Sawadee Everyone,
I often get folks asking me about opening a weed shop in Thailand. It's not a simple "yes" or "no" kind of deal. You've got a whole buffet of things to consider, from what the law says to whether you can actually make a buck out of it.
So, last year, Kitty Chokapa from Chopaka posted some financial figures on how her shop was doing. She shared some numbers over six months that could really give us some food for thought if you're dreaming about starting your own shop.
Let's dive into Kitty's world for a sec:
Her shop pulled in about 3.5 million THB in half a year. That's not too shabby, right? Breaking it down, it averages out to roughly 582,833 THB a month.
Now, in the biz world, we like to play with numbers a bit. We take the gross revenue, shave off any refunds or discounts, and bam – you've got your net sales. Then, you subtract the cost of goods (like what you paid for the weed) to find your gross profit. And finally, take away all the costs of running the place to see what you actually get to keep – the net profit.
So, for kicks, let's round Kitty's six-month total to 3.5 million THB. Weed returns are rare, so let's say that's almost nil. Discounts are a bit of a wild card, but let's guess Chopaka knocks off about 7% for those deals (bulk purchases, etc), landing us at around 245,000 THB.
That gives us net sales of about 3.255 million THB.
Costs of goods are a bit of a guesswork, but let's ballpark it. Wholesale was hitting around 200,000 - 250,000 THB per kg back then. If we figure the weed was selling at about 700 THB a gram at Chopaka, we're looking at a pretty sweet gross profit margin.
If we play pretend that everything they sold was just weed (which, it mostly was, since they don’t carry a lot of glass or smoking supplies), and we stick with that 700 THB retail price, we can work out a 64% gross profit margin. This is the part too many people get stuck on, and I’ll show you why.
If we subtract the cost of running the joint (like rent, payroll, and the electric bill).
Rent = 250,000 x 6 months = 1,500,000
Payroll = 20,000 x 6 months = 120,000
Utilities = 5,000 x 6 months = 30,000
Misc Expenses = 10,000 x 6 months = 60,000
We end up with a net profit of 373,200 THB. That's around 62,200 THB a month from 3.5 million in sales, giving us an 11% profit margin.
Honestly, that might not be as high as some folks were hoping. You could probably get a similar return with less hassle by investing in something like an S&P 500 mutual fund.
In fact, it would be easy to argue that between startup costs and the risk one takes with a 250,000 THB monthly rent bill, 62,200 THB of profit is difficult to justify the risk.
For instance, let’s say that later this year the Ministry of Public Health shuts the doors of every dispensary for 30 days to enact some new law/rule. That’s 285,000 THB that you have to pay with no revenue coming in. That would eat up nearly 5 months of profits once you could open your doors again.
But here's where it gets interesting. Chopaka's in a prime spot, targeting high-end customers. This setup works well for them because they bank on word of mouth rather than splurging on ads.
What you've got to remember is that the location and the vibe you're going for can really shake up these numbers. Sure, moving to a cheaper spot might save you on rent, but you might need to spend more to get folks through the door.
But if your sales start to climb, a lot of those fixed costs like rent don't budge. This means more of that sweet, sweet revenue turns into profit once you hit your stride.
This whole thing is a delicate dance, though. Too many shops and everyone's scrapping to make ends meet. If the scene gets too crowded, it's the customers who end up footing the bill for everyone's overhead.
That’s one of the reasons I often tell people that the reason that the cost of weed remains stubbornly high is because there are too many dispensaries. A lot of people who only ever learned that competition is good for the customer are missing one key part, that is only true when the market finds an equilibrium by trial and error.
A business opportunity presents itself, the profits are so huge that many businesses jump in, the profits evaporate from too much competition, that drives businesses out of the market, the market finds equilibrium.
We’re in the profits evaporating phase.
Imagine if there were fewer shops right now – the competition would be less fierce, meaning shops could start turning a profit sooner and lowering prices.
Or, to break it down, if you have 100 shops that all have 50,000 in overhead (rent, payroll, etc) to clear every month, that’s 5 million that the industry needs to make to break even.
If only 1 out of every 10 survive, the cost goes down to 500,000 and the 4.5 million that was going to landlords, accountants, attorneys, etc is now profit which can be reinvested in the business via lowering prices or expanding product selection.
Yeah, some costs might go up a tad with more customers, but you're not gonna need a boatload of extra staff to handle the uptick.
Anyway, before this runs too long, let me just wrap things up by saying that if you’re thinking about getting into the weed business in Thailand, really spend some time thinking about the numbers above. They’re a good reality check for projections and forecasting.
The business is far from easy, in fact, it’s probably one of the more competitive industries out there. But if you get it right, there’s also a lot of potential.
Stay lifted and enlightened,
Don’t forget that we’ve partnered with some dispensaries for exclusive deals available to members of this newsletter and the r/CannabisThailand sub on Reddit. Just type “Dank Deal” into the comments of any post and the AutoMod will send you the current discounts being offered.
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Good article ka. Find touristy area with lower rent. At Vinzan’s dispensary sale & purchase desk, we have a listing that pays ฿8,000 / mth 3 + 3yrs doing ฿10-15k / day fully licensed, turn key. 1 min from beach.