Beyond / Hello Is Reimagining the Cannabis Retail Experience

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Beyond / Hello | 3516 State St. | Santa Barbara, Calif. 93105 (Photos: Beyond-Hello.com)

In March 2020, as states initiated hurried responses to the raging coronavirus pandemic, the cannabis industry was thrown a lifeline. As all kinds of businesses were forced to shutter and worried citizens retreated to their homes, cannabis businesses were designated essential. That may have been the moment the industry finally started to deliver on the big economic promises that helped shift the tide of public opinion about legal weed.

With healthy third- and fourth-quarter reports driving bullish outlooks from publicly traded multistate operators, and with control of the House, Senate, and White House resting in the hands of Democrats, cannabis and its upper echelon came hurtling into 2021 considerably stronger than in pre-pandemic times.

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Among the success stories at the upper end of the market, Florida-based Jushi Holdings Inc. turned a lot of heads. The rising multistate operator (MSO) is making strategic moves throughout the eastern and midwestern states, building a compelling portfolio while freeing up capital to dominate its core markets. Like its publicly traded peers, Jushi performed very well in the second half of 2020, posting a 67-percent increase in revenue between the second and third quarters. The company projects revenue of between $200 million and $250 million this year.

Rather than leading with cultivation and manufacturing as a previous generation of MSOs did, Jushi took a retail-forward vertical approach, identifying states that meet specific requirements and acquiring licenses to open Beyond / Hello stores, the chic dispensary brand Jushi acquired (along with six additional licenses and two active locations) for $63 million from Pennsylvania company Franklyn Bioscience in 2019.

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Beyond / Hello operates thirteen locations in four states. The most recent store openings in Manassas, Virginia, and Santa Barbara, California, indicate a strategy that separates the company’s geographic expansion into two camps: core markets and developing markets.

For the core markets, Jushi staked out less competitive, limited-license states that are transitioning, or about to transition, from medical to recreational. These currently include Pennsylvania (the company’s biggest footprint), Illinois and, most recently, Virginia, which Jushi dubs a “sleeping giant” and where the governor recently announced a sweeping legalization bill.

But while the MSO is making its most open bets in less competitive markets, the company sees a huge upside to being quietly active in mature markets that have the most innovative products and savviest consumers. “While we have specific criteria for states we like, you cannot neglect California,” said Chief Creative Officer Andreas Neumann. “There has been so much progress in developing the market and the standards in California. The consumers, the brands, the focus on delivery are all years ahead of the rest of the country.”

Although California isn’t a state in which Neumann envisions Jushi competing aggressively for now, the Beyond / Hello store in Santa Barbara and forthcoming locations in Culver City, Grover Beach, and Palm Springs, California, will represent a strong western outpost, allowing the Jushi team to keep its collective finger on the pulse of emerging trends. “I like to think about California as a sort of learning playground,” Neumann said. “What are the most important or innovative things happening, and how can we bring those to our core markets?”

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Arguably, there is no better sector for spotting trends and capitalizing on them than retail. Stores are in direct contact with consumers and brands and possess the ability to capture sales data and completely own customer relationships. By building a sophisticated retail platform during the first wave of its expansion, Jushi positioned itself to read emerging trends and potential acquisitions while maximizing margins for its forthcoming line of private-label brands.

“With our retail stores as real-time data sources, we collect the intelligence to drive business decisions,” said Neumann. “From procurement and product development to e-commerce and personalized rewards programs, big data proves an invaluable foundation in a rapidly maturing industry.”

Coming to cannabis from tech, where he was the creative director for noted user-experience (UX) design studio Idean, Neumann brought to Jushi an obsessive desire to understand the customer journey and remove what he calls “friction.”

“Friction is like a gold mine for UX; the opportunity,” said Neumann, a zealous 50-something German and longtime Angeleno who also is a prolific rock ‘n’ roll photographer for the likes of Iggy Pop, Queens of the Stone Age, and the Foo Fighters. “When we can remove friction from any process, that’s where the magic happens. That magic creates a real business advantage.”

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Upon joining Jushi in February 2020, Neumann made the swift and fortuitous decision to rebuild the Beyond / Hello website with e-commerce front and center. Despite a lack of enterprise solutions (an ongoing limitation at just about every node of the cannabis supply chain), the new platform was a powerful sales funnel to create leads for in-store purchases and close the loop connecting digital and physical retail.

Rebuilding the website, which was underdeveloped yet showed strong traffic data, didn’t seem to register on the company’s priority list, but Neumann was insistent. “We need to be prepared for the future of retail, and that is online,” he told the management team.

As though his words were prophetic, the pandemic unexpectedly upended the retail landscape. “Who could have known the future would arrive just one month later?” he said.

The pandemic hastened the retail sector’s transition from brick-and-mortar to e-commerce by as much as five years, according to IBM’s 2020 U.S. Retail Index. While dispensaries remained operational, many had to transform their rickety old websites into safe, competent platforms to collect and process orders as customers stayed home and sought delivery or curbside pickup.

“We launched the new website in Pennsylvania with limited marketing, and the response was immediate and incredible,” said Neumann, adding the company’s online portal processed about $3 million in revenue during its first month.

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Today, the Beyond-Hello.com run rate is more than $90 million, with as much as two-thirds of total sales happening through the online platform.

“Our online sales continue to grow, and we break new records each month,” Neumann said. “We’re gaining an average of 600 new customers daily, and as new stores come online, having a sophisticated digital strategy plays a leading role in their success.”

Yet despite society’s rapid transition to digital, physical stores aren’t going anywhere any time soon, and in Beyond / Hello, Jushi committed to a concept that is beautiful and hyper-adaptable to local market preferences and regulations.

“We take a modular approach to the design of our stores so we can remain both flexible and consistent, evolving and adapting with changing legislation,” said Neumann.

The stores share a few common design elements reorganized and reimaged for each location. Wood panels framing glass display boxes lend a sophistication to the products they showcase and are presented under mellow light radiating from industrial fixtures. Outside on the façade, the inviting, distinctly non-weed-y words “Beyond / Hello” are visible from the sidewalk and passing cars.

The result is a centrally run, cohesively designed portfolio of fifteen stores across four states, all of which manage to exude style without sacrificing substance and are built upon an underlying digital architecture that uses e-commerce to future-proof Jushi’s budding retail empire.

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While the company’s timing on the upgrade was uncanny, e-commerce was simply a response to a years-long trend visible to anyone paying attention, according to Neumann. Building a great website that showcases a store’s menu and processes orders (if not transactions themselves) should be a mandatory upgrade in 2021. It also feels like a safe business move. Direct-to-consumer THC sales for brands seem a long way off, meaning retail licenses should continue being a protective moat for those who have acquired them at great expense. But to maximize their potential, retailers should embark on the simple, capital-light upgrade to their websites, allowing them to keep pace with consumer shopping habits while maximizing revenue from their brick-and-mortar stores.

For Jushi, the Beyond / Hello stores and e-commerce operations are just the beginning of the company’s bold expansion.

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