Dispensary tips

Cannabis marketing 101: how to market and promote your dispensary

By
Lindsay Crafford
October 19, 2022

If you’re running a dispensary, you're focused on several jobs-to-be-done at any given time. But debatably the biggest challenge you're faced with today is: how can I make more money?

In their approach to revenue generation, some retailers choose to focus on attracting and retaining new customers, while others seize the opportunity to sell underperforming products at a discount so they can re-stock with luxury brands. Regardless of your dispensary's business goals, some good ol’ fashioned marketing will be central to your success. Enter: the 4 Ps (AKA the “marketing mix”).

Marketing strategy for cannabis dispensaries

If you’re an experienced marketer working for a cannabis retailer, the 4 Ps of marketing might strike you as a bit of a throwback from your college days. But for those of us who work in cannabis and didn’t study marketing, it’s possible you’re seeing this phrase for the first time.

So, if you’re ready for a crash course in marketing, keep reading—class is now in session.

What are the 4 Ps?

The 4 Ps of marketing are product, price, promotion, and place; all of which are key factors involved in marketing any product or service. Also referred to as the “marketing mix”, the 4 Ps are meant to guide you in your journey of marketing, promoting, advertising, and positioning your brand. When used strategically, they’ll tell you everything you need to know about how to best market your dispensary.

One way to get started with the 4 Ps is to re-imagine them as questions, and then answer them. Answering these questions will encourage you to think more strategically about how best to reach your customers and drive sales. For example, you might ask yourself:

  • Product: Does my product (or inventory) meet my customers’ needs?
  • Price: What is the value of my inventory? What deals and discounts can I offer?
  • Promotion: How can I differentiate my dispensary from my competitors’?
  • Place: Where are consumers looking for products, and how can I reach them?

So without further ado, let’s get into it.

1. Product

Stock your inventory with tried-and-true favorites. One way to get a pulse on consumption trends is to research the products that have been consistently popular over the past year. This is where historical data comes into play. These insights don’t just show you what sells and what doesn’t—they also highlight peak sales times, so you know when you expect (and prepare for) increased foot traffic.

Still, keep in mind that inventory is a balancing act—you’ll also want to make sure you’re up-to-speed on what’s trending. Take edibles, for example. The edibles craze is in full-swing, having become extremely popular with new consumers. Cannabis-infused beverages are also gaining traction, likely due to their overall subtlety and perception as being “socially adaptable”. Infused liquid products, like tinctures, are also tempting because they kick in much faster. The speed of absorption is appealing to consumers because they don’t have to wait for their bodies to metabolize the THC.

2. Price

Pricing is one of the most powerful components of a successful retail operation. But when it comes to your dispensary’s marketing strategy, the process isn’t as straightforward as you might think (and it’s especially tough on the first-time retailer). We know that only a small portion of dispensary owners have a retail background, so let’s break it down—starting with pricing discounts.

The complexities of retail pricing

At first glance, retail pricing seems like simple math. You purchase some volume of wholesale goods—in this case, flower, edibles, or other cannabis products—for a certain cost. You then add a comfortable margin and sell it at retail shops for a higher price. The margin becomes your profit. Everyone’s happy, right?

In reality, things aren’t so simple. As a retailer, here are a couple of nuances to take into consideration:

Regulation:

  • Cannabis is a highly regulated industry, with high taxes to boot. Many dispensaries choose to support these costs by passing them on to their customers via retail prices.
  • Certain items can’t be sold below their wholesale cost in several states. In this case, pricing discounts may have to begin at the vendor level, since the retail price cannot be reduced.

Packaging:

  • The proper packaging can create a memorable experience for your customers—but it comes at a cost. If you decide to go this route, don’t forget to factor the additional labor and production costs into your pricing strategy.
  • Depending on your state, you may be required to adhere to local regulations outlining specific packaging requirements. This commonly includes things like weighing (and sealing) flower and childproofing, which can add up. Check your state’s regulations regarding packaging to ensure your dispensary remains compliant.

3. Promotion

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. Canada’s laws are even stricter. 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), dispensaries still have options.

Disclaimer: Be sure to research local marketing and advertising guidelines as it relates to cannabis in your community.

How consumers choose their go-to a dispensary

Cannabis consumers are clear about the factors they consider the most important when it comes to choosing one dispensary over another. Dutchie surveyed hundreds of cannabis consumers across the US, and we were surprised to discover that the deciding factors for medical and recreational use were essentially the same: product quality and product selection/variety.

Let’s look into the specifics of each factor and how it affects consumers’ dispensary choices.

1. Product quality

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.

While many consumers struggle to identify what makes a certain product their favorite, they’re crystal clear on what makes a bad product—such as dry, stemmy, or seedy flower; or relatively low levels of THC or CBD.

Stocking your shelves with quality flower, vaporizers, edibles (and more) delivers a high-value shopping experience, increasing the likelihood of word-of-mouth promotion within your community. This means your customers are doing the marketing for you!

2. Product selection/variety

While stocking quality bud is a sure-fire strategy for the dispensary owner, variety is equally as important. Many consumers enjoy experimenting with new and different strains.

Newbies in particular take more time to find a strain and delivery method that works for them. For a dispensary with a large variety of products, this means a single consumer is likely to make dozens of purchases before landing on their product of choice.

Having a wide selection encourages this behavior and gives budtenders ample opportunity to engage consumers on a regular basis. It’s through this “testing phase” that budtenders can guide consumers on their journey to finding their perfect high, while capitalizing on the additional up-selling and cross-selling opportunities presented.

4. Place

Ecommerce has become an indispensable part of the global retail framework. Mainstream marketing studies expect online retail sales in the US to reach nearly $600 billion by 2024. This growth is affecting cannabis retailers in particular, who began to rely heavily on ecommerce and POS technology to support customer safety and social distancing during the height of COVID-19.

If you aren’t convinced, check out these statistics from the State of the Cannabis Industry regarding the explosion of online sales in 2020:

  • Between March 16th-April 24th, dispensaries with order ahead capabilities sold 22% more on average compared to those without.
  • During the same time period, online ordering drove an 8% increase in transactions and a 13% increase in average basket size.

Dispensaries with online ordering capabilities continued to outperform those without, even as the market stabilized. For example—on April 2, 2020, average daily recreational sales were 27% higher for dispensaries with order-ahead in Colorado, and 18% higher for those in California.

As we emerge from the pandemic, the value of online ordering lies in its overall convenience—so if your dispensary lacks an online presence and ecommerce capabilities, you’re behind the eight-ball.

The bottom line

Marketing in cannabis focuses on the consumer’s wants and needs, discounting appropriately, and going digital in all aspects of your online sales. The 4 Ps of marketing—product, price, promotion, and place—can help you determine how to run holiday sales and which products will receive the most hype from your consumers.

About the author
Lindsay Crafford
Sr. Content Marketing Manager