02/10/2024
R-E-L-A-X Watermark is not going anywhere! This explanation is long but with best efforts to maintain a tight lip on a tranasction still in the works, it’s best to explain before a narrative begins, if it hasn’t already.
Honestly, this transaction is simply to solve an unexpected situation with the Watermark parking lot being used (with permission) as a waiting area for Lume customers. When I gave Lume, a (very professional organization) initial permission, it was never envisioned that 30-50 cars would, at times, require the use of the Watermark lot.
Over the course of the last two years, I was approached by numerous cannabis companies, including Lume, to see if I was interested in selling property. Each time I graciously declined. This past summer I was approached by a regional gas mini mart and a national brand restaurant. With my average IQ I thought why, all of a sudden, does it make sense for these companies to want to locate on this strip of land?—my economics 101 class in college taught that business is created by destination and critical mass, its the “build it and they will come mentality” test.
These non cannabis companies know the traffic patterns where cannabis companies are legal to operate. Thus, they have a huge interest and advantage in seeking out the properties surrounding these cannabis retailer’s new LICENSED properties.
When I was in college over 40 years ago, there was a case study that I had to learn regarding McDonalds Corporation. McDonalds had a product so new and so desired by the vast majority of the population that they could land on any street corner they wanted and it probably didn’t matter because it was a destination business. People were willing to travel to get their product. Years later, an up and coming Burger King investor’s group wanted to know how McDonalds Corp chose their sites so they pilferred McDonalds personnel and found that McDonalds actually spent quite a bit of money determining where they located a new store, whether company owned or franchised. Burger King group decided they could not afford to do these studies and be profitable—their solution was to locate as close to a McDonalds as possible, usually on an opposite corner because McDonalds had already done the expensive due dilligence to determine the best site(s). KFC, many owned by the same groups who own Burger King franchises, followed the same plan and ended up on the third corner. A gas convenience store popped up the last corner, usually Mobil. Basically the other three followed McDonalds, in hopes of seducing people headed to McDonalds to try an alternative or to gain additional business from a customer of McDonalds—gasoline, soda, chips, etc.
Ok thats the background of my thinking today. I believe that the City of Menominee created the beginnings of a new critical mass, by accident, with the way they handled the initial Cannabis permits. The limit of two, and an arbitrary method of determing which entity receved those permits, defeated the mechanism that would allow the best and worst to compete freely. The ensuing lawsuit(s)and settlement(s) have opened the door to unlimted Cannabis licenses. While that may seem scary, there is a survival of the fittest in economics at work as well.
Michigan has some of the toughest restrictions on Liquor Permits and the operation of a Tavern and Full Service Restaurant in the country. We can’t even have a beer sign in the window, legally, whereas in Wisconsin they don’t regulate anything but the allowance to operate and sell alcoholic beverages on the entire property. Count the bars in Menominee then count the bars in Marinette for a good example. No gambling machines allowed in Michigan, Wisconsin has 5 in every bar and it doesn’t hurt the casinos.
So if you can get past the asinine political thinkings of both states—you can gamble in a Wisconsin Bar but if a bar in Michigan got caught they’d pay huge penalties—contrasting that to Michigan allows cannabis but just across the river in Marinette its a crime to have cannabis in your possession, we the people are being subjected to choices that lead us to where we can legally act as customers. A citizen of Menominee has lots of gambling choices, except, in michigan you have to go to the casino or drive to Wisconsin where you won’t get a compulsive social disorder (similar to the Covid mentality) and Wisconites can travel to Michigan to get their desired THC for what ever ails them without fear of becoming an addict because the state allowed it—you become an addict to either because you have no self control—that person likely has multiple issues outside of gambling, drinking and pot use.
The crux of my dialogue is that Lume is McDonalds in this case. People restricted by law in Wisconsin are traveling quite a ways, in many cases to get their cannabis fix cheap, and legally. Wisconsin is more liberal now on possession, although still a crime, people are willing to make that trip.
Who could have predicted what that demand could be in Menominee? To anyone driving around and seeing the various cannabis establishments you can see that Lume is far and away the leader of the pack. Nobody envisioned 30-50 cars lined up in Watermark parking lot. My holdout was because i am a greedy businessman—I felt that Watermark would greatly benefit from the traffic—while we are helped business wise on nornal days, we don’t do so well when the parking lot fills up with Lume’s overflow business.
Before Lume opened its doors they attempted to purchase a slice of land from me—I own most of the green space between the properties. As mentioned before, I graciously declined but entered into a gentleman’s agreement to allow Lume employees to park in our parking lot—that took a lot of stress off the situation at the time making two lanes available for customers on Lume’s property. In November lines were backed up onto 10th Street and the Police ordered Lume to use our lot. We lost control that day because the Police were involved—this prompted me to work with Lume further in developing a control plan—last month, we had cars backed up to Watermark’s front door. This prompted my customers to start sounding off to me personally. We are only open 6-7 hours a day, but we are profitable within that timeframe 7:30-2ish. We are closed at night so it wasnt affecting business until the daytime traffic started to increase and blocked our entries/exits and OUR customers who were able to park were blocked in at times.
After exhausting all reasonsble approaches to a solution with Lume management, it became apparent that something had to be done as Summer months were bound to be 3-4 fold the traffic, at times (estimation).
The solution was to sell the property to Lume, they Originally wanted to lease a corner of the lot but that didnt work for me, so I proposed that they buy the property and I would lease the restaurant back from them. After further interest in our property became apparent to Lume, they finally acknowledge that they should purchase the property or it could become a real problem for them. We wanted Lume, they are an easy bunch to work with, i have never had an issue with them ignoring our situation.
Lume has no interest in Watermark’s building. We both believe that connecting the lots and redeveloping the parking area is the solution. We retain all the restaurant equipment/furnishings/fixtures, name, etc. Because of the unknown summer traffic, I can leave the lease agreement with notice—if that were to happen, it would be because our business is adversely affected by high traffic volumes from Lume. If we are to stay its because we are still enjoying good business. My bet is that business will increase from the critcal mass created by Lume and other Cannabis providers located close to our proximity.
I received a lot of feedback from folks about how Watermarks lot is being used-questions about selling to Lume, etc. It was necessary to get this out there so that everyone knows that the owners of the two properties are addressing the situation properly, hopefully effectively.
Please don’t give your negative opinions here-i know there are two sides on the cannibis use and legalization. Lume has products such as “Dream” which is a mild sleep aid. I personally had a presription for Ambien and had adverse reactions at times like sleepwalking. I tried Lumes product “Dream” and i am sleeping better than ever.
Also, a side note—I noticed food sales have risen and alcohol sales have dropped. Not sure if it equates but business at all 3 of my restaurants In Menominee have seen increased sales over the winter. Lots of new faces coming to town for the weekend drive to Lume or another cannabis company. While the product may annoy some people, the benefits are starting to show.
