Marketing in the cannabis industry is a notoriously complex challenge. All legal cannabis states have different laws regulating dispensary messaging and channels, most of which are highly restrictive. At the same time, dispensaries have to compete with black market operators and a federal-level ban on cannabis products to gain popularity with customers.
But even without the ability to advertise in most public spaces or promote products using mass media (unless it’s verifiably adult-oriented, like in California), legitimate dispensaries do still have options.
Cannabis consumers are clear about the factors they consider the most important when it comes to choosing one dispensary over another. We ran a comprehensive set of market surveys asking cannabis consumers this exact question and we uncovered these insights.
We surveyed hundreds of cannabis consumers across the United States and were surprised to discover that the primary factors cannabis consumers pay attention to when choosing a dispensary are mostly the same between both recreational and medical users. This means that both medical and adult-use dispensaries can improve sales figures by meeting customer expectations in the following areas:
Let’s look into the specifics of each factor and how it affects consumers’ dispensary choices.
Location is cannabis users’ number one concern when choosing a dispensary.
In this way, cannabis dispensaries are similar to fast food and casual restaurants – convenience trumps most other considerations for the majority of patients and customers. Convenience, proximity, and parking availability all play a role in choosing the perfect location for a dispensary.
In practice, this means that a cannabis consumer is likely to regularly visit multiple dispensaries. A single consumer may have a favorite dispensary to go to from home, another to visit on the way back from work, and a completely different one nearby a friend or family member’s house.
For current dispensary owners, this presents an opportunity to improve sales through customer categorization. A dispensary located in a busy commercial district may want to highlight offers that will appeal to potential consumers nearby, e.g. people leaving work. They might want something convenient to smoke when they get home, like a discounted pack of pre-rolled joints after a long day at work.
With that, state regulations often get in the way of finding the perfect location. Dispensaries typically can’t be located within 500-1,000 feet of schools and similar institutions, and local laws may impose other requirements. This is often troublesome in high-density urban areas. For those looking to open a dispensary or add new stores to their enterprise, be cognizant of the importance of location.
If a consumer has to choose between two dispensaries that are roughly an equal distance away, the one with better quality cannabis products will usually earn the sale. However, defining quality can be challenging – the cannabis industry is similar to the wine industry in this regard.
Neither the strongest cannabis concentrates nor the highest alcohol-by-volume wines are considered the best. Like wine consumers, cannabis consumers often struggle to explain what it is they like about their products of choice, and environmental factors can change their opinion.
However, cannabis enthusiasts have a clear conception of what makes a bad product. Dry, stemmy, or seedy flower (and relatively low levels of THC and CBD) is usually considered low-grade. Medicinal-grade cannabis is similarly easy to pick out, especially for patients who rely on cannabis products to ease various symptoms.
Just like wine, brand reputation often takes precedence over the functional characteristics of cannabis products. Stocking your shelves with recognizable brands generates a sense of social proof among customers, raising the respectability of the entire dispensary and sending a clear message to customers about product quality. You don’t always have to supply popular brands, but having a few products like that on your shelf may help instill trust in new customers or those customers traveling through.
While stocking great cannabis bud is a sure-fire strategy for the dispensary owner, stocking variety is equally important. Although many cannabis consumers find their favorites and stick to those products, many will periodically test different strains and products that use those strains.
Industry trends are important to pay attention to here, as a wholesale brand’s social media may indicate a new, blossoming strain that attracts attention. Within the last year, the strain GMO which stands for “Garlic, Mushroom, Onion Cookies,” has become a genetic phenomenon. This classic Girl Scout Cookies cross emerged from an already popular strain. If buyers are open to listening to a strain’s hype, they can tailor their menus to a selection that is guaranteed to sell in many forms: GMO vapes, concentrates, joints, and more. Pay close attention to these trends and capitalize on them based on your store’s customer sales data.
Newcomers to the world of legal cannabis typically take time to identify the strain and delivery method that best meets their needs. For a dispensary with a large variety of products and a convenient location, this means that a single consumer is likely to conduct dozens of transactions before finding the product they like best.
Having a wide selection encourages this behavior and gives budtenders ample opportunity to engage consumers on a regular basis. It is through this “testing phase” that budtenders can guide consumers to the ideal product and delivery method while capitalizing on the additional up-selling and cross-selling opportunities presented.
Dispensaries must keep track of what products their customers purchase in order to remain compliant with state regulations. But that data also gives dispensary owners unique insight into sales trends. By making this information available to budtenders, dispensary owners can leverage consumer behavior patterns to personalize their sales approach. Dutchie analytics can help you determine what brands are selling well, and which you could take a pause on ordering.
For most cannabis consumers, product price is a final – but important – consideration when choosing between different dispensaries. If a consumer already knows what cannabis product they would like to purchase and is aware that it is significantly cheaper at one dispensary than another, there is a good chance that the dispensary with the lower price will win in the long run.
Medical dispensaries have more to gain by lowering their margins to attract customers. Back in 2019, it was determined that medical cannabis patients spent an average of $136 every ten days on medicinal cannabis products, while recreational users spend an average of $49 every two weeks. It’s impossible to tell how much black market sales affect these numbers as unlicensed dispensaries don’t report their sales figures.
Based on New Frontier Data, Forbes predicts that cannabis sales will jump significantly by 2025:
“By 2025, 42% of the total annual U.S. cannabis demand is projected to be met by legal purchases in regulated marketplaces. This is a 24% jump from 2020... As more states legalize and cannabis consumption increases, investor confidence has also grown. The study found that in May 2021, fundraising in the legal cannabis market more than tripled, amassing $6 billion.”
With higher industry investment comes the spread of markets and a surge of new and larger cannabis brands, which, economically speaking, should send prices down. Maintain that competitive edge with your store’s pricing strategy before the market expands.
Legitimate dispensaries can earn greater customer loyalty by offering daily deals for their most popular products. Social media promotions are also effective, but some states limit how explicit dispensaries can be when promoting their products online.
Another tried-and-tested way to improve customer fidelity is through cannabis customer loyalty programs. Several vendors like Foottraffik, Alpine IQ, and SpringBig have purpose-built applications for customer loyalty in the cannabis industry. Reward customers who shop with you frequently to keep them coming back. Using one of these (or creating your own) can significantly improve sales figures per customer in the long run. Learn more about developing customer loyalty in the Canadian markets, with How to drive customer loyalty for cannabis retailers in Canada. (Most of these tips are also valuable in the US as well, but this post adheres to the more limited policies in Canada.)
Both medical cannabis dispensaries and recreational cannabis dispensaries have a lot to gain by implementing modern customer relationship management tools at the budtender level. An accessible cannabis dispensary with a variety of high-quality products can personalize the customer experience for patients and customers more effectively than its competitors.
