Running a cannabis business is notoriously complicated. For dispensaries, complex compliance burdens permeate every facet of the business, from zoning and licensing to marketing and payments. Whether you’ve been in the cannabis space for mere months or multiple decades, you’ve likely run into drawn-out approval processes, supply chain headaches, or constantly changing regulation that makes compliance challenging, not to mention the other micro and macroeconomic factors that plague all small business owners.
To put it mildly, the cannabis industry doesn’t go easy on anyone, particularly newcomers. Starting a new business is always fraught with challenges. Still, as more states legalize marijuana while the federal government refuses to do so, the cannabis landscape continues to shift almost on a daily basis. This makes it a particularly difficult sector to grow and thrive in, especially considering the average cost of opening a dispensary is over $700,000.
Here’s what industry veterans and business owners wish they knew when they were first getting started.
Relationships really are everything
As cliché as it sounds, a good business starts with good relationships. In the cannabis industry, it’s particularly important to establish strong, trustworthy relationships with both suppliers and vendors at different points along the supply chain. Good relationships with cultivators and manufacturers ensure you have a steady supply of quality product, keeping your shelves stocked and your customers happy. Establishing consistency in quality and price—along with prompt payments to suppliers and growers—will benefit everyone, including both you and your customers.
To ensure any inventory on the floor remains high quality, inspect it manually upon delivery and conduct regular audits. By logging every product by lot/batch number and tracking it meticulously, you not only stay on top of trends and know what’s popular but also ensure compliance, including secure disposal procedures. Investing in temperature-control solutions, airtight storage containers, and UV light protection also keeps cannabis products fresher for longer, ensuring the product isn’t wasted.
Crucially, these supplier relationships also serve as a safety net and help dispensaries weather inevitable supply chain hiccups when they happen. Industry events like MJBizCon and other conferences can offer great spaces for networking and relationship building, and online B2B marketplaces like LeafLink connect brands with businesses for wholesale stocking.
Hire good people and train them well
Even though dispensaries and headshops operate in a specialized and highly regulated space, general business best practices still apply. Business owners should hire responsible and trustworthy employees who are personable, friendly, and smart. In the cannabis industry, budtenders not only need to have product-specific knowledge and expertise, but they also need to stay up-to-date on compliance protocols in a constantly evolving and intentionally confusing regulatory landscape.
As your first line of defense against compliance issues, employees need to be able to do more than recommend their favorite products. When hiring, look for candidates with previous retail experience, and beyond sales experience, make sure they are personable and helpful, offering a tailored customer shopping experience that is thoughtful, seamless, and educational. All staff should receive training on both products and compliance and become masters of both. As you understand the nuances of state-specific compliance laws, you also need to stay current on local law, since municipalities and counties can often set their own differing standards.
Mango Cannabis is a small, family business operating across Oklahoma, Michigan, New Mexico, and New York. Mango’s co-founder and chief operating officer, Mike Khemmoro, told MJBizDaily that if he could do it again, he would’ve started building the team’s talent earlier “to accommodate expansion in a more manageable way”. Other dispensaries strongly recommend a soft launch before the store’s grand opening, which builds in buffer time to work through operational kinks, ensures staff are fully trained and confident in a lower-pressure environment, and allows for a smoother customer experience upon opening to the general public.
Don’t reinvent the wheel
Unlike in the early days of recreational legalization, there are now abundant resources to help new cannabis retailers get started. Featured in our Women in Cannabis column, Aubrey Amatelli built PayRio specifically to help cannabis businesses manage payments in a heavily regulated and convoluted landscape. Industry-specific point-of-sale devices and other software now allow dispensaries to accept cards and streamline the payment process in ways that were previously not possible.
Similarly, there are customer relationship management (CRM) platforms designed by and for cannabis businesses to track sales, customer engagement, and compliance all in one place. For dispensaries and other B2C retailers, it’s essential that your chosen CRM integrates directly with your POS system so you can log every customer transaction automatically, helping with inventory management as well as state and local compliance tracking. CRM software can also help businesses manage email and SMS marketing, establish customer loyalty programs, and run personalized promotions.
While it may be more costly up front, building the infrastructure first will make your life exponentially easier down the line, seasoned retailers say. Doing everything by the book from the beginning and investing in industry-specific solutions upfront allows businesses to scale more seamlessly. “It is easier to fly the plane if you are not trying to build it at the same time,” Mango’s Khemmoro says.
Looking to learn more from experienced shop owners and operators? Explore our Shop of the Month features for valuable insights, proven strategies, and advice from some of the best in the industry.
