The cannabis industry had a mixed year in 2022 because legal sales at cannabis retail in mature markets slowed down or declined. Some markets had something to celebrate as they experienced growth. Additionally, a few states have enacted laws to legalize adult-use or recreational sales. Being in the cannabis retail business isn’t easy with the strict regulations, heavy taxes, and competition from the black market that attempts to undercut their efforts.
At the federal level, there are a few legalization bills in the works, but only one has materialized. It’s the Medical Marijuana and Cannabidiol Research Expansion Act (MMCREA), which opens the door for research into the medicinal uses of cannabis. The act cuts federal restrictions on the research and cultivation of cannabis. MMCREA also allows the U.S. Food and Drug Administration (FDA) to approve drugs with CBD and cannabis.
There is good news. Most Americans heavily support (88%) the legalization of marijuana for medicinal and recreational use according to a Pew Research Center. This kind of support increases the chances that federal laws will be enacted in favor of the industry.
Considering these factors, it’s crucial for cannabis retailers to review their strategies to confirm they are optimizing operations. Here are the top seven strategies for cannabis retail success.
1. Use a Cannabis Retail Inventory Management System
An inventory management system can do more than track your most important assets and keep you informed of your inventory. The system helps cannabis retail managers review data from the point-of-sale system to identify trends. This information will aid in making better business decisions. Check your inventory a couple of times a day, especially during shift changes.
Cannabis retailers who rely on an inventory management system will know which products do and don’t sell. It will make it easier to adjust the inventory to ensure there are enough popular items in stock and to eliminate those not moving off the shelves. When customers don’t find their favorite products in stock, it can affect their experience.
Thanks to the use of artificial intelligence (AI) analytics, the system can collect customer information along with their preferences, shopping history, and spending patterns. This will go a long way toward helping marketing strategies.
Another advantage of an inventory management system is that it simplifies inventory management. It’s important to control how much inventory you keep onsite and who has access to it. This is where an access control system can be valuable. Managers can control who has access to specific areas in the cannabis retail store and inventory.
2. Cultivate Relationships
There are three relationships you want to build and cultivate: businesses, customers, and the community. Cannabis retail employees aren’t the only ones who support the business. The store works with lawyers, accountants, cultivators, security, and other vendors. In choosing these professionals, look for those with experience in the cannabis industry. It has rigid regulations unlike any other industry.
Cannabis laws vary based on location. The U.S. and Canada have exhaustive requirements for cannabis security that include video cameras. Rules affecting cannabis retail stores in the U.S. can vary by state as well as by municipality. In Canada, laws vary by province.
The information management system isn’t the only thing that provides insights into the store’s customers. Employees are an essential source for information about customers. They listen to customers and use the information to strengthen the business. Brand loyalty is critical. Customer information from employees and the system provides invaluable information that will enhance the brand to keep customers coming back.
3. Design Great Customer Experiences
The information gleaned from the inventory management system, POS, and relationships can inform special deals and loyalty programs. They also ascertain whether the cannabis retail store’s customer experience delivers on their expectations.
Everything in the atmosphere matters from the colors and posters to music playing and cleanliness. Many people tend to go to specific coffee shops for more than good coffee. They go for the experience.
Customer experiences evolve, so it’s essential to review those experiences on a regular basis. Don’t let the cannabis retail store become stagnant. The economy and environment can affect those experiences.
4. Optimize Retail Operations
An inventory management system takes a step toward optimizing cannabis retail operations. A point of sales system (POS) also plays a role. Integrate the POS with other systems such as an accounting system. Integrating systems let businesses monitor their sales, profits, and costs.
It’s possible to have a thriving business with customers coming and going all the time. But if the cash isn’t managed, then it won’t save the business. It’s essential to stay on top of financial information. Any data collected reassures the managers that they’re making the right decisions.
5. Maintain a Cannabis Retail Security Plan
Most regulations have complex security requirements, which demands cannabis retail stores to have a security plan to assist them in this effort. A security plan keeps track of the security in place, changes made, and any gaps in security. A lawyer and security vendor familiar with cannabis regulations can verify the cannabis retail store remains in compliance.
It’s important for cannabis retail managers to know that their employees are one of the biggest threats. According to MJ Biz Daily, employee theft is responsible for 90% of the loss of products in the cannabis industry. It may not be obvious as employees may pocket small amounts or give discounts to friends and customers. Stores tend to have some slight overages for weighing products. Employees may swipe the overages.
Employees know what security system the store has, how to use it, and its weaknesses. An effective way to cut internal threats is to implement rotating shifts. That said, security and process training for employees is a critical component. Therefore, the security plan includes policies such as every prospective employee will undergo a background check before being hired.
The training emphasizes the need to follow strict processes to protect the business. The security plan must indicate all new employees receive training and current employees undergo refresher training at least once a year. Every employee must sign off on the security plan and the training. This protects the business from dealing with a situation of “I didn’t know that.”
Since regulations and business continuously evolves, the security plan also needs to be reviewed and updated at least annually.
6. Sell Higher-Margin Products
Successful cannabis retailers don’t just sell marijuana. They sell accessories and ancillary products. Some have found a way to turn it into a brand and sell branded clothing and accessories like pipes and bongs. Social media is loaded with people wearing cannabis-related shirts and hats. This is another option.
Free Money by Vice article quotes Marketing Professor and Vice Dean at the Alberta School of Business Kyle Murray who says add-on and ancillary products comprise about 15% of a cannabis retail store’s sales.
Remember customer experience is key. This is why employees need to build relationships with customers. They can make recommendations. Have you ever bought something because an online store asked if you wanted to add an item to your order or informs you that people who bought the item also bought these other items? Recommendations are powerful.
7. Partner with Cannabis Security Professionals
Just about every law requires cannabis retailers to have video security. These detailed regulations cover things like security camera frame rate and resolution, how long to retain video recordings, and camera placement. One California municipality requires cannabis retailers to give the police department access to the security cameras.
With all the extreme weather happening lately, there have been a lot of power outages. It’s a harsh reminder that the video surveillance system needs a backup plan in place to ensure they remain operational. No store wants to find out the cameras stopped working when a crime occurred. A preventative measure is to add a system health check to the video surveillance with a monitoring system.
Work with an Experienced Cannabis Retail Security Vendor
Cannabis retail managers who follow these seven strategies can have a greater chance of success while lowering their risks. In the search for qualified cannabis retail security vendors, ask for client referrals, cannabis case studies, and security video clips.
When it comes to security regulations, many cannabis retail stores fail compliance. Due to the complexities of cannabis laws, security experts strongly advise partnering with a security vendor that has cannabis retail experience.
Even with the right video surveillance technology, it’s possible for it to fail compliance if it’s not installed correctly. This puts a business at risk of expensive fines. Work with a company that has cannabis retail experience because they can implement it based on regulation requirements and save money in the long run. Better yet, ask the security vendor about an installation guarantee clause. This protects the cannabis retail business if the cameras fail compliance or don’t work.
It’s possible to find a solution that integrates an access control system, security cameras, video verification, and monitoring. The more efficient monitoring systems rely on video analytics and trained monitoring operators.
Stealth Monitoring provides security services to cannabis retail stores. The company has experience in working with cannabis dispensaries in the U.S. and Canada. To learn more about effective cannabis retail security systems that comply with regulations, check out this cannabis security guide.
Texas Private Security License Number: B14187
California Alarm Operator License Number: ACO7876
Florida Alarm System Contractor I License Number: EF20001598
Tennessee Alarm Contracting Company License Number: 2294
Virginia Private Security Services Business License Number: 11-19499
Alabama Electronic Security License # 002116
Canada TSBC License: LEL0200704