Dispensary tips

Switching to recreational cannabis sales: 8 steps to success

May 31, 2022

Step 1: Rethink the flow of your store

When you have medical patients, you may have a few patients come in at a time. But when you go recreational, the whole flow of the store should change to accommodate the significant increase of new customers. Rather than being like a pharmacy, you need to start mimicking the workflows of traditional retail stores.

This means:

Restricting access to the products while maintaining flow.

All states have rules regarding restricting cannabis access. Most retailers choose to use waiting rooms or some kind of gated entrance layout to control this. It’s certainly possible to go without a standard waiting room and maintain a barrier-free zone for medical patients with limited mobility, but the main compliance concern with making a store too accessible is that the product could also be too easily accessible.

Our Compliance Research Associate notes that in some cases, dispensaries have someone at the door still controlling access at all times. In others, they've concealed products from public view with some kind of partition so no one can see the goods until their IDs have been verified. Operating your store without a physical barrier can compromise compliance and security measures, but it’s possible to regulate with strategically-placed staff.

Considering the checkout process.

You’ll want the checkout process to be as efficient as possible. This may mean pre-made labels and pre- weighed and sealed flower—as opposed to items that require labels printed on the spot. It may also mean implementing a POS system with a fast transaction time.

Being deliberate about product displays.

How do you show off your product and educate customers in a retail environment? With more people in the store, customers may not get as much one-on-one time with budtenders. Consider implementing terpene and effect graphs throughout the store so users can learn at their leisure.

Preventing product theft.

More people in the store means more opportunities for customers to try to steal products. Yes, we’ve seen it happen. You’ll have to think about the layout of your store to minimize theft and comply with your state regulations regarding required security measures. Cannaspire is a consultant group with experience in cannabis security and may be able to help.

Minimize on-site cash risks with Dutchie Pay.

The potential for cash theft can be reduced by implementing an integrated digital payments solution, like Dutchie Pay, that reduces the amount of cash going in and out of your store. Consider signing up for the waitlist.

Step 2: Decide on your business model 

There are many different types of stores out there, and you’ll have to find your place among the competition. Will you model your business after a retail giant like Walmart, offering a wide array of products from a number of different growers? Or will you operate more like a boutique, offering a limited, curated collection of products from one or two different growers?

Speed and convenience make it easy for customers to come in, get their product, and be on their way. With this model, you may have a much larger inventory, but risk not being able to offer the same time and attention to each shopper.

On the other hand, the customer-centric “boutique” model is based on educating customers and providing them with a more personalized experience. This approach is more limited in terms of offering only high-end products, but it gives you and your staff the opportunity to sell a curated collection and work more directly with each customer.

We’ve seen both models be successful, but it’s hard for retailers “in the middle” to get it right. Now is the time to begin thinking about what model you’d like to execute. Once you decide, you can build your business around that model.

Step 3: Make sure you have exceptional inventory management in place

With recreational cannabis sales in place, it’s your responsibility to manage your inventory so that you have the product that customers want. In the beginning, you can research wholesale brands to determine their quality and user engagement. In-store, you can use your Dutchie Analytics to follow consumer trends. Armed with these insights, your purchasing team will not only have a window into what’s hot—but they’ll also understand what consumers find most effective. In cannabis, product hype can be short-lived, so try to maintain inventory that provides a consistent (and quality) experience.

A huge part of inventory management is having a point of sale that can sync with the state traceability system and offer additional auditing tools. Cannabis retailers must reconcile their on-hand inventory within their POS, which must also be reconciled with traceability. Auditors will focus solely on information reported into the state traceability system, so having a trusted POS that helps you maintain this balance and flags traceability errors is critical to proper inventory management.

How to manage your online inventory

When it comes to online sales, Dutchie Ecommerce can keep your inventory sorted in a few ways:

As you transition from serving only medical patients to medical and recreational, Dutchie gives you the tools to ensure that your medical products remain accurate and compliant alongside their recreational counterparts. This includes tools that ensure that prices, taxes, and applicable discounts are highlighted. Your consumers will be able to shop both menus from a single place while serving both types of customers.

Dispensary managers can also create discounts tailored to each type of consumer, rewarding them for their loyalty. Discounts go a long way in driving customer retention—remember, with new customers, comes new opportunities to create brand affinity and grow a loyal customer base. Make sure you check your market’s regulations before issuing a discount, as some limit or ban discounts altogether. 

Innovative ways to manage supply

If you’re low on stock of a certain product, get creative! Find innovative ways to repurpose the products you do have. For example, you can create pre-rolls out of existing flower to create an entirely new product that excites your customers. This is allowed in a lot of states, but not California for example. Make sure to confirm that this is allowed with your local packaging rules.

When one retailer was unable to supply their customers with edibles, they experimented with “make your own” edible kits, which included flower, baking supplies, and DIY instructions. These kits were such a success that the store continued to sell them even when they were able to stock other edibles.

Step 4: Stay on top of the ever-changing rules

Since the regulations around recreational cannabis change constantly, being proactive is key. What was legal last week may be illegal this week. Read up on the latest cannabis news in your state to ensure you’re compliant at all times. We recommend subscribing to updates via your state’s website if they don’t automatically update you.

It’s also a good idea to develop a rapport with your regulating officer. Be open and willing to ask questions when you aren’t sure, and turn to them when you need clarification. Our friends at Canna Advisors and Vincente Sederberg are here to help guide you as well.

Step 5: Get the right tools

The right tools can make reporting, managing inventory, compliance, and sales easier for cannabis retail owners and managers. Rather than manually entering seed-to-sale information through METRC or BioTrack, retailers can automate the process using a POS solution like Dutchie’s—saving 200+ hours per year and significantly reducing manual errors.

Step 6: Vet your vendors

Many are trying to get rich off the new cannabis market, which means you need to “weed out” uneducated vendors. These vendors may have good intentions but aren’t aware of the scope of the challenges in the cannabis market.

Mistakes made by your cannabis vendors could have compliance implications for you as a retailer. Some common examples of this are labeling and traceability categorization. We’ve seen retailers get audited for the labels on products provided by vendors. Once the retailer has accepted it, then the products are their responsibility.

Tread carefully—we’ve also seen vendors assign products to the incorrect category in the traceability system. In one case, the processor had mistakenly set their package of pre-rolls as a concentrate. The retailer who purchased them did not catch this before the sale, leading them to be investigated for what appeared to state regulators as gross overselling.

Whether you’re considering purchasing from a wholesale brand or distributor, make sure your vendors have worked in the industry before. Get a consultant to help if you’re unsure.

Step 7: Find innovative ways to care for your team

Just because cannabis is not federally legal does not mean you can skimp on providing benefits for your team. Your staff is the lifeline of your business—and as a retail owner or manager, you need to keep their best interests top of mind.

The most successful retailers offer health insurance to their employees, and some have even figured out how to offer employees paychecks via direct deposit. This works when retailers agree to pay a third-party company to manage payroll, allowing employees to receive a paycheck just like they would anywhere else. (Source: Cannabis Station)

Step 8: Don’t lose sight of the overall experience

A cannabis shop can be more than a pit stop full of Bob Marley posters. Retail innovators are designing shops that feel more like luxe boutiques and hipster hangouts. These shops prioritize the experience they offer more than a standard liquor store or pharmacy and work to destigmatize cannabis.

For example, Farma, a retail cannabis shop in Portland, Oregon, is outfitted with clean lines and a modern look, providing a clean and luxurious environment for customers, as well as design inspiration for recreational shop owners everywhere.

Remember: the experience goes beyond retail. As an adult-use retailer, you may feel the need to help destigmatize cannabis consumption. One way to do that is being really thoughtful about the entire shopping journey. 

In this new era of cannabis, current medical store owners should be prepared for the new challenges ahead. As cannabis is legalized and regulated in states across the country, there will be changes in regulations, customers, and compliance.

Ready to discover more about what to expect with recreational sales? Download the full guide.

Ready to grow together? Book a demo today.

About the author
The Dutchie Squad