k once binding term sheet is signed, with 30 day due diligence period)
- $300k payment when conditional use permits are received ($180k North Beach/$120k SoMa)
- 2% of gross revenues from both stores once operational
- Shelf space in both stores
Our equity applicant holds 40% ownership. (required to get license) Incoming buyer will own 60%. SF office of cannabis will allow new ownership as long as its done before licenses are received.
We estimate that both of these locations together have the potential to do north of $10M in revenue. So it’s a great opportunity to get 2 new locations going for a small investment relative to the upside potential.
Background on operating in San Francisco:
A recent report from San Francisco "recommends that the city consider limiting the number of stores by imposing a moratorium on new applications".
What does this mean for retail operators looking to enter this market?
It means they may get shut out.
If a cannabis retail operator is seeking to have a store in San Francisco the lowest cost approach is to take over an existing application which is currently pending with the SF office of cannabis.
Acquiring an existing application makes sense due to long timelines to get operating in SF. If a new application was submitted it would take between 2-3 years based on current timelines to receive a conditional use permit.
All the current applications the SF office of cannabis are processing have equity applicants attached who hold a minimum of 40% equity.
As of August 15, 2019, the city was processing 133 social equity applications which are seeking a permit to operate a retail storefront.
The 2 locations available are towards the front of this line and could receive use permits within 5-8 months.