By Lou Fancher
Representing victory, and in several ways validation of a robust, reliably replicable business model and tightly curated product line, Element 7 won approval and will in approximately six week’s time open its doors in the cozy downtown of Montclair Village. The retail cannabis dispensary founded by CEO Robert DiVito in 2018 established stores in eight locations, including Rio Dell, Chula Vista, Marina, Port Hueneme, Firebaugh, Mendota, Willits and Cathedral City.
The steady expansion of its footprint is a core element of Element 7’s ultimate vision: to be California’s dominant and “most local” cannabis company whose outlets hold the focus on education, health and wellness, social justice, long term relationships with licensed cultivators and manufacturers, and setting high standards for the 3-400 small-batch craft premium cannabis sold in their stores.
Ironically, DiVito’s entry into the industry came at a time when he was “not really a weed guy” and was filing applications to open childcare facilities. “Honestly, I was sitting with a group of attorneys I went to college with at DePaul University in Chicago, my hometown. Childcare is a hard industry, and the application process is vigorous, so they asked if I’d thought about cannabis. Then later, in 2015, I met a group of guys who told me more about application writing and team building, and since I was in California, I started putting in (cannabis dispensary) applications, and that’s how I got into it, in a nutshell,” says DiVito.
Every Element 7 store presents the brand’s signature design, which favors soothing colors such as off-white, cool green, warm gray and light brown that come from paint, but also from the building or decorative materials used: stone, metal, wood, wallpaper, flowers and plants. With over 6,000 cannabis brands available in California that encompass drinks, edibles, flowers, pre-roll and more, the operation’s products cover all the bases. Aiming for upper echelon products and a streamlined, welcoming environment, DiVito says, “Our stores don’t project that you’re in a smoke shop.”
The new store in Montclair Village will mirror in almost every way possible the 1,500-square blueprint of all the other locations. “We don’t clutter, and because we have a highly curated model plan, we don’t have products everywhere. We try to keep it comfortable,” says DiVito. “People think a cannabis shop is something for the younger or middle age crowd. But we speak to provide holistic medicine, so anyone can walk in and talk to our super-educated budtenders. Element 7 is catered toward an upscale coffee shop customer of any age. I wanted my mom to feel comfortable in the shop. Does she? Yes.”
Although his mother and many customers might find comfort at Element 7, DiVito has experienced anything but comfort while expanding the company’s operations. Each location comes with a different community response and unique or industry-wide challenges related to the legalities of zoning, approval processes and timelines.
DiVito says despite the trajectory of change “moving along steadily” during the last 20 years in terms of social acceptance of medicinal and recreational marijuana, restrictive banking and excess taxation remain the primary obstacles to building a successful business. A legal distributor’s biggest competitors are illegal operators who undercut price points and frequently sell inferior products. “The legal distributors all work together to see how we can collaborate, but the illegal operators, that’s our biggest problem,” DiVito says.
The company’s website makes a promise to cities: “We will go head-to-head with these unlicensed operators on price and service, and we will push well beyond them in terms of product quality, selection, and education. This is the only way to eliminate the criminal element from the cannabis industry. We know we can do this.”
As for legislation most needed to address banking restrictions and reduce the high (100%) tax burden of businesses associated with selling Schedule 1 substances, such as cannabis as defined by the Controlled Substances Act, DiVito says two actions would provide solutions.
“Section 280E needs to go away. We are not allowed to write off anything: We have no tax deductions. It’s detrimental to every cannabis business, and everybody knows it. We’re overtaxed. Our intake is 100% taxed because there is no fair banking act. If 280 E went away, it would bring a lot of relief to us cannabis operators because it doesn’t matter if the market goes high or fluctuates low, we have the liability of 280E,” DiVito explains.
Federally declassifying cannabis as a Schedule I substance would “be great,” according to DiVito, but the debate on federal legality is a larger conversation involving complicated matters such as carrying cannabis across state lines with differing regulations, among other issues.
“Tax relief got through the House of Representatives, but it still has to get through the Senate. There are so many obstacles for a Schedule 1 drug. Banking is more reasonable to change, and it’s something everybody is talking about—that we can’t have access to regular banks and have to use credit unions. Then on top of that, we get extra fees, more taxes…it just stacks up,” says DiVito.
And there’s the land problem. Most cities set the criteria and designate a cannabis business to industrial areas or raw land; hardly customer friendly locations and lacking pre-existing structures and utility services, which inevitably drive up construction costs.
“In a perfect world, we’d be at liberty to be in a strip mall with adequate parking, easy egress and ingress, near large corporate operators (whose due diligence would already have found or established high volume customer traffic). We’d be able to build quickly, and it would be no different than a Dunkin’ Donuts, Starbucks or Jamba Juice. We just want to fit right in,” DiVito says.
Finding an Oakland location and fitting into Montclair Village tasked DiVito with an extended search and jumping through hoops he had never before experienced. “For Oakland, I had to move to different locations three times. I went to a former CVS in Piedmont, then to Grand Street in the old Walgreens location,” he recalls. “Montclair was my third choice, and I fell in love with it. They told me it would be hard to get in there. I had to go to the merchant board, the community board, and do community presentations to show who we are and what we represent. That’s finally when the community said thumbs up and we were able to move forward.”
When visiting or reaching out to local charities, churches, nonprofits, clubs and community groups, DiVito and other Element 7 leaders emphasized an educational standpoint and the value of carefully curated products. The two points speak to a central practice: spreading fact-based knowledge throughout the community at large and to individual customers via expert bud sellers in the shops.
“We deal with naysayers face up, and I go to city council meetings and communicate with them. I show them that cannabis is used for medical purposes. Others use it for recreational purposes. I talk about medical uses, and if people in the community need it, it makes more sense to have it local, accessible. We bring added security too, with extra cameras and security guards who, when no one is in the dispensary, pick up trash and add benefit to the community. It’s a big algorithm to win,” says DiVito.
Earning the respect and support of neighboring business owners and members of the Montclair Village Association is another part of the equation. Future side-by-side neighbor Liz Nelson owns Olfactory Candles and Apothecary Boutique. Nelson said in a separate interview the advent of Element 7 has sparked curiosity. According to Nelson, “There was some concern in the beginning, but mostly people coming in and asking if the news was true and what the approval process was. The concerns came from only one out of 10 people, and overall, the response has been very good.”
Nelson’s take on the organization and its value to the community is clear. “I think the dispensary is a classy and well-organized group. They have a clean, healthy look behind them. The founder is administering health and wellness. It’s not flashy. It’s a calming environment, and it will offer extra security patrol and hopefully bringing good people into the village,” says Nelson.
Jeff Diamond formerly owned and operated Montclair’s Farmstead Cheeses & Wines store (along with a store in Alameda) with his wife, Carol Huntington. Angling into retirement while waiting to close escrow on the sale and still active in the Montclair business community, Diamond was the association’s board president when Element 7 came on board for approval.
“We don’t have legislative authority, but we have an advisory capacity with various government departments, especially anything having to do with the zoning area. There are restrictions if you’re building in Montclair Village; you can’t have lawyers on the ground floor, for example. And cannabis dispensaries are not like a bar. You have to be 21, there’s no product sampling, and customers cannot come in with their children,” says Diamond.
With all the safeguards and an arduous approval process that took nearly a year, Diamond expresses confidence, saying, “I don’t think there’s an issue with them coming into the village. The village region goes into Piedmont and Redwood Heights in a three-mile radius and has an upscale group of consumers. Cannabis products fall into that category. It fills a need. I invite them to embrace our community and be as open and educational as possible.”
Diamond’s words would likely sing like sweet music in the ears of DiVito, who says, “The more I got involved, the more I felt Montclair is where Element 7 should be. The village association introduced me to my landlord and convinced him we’d be a good business. I am his first cannabis operator, and we get along well.”
As renovation of the space is completed and community outreach continues, DiVito and his staff are developing new hires. With nearly identical menus and business protocols at each location, new employees and managers are sent to existing stores for hands-on job training and in-person education. The onboarding of new staff is streamlined through consistency, which also guarantees a Montclair-based customer who stumbles upon the Marin outlet or another Element 7 store can trust that certain or favorite brands can reliably be found.
Relationships that last and broad market coverage means brands such as Sativa, Indica and Hybrid pop up repeatedly; and products include edibles, extracts, flowers, pre-rolls, tinctures, topicals, vape cartridges, disposables and special pods, and gear such as clothing and vaporizers. “We build deep relationships over the years and try to keep products that cover all of the market and are consistent between the locations,” says DiVito.
Projecting an opening at the end of May or by June at the latest, DiVito says his original idea of being “Cali strong” with 15 to 100 stores in the state remains intact. Which doesn’t mean his imagination isn’t fired up with other possibilities. “I do have my eyes on other limited markets in the United States,” he admits, with gentle prompting. “We’re applying in Texas, and looking to Florida, Massachusetts and my hometown of Chicago in Illinois. I wouldn’t mind being cross-country and becoming a national brand, but for now, we’re focused on California.”
Having the final word and offering a mini-boast that emphasizes Element 7’s hyper local appeal, he says, “We also have a local legend the community might or might not know about. One of our partners is the Golden State Warriors NBA star Gary Payton. He’s a part owner in the business.”
Landing in Montclair Village after performing on the high wire of gaining approval to open a new cannabis retail outlet in Oakland, the primary work ahead is to nourish and educate the community while establishing deep roots in what many people hope will be a long-lasting local business.