Growth leads to expansion for MMJ dispensary The Source

Medical marijuana dispensary The Source recently relocated to a new 20,000-square-foot building along Interstate 49 in Rogers from an almost eight times smaller Bentonville location.

The two-story building at 4505 W. Poplar St., near Outback Steakhouse, has the space to allow for cultivation and production and house administrative offices for the company that’s grown across the state line to include three dispensaries and a cultivation facility in Missouri.

And, if Arkansas voters approve a recreational cannabis ballot item in November, the new Rogers location also has room to grow for that business.

“We built it thinking ahead of what might be to come,” said Erik Danielson, a Fayetteville attorney and an investor in The Source.

CEO Aaron “Moose” Crawley said business increased after opening at the new location in mid-July, and he expects more sales growth if recreational cannabis is approved.

Crawley pointed to a recent study that showed recreational cannabis sales in the first year would be more than double or triple compared to existing medical marijuana sales. He added that the new location has “the capacity to realize those sales.”

Alec Long, complex director for The Source, said its sales floor could be doubled. And the number of cannabis plants it can grow at the facility would double if voters approved the proposed amendment in November.

Danielson said the Rogers facility can grow up to 50 plants and has plans to produce gummies and vaping cartridges on site. Tinctures and topical products might also be made there.

Crawley said cultivation is expected to start in September, and the lab is expected to be completed in about a month. The lab can convert the plants to distillate oil, which can be used in gummies, vaping cartridges and other products.

Danielson added that the production and cultivation operations include exclusive partnerships with “heavy-hitters from the original Colorado market,” such as Boulder, Colo.-based boutique cannabis company In The Flow, which will manage cultivation, and a manufacturing partnership with EDM.

Danielson said that smokable flower comprises between 50% and 65% of the medical marijuana market, while gummies and vaping cartridges comprise about 10% to 15% each.

“The market is moving so fast,” Danielson said. “There are always different things that are coming up. It’s hard to tell what’s a fad and what sticks.”

INTERSTATE VISIBILITY
Compared to the former location, the new dispensary site has improved access and visibility from the interstate, executives said.

“The new building is much brighter; it’s more inviting and feels like it puts people more at ease,” Long said. “It’s more relaxed here as opposed to the older location. We’ve seen a significant uptick in business on a daily basis.”

Crawley expects sales to rise between 15% and 20% this year.

Long said the new building includes eight points of sale and three pickup windows, up from four points of sale and two pickup windows at the former location. The patient waiting room also is larger.

Danielson said the first floor includes the retail dispensary, cultivation, storage and break room. The second floor consists of the lab, manufacturing, kitchen and administration offices for operations in Arkansas and Missouri.

The building also includes a separate tenant, apparel store Cookies, in a 2,000-square-foot retail space that’s open to the public. Danielson noted that patients must show a medical marijuana card at the entrance before being allowed inside the dispensary.

STATE NUMBERS
According to the Arkansas Department of Health, 89,983 patients had an active medical marijuana card as of Sept. 4.

According to the Arkansas Department of Finance and Administration, The Source is one of 38 licensed dispensaries in Arkansas and one of five in Northwest Arkansas. Between Aug. 15, 2019, and December 2021, The Source sold 3,632.39 pounds of medical marijuana. In 2021, the dispensary sold 1,520 pounds. Sales rose to 132.59 pounds in August, from 102.19 pounds in July.

Scott Hardin, an Arkansas Department of Finance and Administration spokesman, said Osage Creek Dispensary in Fayetteville received approval in May to transfer to Eureka Springs. After the move, Northwest Arkansas will have two dispensaries in Fayetteville, one in Bentonville and one in Rogers.

“August was the largest month for pounds sold in 2022 as patients purchased more than 4,245 pounds of medical marijuana,” Hardin said. “Since Jan. 1, 2022, patients have spent $181 million to obtain 32,027 pounds.”

ROOM TO GROW
Danielson said that when The Source opened in Bentonville, the investors weren’t sure what to expect. Initially, they’d planned for cultivation operations at that location but soon found they didn’t have the room.

“The volume of patients we started seeing was more than I think anyone anticipated,” Danielson said. “Ultimately, we remodeled that old space three times. It had three different floor plans that we worked through, which ate into the space that we originally planned to cultivate. We consumed all the available space for retail space … and break room for the staff.”

The Source opened on Aug. 15, 2019, at 406 Razorback Drive in Bentonville.

According to Benton County property records, Dark Star Investments LLC purchased the Bentonville property from Starling Investments LLC for $405,000 on May 1, 2019. The 0.62-acre property included a 2,600-square-foot building, formerly a liquor store. Danielson said plans for the property are in the works, and it maintains a liquor permit.

The records show that on Sept. 14, 2020, Dark Star Investments purchased 1.75 acres at 4505 W. Poplar St. from the Steven and Kellye Smith Trust for $690,000. In June 2021, Fayetteville-based general contractor Napa Construction received a permit valued at $3.5 million for the construction of a 20,527-square-foot building there, according to city records. Crawley said Fayetteville-based BiLD Architects was the building designer, and Bentonville-based HFA was the engineer.

Along with Danielson and Crawley, the investors in The Source include Mitchell Massey, Robert McLarty, David Starling, Jeff Starling and Mike Tullis. The Source has about 50 employees.