Grass Roots: One of Northern Michigan’s First Locally Owned Dispensaries Takes Off
Buying local just got a fresh twist.
Dunegrass, a marijuana dispensary, is locally owned and operated, a situation which the owners say is uncommon in an industry dominated by downstate brands, owners and investors.
In August, a few members of the Piedmonte family opened their first marijuana dispensary in Manistee. The way CEO and Traverse City native Nick Piedmonte tells the story, the journey toward Dunegrass has been a long one.
For years, he and his business partners – brother Eric Piedmonte and cousins Chris and Bryan Piedmonte – have been eyeing Michigan’s evolving marijuana market for a potential business opportunity. They were delayed by regulatory barriers – until several years ago, marijuana dispensaries were illegal in the state.
Rather than wait around, the Piedmontes opted to go another route, opening Grand Traverse Vapor in 2013.
“That business was really founded with the idea that if there were ever an opportunity to begin transitioning into the cannabis space, that’d be something we’d be really interested in,” Nick explained.
While Michigan voters passed a proposal in 2008 that legalized medical marijuana in the state, the measure didn’t explicitly allow for medical marijuana dispensaries to operate in Michigan.
It wasn’t until 2016, when former Gov. Rick Snyder signed a new package of bills on the subject that state law officially provided for the operation and regulation of medical marijuana dispensaries. When that moment came, the Piedmontes were ready to get started. And where better to begin than in their own backyard: the city of Traverse City?
The waiting game, it would turn out, wasn’t over just yet. Traverse City Commissioners would spend many months (and many meetings) mulling over how best to approach the permitting process for allowing medical marijuana. Looking back, Nick calls the entire process “surreal” – particularly the ending, when the city drew 13 business names at random in a lottery to decide which permit applicants would be allowed to operate dispensaries in city limits.
“We had been working pretty closely with the city for probably a year in the lead-up to the permit application,” Nick recalled. “They were having city council meetings and ad hoc medical marijuana meetings, and we had someone in attendance in some capacity at pretty much all of that stuff for about a year. It was just us (in the audience), along with maybe one or two other people. The thought had never occurred to us (that we would have trouble getting a permit).”
Then, one day, Nick got a fateful phone call from a friend in the local real estate industry.
“He said, ‘I want to give you a heads up that there’s a rumor going around that all these applicants from downstate are stacking applications on top of the same properties,’” he said. “And we said, ‘Ok … well, what does that even mean?”
As it turned out, several of the applicants seeking permits were exploiting what Nick calls a loophole in the lottery system to give themselves better chances. The rules of the lottery prohibited any one individual or business from submitting multiple permit applications under the same name; it did not limit the number of applications that could be lodged for the same property address.
Nick claims that some applicants were attempting to weight the applicant pool in their favor by using a range of different business names or shell corporations to submit multiple applications for a single location.
When all was said and done, the Piedmontes found themselves facing 71 other applicants in a contentious permit lottery draw. The first 13 businesses drawn in the lottery got permits; Dunegrass came up in the 20s. Just like that, the Piedmonte family’s dreams of opening a medical marijuana dispensary in Traverse City evaporated.
Fast forward 18 months and the Dunegrass team has come to see the botched Traverse City permitting process as a “blessing in disguise.” Even without a Traverse City dispensary, the company has begun making a name for itself in the growing northern Michigan marijuana scene.
In late August, Dunegrass held a grand opening for its Manistee store, which is both a medical dispensary and an adult-use shop. When Eric (chief operations officer) and Chris (vice president of retail experience) arrived to open the shop that morning, they found a crowd of customers already gathering outside the store. By the time the doors opened, there were 60 cars in the parking lot and more than 100 people ready to shop.
Riding high off positive customer reviews and strong word-of-mouth from the Manistee store, the Piedmonte crew is now looking ahead to the next steps for Dunegrass. Those steps include opening four more dispensary locations that are already permitted for adult-use sales: one each in Big Rapids, Beulah, Cadillac and Marquette.
The first three of those stores are expected to open before the end of the year, with the Marquette dispensary likely to follow in Q1 of 2021.
Dunegrass will also be going after adult use licenses in at least two other northern Michigan cities. One is Gaylord, where the city council is currently reviewing an ad hoc recommendation to start permitting marijuana businesses in town. The other is Traverse City, where applications for recreational marijuana permits will officially open on Nov. 30; the city of Traverse City will use a competitive scoring process to award just four adult-use retail permits.
This time, win or lose on the Traverse City permitting front, the Dunegrass crew say they feel good about the future of their business. From branding to customer relationships, they’re playing a long game now – one built on their local roots.
“Eventually, it comes down to a conversation about what we can do differently (from other dispensaries in the area),” Eric Piedmonte said. “How can we add value? What’s going be our unique value proposition?”
The Piedmontes say they will focus on the northern Michigan vibe.
“Dunegrass is not just a name; it’s a vibe. The whole look and feel is designed to evoke these feelings of being on the beach,” said Eric Piedmonte. “Because Dunegrass to us is sitting on Lake Michigan, having a bonfire, passing a joint around the fire with your friends.”
Pointing to pun-heavy business names, iconography that explicitly calls out cannabis and other common attributes of dispensaries, Nick Piedmonte says that Dunegrass is all about a long-term approach.
“We want to have a subtle wink or nod to the cannabis industry, but not have the giant ring pop leaf logo, or call ourselves ‘Dank Buds’ or something like that,” he said. “We feel our brand and our company and our operations really ingrain themselves in local communities well.”
According to the Piedmontes, those community integrations might take multiple forms. In Marquette, for instance, Dunegrass is planning a webinar with the Lake Superior Community Partnership – the city’s economic development organization – to educate viewers about the potential impact of the marijuana industry on the local area.
In Cadillac, Dunegrass is eyeing a partnership with Higher Grounds Coffee, with the goal of opening a café upstairs from the dispensary. And more broadly, Dunegrass is looking for ways to collaborate with local growers, processors, and suppliers to build a true northern Michigan cannabis industry.
Currently, downstate businesses dominate the supply chain in Michigan. The Piedmontes would like to see a shift to an entire supply chain, “basically a holistic northern Michigan cannabis ecosystem,” he said.
“Something we’ve learned since the launch of our first adult-use store in Manistee is that 75-80 cents out of every dollar spent at the store blows out the back door to growers and processors who’ve set up shop downstate,” Nick Piedmonte said. “As a company that wants to be the consumer-facing brand for northern Michigan cannabis, we’re looking at what we can do to ensure that the economic value (of local dispensaries) becomes a sort of compounding multiplier inside of northern Michigan communities.”