7 Challenges When Opening a Dispensary in July 2020
With sales on pace to grow 20% in 2020 over 2019, it appears COVID-19 has done little to slow the Green Rush thus far. It seems like a logical conclusion to buy into the cannabis industry and open a dispensary yourself. Celebrities and corporations all want a piece of the pie, too. States such as Missouri are opening their medical marijuana markets for the first time. States like Oklahoma are booming and awarding more cannabis business licenses. And states like Illinois are ramping up their social equity programs. Being awarded a cannabis business license is a major challenge in and of itself that requires time, money, legal knowledge, perfection, and sometimes even a little luck. But, the challenges are just beginning for those who are awarded cannabis licenses. Here are some of the most common dispensary challenges and oversights when opening a cannabis storefront:
Cannabis laws and regulations vary greatly by geographic location. As a dispensary owner, it is key to have a working knowledge and understanding of your local laws and ordinances. The lawyers, tax professionals, compliance managers, etc that you employ will help you navigate the messy regulatory framework. Still, it is best practice to stay as up-to-date as possible as cannabis laws and regulation change frequently– especially during this pandemic. Medical marijuana and recreational cannabis dispensaries have very different regulations and standards than other businesses. Even a small in-store renovation is required to be cleared by the marijuana commission in some municipalities. Failure to abide by compliance and regulations can result in fines and up to revocation of licenses. Never cut corners and always ask yourself if there is a law before making decisions. Subscribe to blogs and other publications to stay on top of industry news and ahead of the curve.
Banking and Taxes Dispensary Challenges
Cannabis is a cash-only business, and this is probably the biggest dispensary challenge. Cash businesses attract crime and leave your employees and customers at risk. A federal cannabis banking act is getting closer to becoming a reality, though the COVID-19 pandemic slowed much of the progress. Cannabis industry insiders and state treasurers from marijuana-legal states are hoping that a new COVID19 relief bill will include a sweeping cannabis banking law. Moving to a cashless system at the dispensary will be a game changer for dispensaries and customers. Taxes are another major challenge for the cannabis industry. In some cases, cannabis businesses are taxed two or even three times at different levels up to 70%. Use a trusted and vetted tax professional– one that specializes in the cannabis industry if possible.
Investing in Security
Dispensary security is one of the areas to invest the most in your cannabusiness. Security regulations are typically laid out in your state or municipality’s cannabis code. As we wrote in our recent Quick Guide to Dispensary Security, it is best practice to go above and beyond what the law requires. Do not skimp on cheap cameras and alarm systems. Investing in security is an investment into your business.
Investing in Employees
Increasingly, it is becoming apparent that dispensaries with staying power typically have a positive employee work environment. Hiring full-time employees, paying a living wage, and offering a benefits package are ways to foster a positive work culture. Some cannabis businesses are even offering stock options to their employees. Happy employees that feel connected and proud of the brand make your job of running a dispensary much easier and more effective. The customers certainly notice!
Inventory, Tracking, and Reporting Compliance
From “seed to sale” is a common saying in the cannabis industry and is a dispensary challenge. Again, this is another major regulatory hurdle that the cannabis industry faces over the majority of other consumer packaged goods. Any hiccups or irregularities in inventory reporting can cause a loss of license. Cannabis products must be tracked from the time they enter your store, to the shelf, and finally at the sale. Having an integrated point of sale system that tracks your inventory is one of the most important operational decisions you will make for your dispensary. IndicaOnline is a cannabis POS system for dispensaries that tracks your inventory in real time and also has a reporting feature which makes compliance easy. IndicaOnline is fully integrated with Metrc reporting to make sure you always remain compliant.
If you haven’t done so already, check your local regulations regarding setting up your own online store in addition to your storefront. An online store can facilitate delivery, curbside pickup, and in-store express checkout. Potify is a digital platform for dispensaries that integrates with your inventory and updates your online menu in real-time. This gives customers the Postmates or Amazon shopping experience from the comfort of their own home at their own convenience. Even when the COVID19 virus goes away, it is clear cannabis consumers will continue to buy cannabis online. Some shop owners are seeing 20% of their entire revenue coming from delivery sales. Not capturing all available revenue is one dispensary challenge that is easy to overcome with an online store.
Using Data and Technology
Long gone are the days of passing around a sign-in clipboard at check-in. Now, all data must be stored securely and utilized to make sound business decisions. IndicaOnline offers a cloud-based security system to keep your customer’s information safe. In addition to complete sales history for every patient, reviewing global analytics and sales reports allow you to make informed decisions for purchasing. Your POS software system should integrate in real-time with online menus such as Weedmaps, your online store, and the digital menus in-store.
Overcoming Dispensary Challenges
For all of the success stories and “Green Rush” hysteria, there are many more failures. There are challenges along the way to running a successful dispensary at every stop. Knowledge and technology aid in overcoming many dispensary challenges.