I just lately had the chance to take a seat down and interview Peter Davis. Most individuals within the Arizona hashish business know Peter. Peter was one of many first receivers appointed over a dispensary in the USA. Since then, Peter has constructed a really respected hashish observe. He’s at the moment the receiver over a Phoenix primarily based dispensary that additionally has a develop operation. Peter has been a receiver over dispensaries on three events. Along with Arizona, Peter has additionally assisted purchasers in California and Nevada.

Peter additionally comes from the insolvency and monetary advisor world. I’ve had the great fortune of working with Peter on Chapter 11 chapter issues. Amongst different issues, Peter was appointed as an Examiner for group of c-stores that filed chapter in Arizona the place my consumer was one of many senior secured collectors.

Peter began Simon Consulting in 2000 and just lately merged with JS Held, which has 1,200 professionals worldwide. Peter is a newly appointed observe lead for JS Held’s hashish observe. To learn extra about Peter and his background, please CLICK right here.

Ethan: Peter, thanks for taking the time to take a seat down with me. What are a few of the points you’re seeing within the hashish business in Arizona?

Peter: Good query, Ethan. Proper now, the most important difficulty going through the business is provide. Since leisure marijuana turned authorized in Arizona, there was a scarcity of product.

Ethan: What impression has that had available on the market?

Peter: The worth per pound has gone up quickly. Earlier than leisure marijuana was legalized, a pound of flower was promoting for round $700. Now, the worth per pound is $2,000, and I see the worth persevering with to go up till provides can meet up with demand. The pricing additionally depends upon how the hashish is grown. Basically, there are 3 ways to develop marijuana – out of doors, in-door greenhouse or in-door develop facility the place the entire develop circumstances are managed by specialised lighting and vitamins. The in-door develop services usually produce the very best merchandise. Nonetheless, it price tens of millions of {dollars} to correctly build-out such a facility.

Ethan: Given the price of a state-of-the-art develop facility, are you seeing any funding exercise in that space?

Peter: Undoubtedly. Present house owners want entry to capital to build-out these kind services. As a result of conventional financing shouldn’t be accessible, and different financing might be very costly, some house owners have turned to exterior traders. So, whereas procuring a brand new license is tough given the cap on the variety of licenses in Arizona, there are different methods to get entangled within the business.

Ethan: What sort of regulatory points have you ever seen recently?

Peter: When you aren’t in compliance with the laws, then the Arizona Division of Well being Providers will take discover and should revoke a license or pursue different disciplinary motion. The business is topic to random audits by the Division, however to date, I’ve discovered the Division fairly affordable to work with. When you observe the laws and guarantee compliance, try to be in fine condition.

Ethan: Now that Arizona permits leisure use, are you seeing loads new gamers out there?

Peter: Sure, we’re seeing nationwide gamers enter the Arizona market. They’re curious about all aspects of the business – from proudly owning and working their very own dispensaries to aiding present house owners with rising extra product. They’re additionally effectively financed and capable of pay the worth for a license within the open market.

Ethan: You simply touched upon a topic I needed to ask you about. Given the restricted variety of dispensaries allowed in Arizona, how is that impacting the worth for a license?

Peter: We’ve got seen the worth for only a license go as excessive as $10,000,000 to $15,000,000 – and that may be for a mean kind dispensary. That’s only for the bare license, with out actual property and different belongings. I don’t see the worth coming down any time quickly, and actually, now that dispensaries can promote each medical and leisure merchandise, I feel the costs will proceed to go up. So long as you could have a restrict on the variety of dispensaries, you’re going to see excessive values as effectively.

Ethan: How a lot does location impression income?

Peter: We moved a dispensary in receivership, pursuant to a Courtroom order, from Wickenburg to Phoenix. It’s attainable to maneuver a dispensary and shifting to the correct location may end up in considerably greater revenues as we skilled within the latest transfer.

Ethan: Now that marijuana has been legalized and a few persons are making an attempt it for the primary time, do you anticipate leisure gross sales to remain excessive or stage off?

Peter: We’re at a tipping level in Arizona and nationally. Now that states are legalizing marijuana, I feel we are going to see continued demand, particularly as much less stigma is hooked up to using marijuana. Finally, marijuana will likely be seen like alcohol and turn out to be a part of a mainstream for leisure.

Effectively, this looks as if a superb place to cease for at the moment. I need to thank Peter for his time and insights. Within the coming months, we intend to verify again in with Peter to get a chook’s eye view of the market.