Dan Morgan, Co-Founder and President, Social Dispensary – Interview Series

Regardless of the state market or the size of the business, expanding a cannabis operation—even within your own state borders—can be a Herculean task. Beyond the steep financial costs, operators must navigate complex licensing, strict regulatory requirements, and a host of unforeseen roadblocks. When expanding into state markets on the other side of the country, the logistical challenges become nearly overwhelming.

To take a deeper look at what it takes to scale both locally and nationally, mycannabis.com spoke with Dan Morgan, Co-Founder and President of Social Dispensary.

What subjects did you study at the University of Denver? What courses and topics ended up becoming the most worthwhile when operating a cannabis business?

I studied international business at the University of Denver and it turned out to be about the most relevant thing I could have picked for this industry. The whole major was built around reading a country’s economic climate, figuring out how business-friendly it was for your particular industry and deciding whether it was actually a viable market to enter. Cannabis works the exact same way, except the “countries” are cities and states. Each one operates under its own rules, its own taxes, its own licensing. So when I sit down to analyze a new market, I’m running the same playbook I learned in school, just pointed at a new city or state instead of a foreign country.

Prior to co-founding Social Dispensary, what experiences and roles in the cannabis industry did you have? What were the most valuable lessons you learned during your first years in the cannabis industry that paid off greatly later?

I’ve done just about every job there is in this industry. I started as a budtender in early 2010 and moved into cultivation not long after. The wholesale flower market took a sharp downturn around 2016 and 2017, and the company I was working for ended up selling off most of its grow operations. That’s when I shifted into more of an administrative role, focusing on staff training, store operations, business development, purchasing, and systems.

I was able to learn and absorb so much during that time, which really set the foundation for Social Dispensary. One of the biggest lessons was learning how to run a lean business. Early on, there was this misconception that if you were in cannabis, you were basically printing money. That was never true, and it got exposed fast once the market got competitive and started declining, so being able to stay lean through the good times and the tough ones is what carries a company through, not to mention dealing with the 280E tax code. Tied right into that is the fact that just because it’s cannabis doesn’t mean the general rules of retail stop applying. A lot of operators think they can ignore basic retail principles because the product is cannabis, but as a market matures and gets more competitive, those fundamentals are exactly what keep you in business.

What inspired you and your co-founders to create the company that would become Social Dispensary? What were the co-founders’ reasons for wanting to start a cannabis business?

All four of us were working at Star Buds when the company sold off its Colorado assets in early 2020. We’d spent years running stores and learning the business from the inside, and we always wanted to be the ones steering the ship instead of executing someone else’s vision. So when those assets were sold, it felt like the natural moment to take everything we’d learned and put it into a brand of our own. We knew how we wanted to treat customers, how we wanted to run the operation, and where we saw the industry heading, and this was our chance to build all of it the way we thought it should be done.

Even in a state with as established a cannabis industry as Colorado, what were some unexpected roadblocks that you faced when applying for the license to create Social Dispensary?

Our first Social Dispensary location was in Denver, and we opened it through the city’s social equity program. That program was still new at the time, so the rules were pretty vague, but Denver was great about walking us through the process. The bigger challenge was that it turned into a race to lock down a viable location. Denver has setback requirements, so two stores can’t sit within a thousand feet of each other, and whoever gets their application in first claims the spot. We were lucky enough to find a location on Federal Boulevard, but we knew competitors were eyeing sites in that same radius. So the real pressure was getting our application in before anyone else did, because if a competitor had filed first, those setback rules would have blocked us from opening there at all.

From a logistical and business management standpoint, what all goes into expanding a single cannabis dispensary into a total of nine different locations across Colorado? Were certain towns or counties in Colorado less receptive about a dispensary opening up in their areas than others?

 When we started Social Dispensary, we always intended to expand, so we built scalable practices into that very first store from day one. Luckily, that’s what made opening the next couple of locations pretty smooth. Still, we’ve found that about every five stores, we have to reconfigure our admin and office staff to keep supporting the stores. The advancement of AI has made a huge difference for Social in the last couple of years. It lets us reach efficiencies we couldn’t hit before, cutting down on busy work and the time it takes to complete a task. That alone has saved time and has been huge for scaling the business and freeing our staff to focus on the tasks that actually add value to the company. At the end of the day, though, we’re a customer service business, and that’s the one thing AI can’t replace. The human touch is everything in our stores, and keeping our brand standards consistent across every location comes down to people, not software. That’s why we take a very hands-on approach with every store, and we’ll keep expanding our operations team so each location gets the time and attention it needs. Scale comes with real advantages too. Negotiating deals is much easier now, and it’s helped us build a great reputation. That reputation, along with our footprint, has led to us getting approached a lot more for acquisition and partnership deals.

The reception really varies from one municipality to the next. We’ve run into fierce opposition in some places and gotten unbelievable support in others. Our toughest win was opening in the Reunion location in Commerce City. Reunion is zoned in a way that doesn’t allow dispensaries, so we had to apply to get the zoning amended for a specific location we found on 104th and Tower Road. That process took about two years, and we had to go before both the zoning department and the city council multiple times. The mayor and several city council members were opposed, along with a very, very loud minority, but we had incredible support in our corner too. What ultimately carried us through is our track record of embracing the community, building a great-looking store, and being a good neighbor. In the end we got the zoning exemption for our property and opened last year after a long battle.

How did the expansion out to Bridgeton, New Jersey come into fruition? What would you say are the largest differences between the Colorado industry and the New Jersey industry?

Back in 2020, we met some entrepreneurs who wanted to open Social Dispensaries in New Jersey. It was a struggle at first. We submitted several applications in different cities and kept getting passed over, but each one taught us something. The biggest lesson was that a lot of the time it’s not what you know, it’s who you know. So we put real effort into making connections at the local level, taking the time to show the community what Social is all about and that we’re a responsible operator who truly cares about the area. That’s what finally got us over the line, and after about four years, we opened our first store in Bridgeton, down in South Jersey. We’re already working on our second location in the state and we anticipate rapid expansion in the coming years, similar to Colorado.

As for the differences between the two markets, New Jersey is still pretty immature even though it’s had recreational cannabis for a while now, mostly because the state took so long to award licenses. One of the biggest things you notice is the layout and atmosphere of the dispensaries. Almost every New Jersey dispensary is built around ordering on tablets instead of real budtender interaction, and they don’t put many products out on display. That’s where we see a big opportunity to bring our customer-service and product-driven model out there. Another challenge is that the number of vendors is very limited and that’s only just starting to change. Up until late last year, almost every store carried the same products at the same prices, which made it tough to compete on selection or price, and those high prices make it hard to compete with the illicit market. Now that more companies are opening and supply is increasing, we’ve been able to start setting ourselves apart on product selection, and as supply keeps growing, prices will go down and make it easier to compete with the illicit market.

What are some organizations that the Be.Social Community Program has assisted through donations and volunteering? Why is it important for cannabis companies to be philanthropically involved?

Our donations and volunteering through the Be.Social Community Program are built around three pillars our whole team helped pick: hunger, veterans and cancer. We focus on nonprofits local to the communities our stores operate in, which has connected us with partners like Community Food Share, Bienvenidos Food Bank, Parker’s Platoon, Ray of Hope Cancer Foundation, and First Descents, along with Expunge Colorado on the record-clearing side. With Community Food Share in particular, we just won their Corporate Challenge grand championship for the second year in a row, going up against other local companies to see who can raise the most money, donate the most food and put in the most volunteer hours. The full list of our partners is on our website at besocialcommunity.com.

The program is simple: every time a customer buys from one of our partnered brands, a piece of that sale goes back into the community. So far, we’ve given back more than $143,000 that way. What I like most about it is that it doesn’t ask anything extra of the customer. They’re already buying these brands, so it just turns a normal purchase into something that actually helps somebody down the street. That’s really how we see philanthropy fitting into our mission: it’s not a once-a-year check we write; it’s built into most transactions that happen in our stores, every day. It matters for the whole industry, too. Cannabis still carries a stigma, and one of the best ways to break it down is to show up and put real money and hours back into the community. When people see that coming from a dispensary, it starts to change how they think about who we are. We want to be more than a dispensary in the neighborhood; we want to be a good neighbor.

Why is being a social equity cannabis company an important distinction in the state of Colorado? Why is Social Dispensary proud to be a social equity company, and how do you plan on showcasing the possibilities of an effective cannabis social equity program through your store operations?

 We couldn’t have started Social Dispensary without the social equity program. The barriers to entry in this business are high and expensive, and that program is what lets us open our doors without having to put up a huge amount of money to acquire licenses or go head-to-head with the bigger players who have far more disposable income on new licenses. It gave us a real shot when we otherwise wouldn’t have had one.

That’s a big part of why we’re proud to be a social equity company, and it’s one of the main reasons we started the Be.Social Community Program. Having that door opened for us, we feel a responsibility to turn around and give back to our local community and become valuable members of it, not just another cannabis business that only cares about the bottom line. The best way we can show what an effective social equity program makes possible is by running great stores, taking care of our neighborhoods, and proving that a company that got its start this way can become a real asset to the community.

What do you envision the next few years holding for both Social Dispensary and the greater Colorado cannabis industry? Are there any widespread issues in the state cannabis industry that you worry may quickly snowball in the future?

For Social Dispensary, the plan is to keep expanding. We’ll keep growing in Colorado and New Jersey and start opening in other East Coast states. What we’re most excited about is our tech stack and how far we’re able to lean into AI. We’re building new tools in-house that give us capabilities most other dispensaries don’t have, and that’s becoming a real competitive advantage for us.

Colorado itself has been a declining market, but there are still opportunities we’re looking forward to, including new markets opening up within the state. Realistically, we’ll keep seeing cannabis businesses close their doors, and I think the state’s revenue eventually levels out and stays fairly consistent from there. Colorado still pulls a lot of cannabis tourism from people who can’t buy legally where they live, and the day one of those states legalizes, a good chunk of that traffic goes away.

There are always concerns in this industry, so the key is staying optimistic and keeping your business model flexible. Federal regulation sits at the top of the list, just because you never know which way it’s going to go, though with rescheduling and the direction medical is heading, it does feel like things are trending positive. Intoxicating hemp is another big one. It’s a real threat to the regulated market because those products don’t have to deal with all the compliance and regulation we do. Colorado has done a good job keeping it limited to online sales, but that could change fast. And every year we see bills introduced to raise taxes or cap how many products we can carry, or even what kinds we can sell, which only makes the legal industry less attractive and makes it that much easier for the illicit market to compete.

Thank you for joining us, Dan! For more information on Social Dispensary, please visit its website.