News and updates

This Week in Cannabis Retail: July 22, 2022

By
Jay Rosenthal
July 26, 2022

Dutchie is thrilled to announce the launch of our latest content program, This Week in Cannabis Retail, hosted by Lead Content Producer Jay Rosenthal.

Every Friday, we'll be taking to LinkedIn to provide the latest and greatest market insights from that week, as well as happenings in the Dutchie universe. The program will be divided into three segments: what you need to know, followed by an interview with a thought leader in the cannabis space, and then we'll wrap up with what folks can expect from the Dutchie Squad in the coming weeks.

So without further ado, let's get to it!

Here's what you need to know this week

The U.S. Senate bill finally dropped. Senate Majority Leader Chuck Schumer, Senate Finance Committee Chairman Senator Ron Wyden, and New Jersey's Cory Booker formally and finally introduced the Cannabis Administration and Opportunity Act on Thursday. This is a legalization bill that is a year plus in the making, so it's been heavily anticipated. Here's what it might do:

  • It would remove cannabis from the Controlled Substances Act.
  • It would impose a federal cannabis excise tax, have that tax be varied based on size of the business, and set a federal age limit for cannabis purchases.
  • It would expunge certain cannabis conviction records and a slew of other measures.

But—and this is a big one—although the bill has the support of 60 senators, it's unclear how this will proceed.

Further down Pennsylvania Avenue and a little bit earlier in the week, President Joe Biden spoke to reporters after returning from Saudi Arabia, stating "I don't think anyone should be in prison for the use of marijuana." This was in response to a question from the New York Post. So, there's lots of conversation on the cannabis front in the nation's capital this week. 

New York is finalizing the rules for retail applications. The state is closer and closer to finalizing the rules for adult use. They approved their application forms for retail licenses and importantly, accepted more cultivation permits, bringing the number of cultivators in New York that are approved to 223. That's all according to Marijuana Moment, and that's not all. The governor of New York announced a plan to provide $5 million in funding to community colleges in that state to support programs to get New Yorkers into the cannabis industry. So New York is becoming becoming the central hub of cannabis in the U.S.

And not to be outdone in the northeast, Connecticut says they're about six months away from having adult use cannabis sales. Personally, I love when elected officials use Twitter and use it often, because sometimes you can learn a lot. Like last week, we learned about Connecticut's timeline for adult use via a tweet from Governor Ned Lamont, who responded in his "Ask Ned Anything" segment,

"I just got my latest briefing on an adult use cannabis this week. We're about six months away from opening a safe and equitable market." — Governor Ned Lamont (D), Connecticut

From an expert

Given that this is the pilot episode of This Week in Cannabis Retail, we're thrilled that we had a chance to catch up with the Co-founder and Chief Product Officer of Dutchie, our very own Zach Lipson. He joins us to discuss the news that we dropped this week about launching Dutchie Pay, the first fully integrated digital payments solution for cannabis retail. Continue reading for the top highlights.

On the key pain points that Dutchie Pay was designed to alleviate

"Because cannabis is still illegal at the federal level, credit card companies are not willing to process payments through through their networks. So if we can't take credit cards in the space, what that does is it forces these dispensaries to rely very heavily on cash. Cash is still king here, and the reason that that's a problem—aside from the fact that it is just that's not something we're used to from a consumer perspective—is that it creates a lot of challenges on the business side. One being that cash is expensive. When you're managing large amounts of cash at the retail level, you're having to pay for security. You're having to pay for things like transportation of that cash. So it's a very real cost. And then you look at it from an operational perspective, and it's inefficient to manage cash. You're introducing human error that leads to all sorts of challenges downstream."

"The biggest problem is that it's not safe to handle large amounts of cash. Dispensaries are dealing with theft and robbery. They're being targeted because they're having to handle these massive amounts of cash. We talk to these dispensaries. We want to be able to provide a solution. Our mission as a company is to provide safe and easy access to cannabis is something we've been focused on for the past five years. So when we looked at this problem, this was an opportunity to to really lean into that mission even further and hopefully provide a more normalized cannabis solution for payments."

On the magic of Dutchie Pay for consumers

"I think the unique thing for us is because of our other offerings, our ecommerce solution as well as our point of sale solution, we had the opportunity to build a fully integrated system. So instead of just offering, bank payments through our ecommerce solution, we said, you know what, let's utilize the power of of the ecosystem that we've built and let's create a more seamless solution for our dispensaries."

"When you think about buying something on Amazon, or ordering your lunch on DoorDash, you're not putting your payment information in every time. It's set it and forget it. That's the experience. That's the convenience and the simplicity of of payments today. And we haven't had that in cannabis. In fact, it's been the total opposite. You've got a breach in your wallet, you've got to get cash out. You maybe have to go to the ATM, right? Pay a high fee, maybe. Maybe you even you even just walk out of the dispensary because you're like, 'I don't want to do that and I'll go home.' These experiences are just horribly disjointed. So from the consumer perspective, Dutchie Pay just provides that convenience and that simplicity that we've come to expect from payments. And furthermore, you can utilize it at any of the dispensaries that utilize dutchie pay, you know, that utilize our ecommerce solution and actually pay in conjunction with it.  So there's this really incredible network effect. And if you see that green button, you know that you're going to have a simple experience to log in and pay for your order. 

On how Dutchie Pay optimizes operational workflows for dispensaries

"What was really important to us in building out Dutchie Pay and creating the solution is that we were able to bring that convenience and that that sort of efficiency and that simplicity to the bartender experience as well. In the past, budtenders would have to go through a number of different steps to tender—grab the cash, input the amount of cash, grab the change, give it back to the consumer. Of course, we talked about the potential for human error there. Now, with the Dutchie Pay order, it simply just says this order's already been paid for with Dutchie Pay, and that's it. That's it. And again, we have the exact value, of course, that we can just simply move into the transaction. It literally eliminates the risk of human error, and it creates a really simple and efficient process for that budtender. Now, compound that. Imagine that's happening all day. What that leads to is dispensaries being able to serve more customers and serve more customers safely."

On Dutchie Pay's impact on consumer behavior

"We're seeing average order values go up 20%, sometimes even 30%, which is really, really exciting. Because consumers are able to use a simple payment method, a digital payment method, they're not reaching for cash. We're actually seeing them purchase more, which is great. We're seeing a decrease in abandoned carts, so they're actually completing the shopping experience. I think when we peel back the layers of that and start to do a little bit of more analysis, it really comes down to drop off at the final piece of the funnel, which is checkout. And oftentimes we're going to probably see that because they're going to look at the payment methods that are accepted and the customer is going to go, 'well, I don't have cash on me and I don't want to pay in cash. I might go somewhere else.' And that's the beauty of Dutchie Pay—it's breaking down that barrier at the end of the process and allowing that customer to just quickly and seamlessly checkout."

"We're also seeing customers come back more frequently. Higher retention rates are of course, great for our dispensaries. It means that the service is really working. The  offering is really providing a great experience for that customer. And then of course, we talked about the problem of cash and the fact that it actually costs money to handle cash. We're seeing those numbers go down as well. So roughly about 15% is the reduction that we're seeing in cash management fees so far for dispensaries. "

Dutchieverse happenings

It was a busy one, of course, here at Dutchie as we talked and launched Dutchie Pay. Now a few things coming up:

  • Wednesday, August 10th: we'll be having a webinar with our friends in Vermont, titled "Launching a Cannabis Business in Vermont".
  • Thursday, August 11th: We've got another webinar on the books, and it's all about cashless payments and how they can boost dispensary sales. This content will focus primarily on payments, but specifically around Dutchie Pay.

And of course, you can view (and register) for all upcoming events, from point of sale and payments to business strategy and ecomm, on our LinkedIn page.

Full transcript

Jay Rosenthal [00:00:13] Welcome to This Week in Cannabis Retail. My name is Jay Rosenthal and I'm the Lead Producer of Content here at Dutchie. This is a new program, obviously, that we're putting on. And here's what it will look like every week. 

Jay Rosenthal [00:00:26] First, we'll share the most important stories impacting and affecting cannabis retail. Sort of a, "what you need to know" segment. Then we'll talk to an expert. Now, that expert might be someone here at Dutchie, like it will be today, or might be someone that has deep knowledge or expertise about a specific slice of cannabis—retail or a specific jurisdiction. So that'll be our second segment. And then finally, we'll wrap up the program with a look at what's happening in the Dutchie universe over the next few weeks. Because as we launch this program, we're also kicking off a ton of new webinars and in-person events. So you'll want to bookmark our LinkedIn page where you're watching this and make sure to check back here noon Eastern, 9am Pacific on Friday. And we will make this program quick, we promise. We promise no more than 15 minutes. So let's get to it. 

Jay Rosenthal [00:01:31] Here's what you need to know. The U.S. Senate bill finally dropped. That's right. Senate Majority Leader Chuck Schumer, Senate Finance Committee Chairman, Senator Ron Wyden, and New Jersey Cory, New Jersey's Cory Booker formally and finally introduced the Cannabis Administration and Opportunity Act on Thursday. Now, this is a legalization bill that is a year plus in the making, so it's been heavily anticipated. Here's what it might do: it would remove cannabis from the Controlled Substances Act. It would impose a federal cannabis excise tax, have that tax be varied based on size of the business, and set a federal age limit for cannabis purchases. It would expunge certain cannabis conviction records and a slew of other measures. But—and this is a big one—it's unclear... it has the support of 60 senators, but it's unclear how this will proceed. So we will keep our eyes on that. More information and link to stories in the description below. And then further down Pennsylvania Avenue and a little bit earlier in the week, uS President Joe Biden spoke to reporters after returning from Saudi Arabia and said this quote, "I don't think anyone should be in prison for the use of marijuana." This was in response to a question from the New York Post. So there's lots of conversation on the cannabis front in the nation's capital this week. 

Jay Rosenthal [00:02:50] New York is finalizing the rules for retail applications, which is good news. They are closer and closer to finalizing the rules for adult use. They approved their application forms for retail licenses and importantly, accepted more cultivation permits, bringing the number of cultivators in New York that are approved to 223. That's all according to Marijuana Moment, and that's not all. The governor of New York announced a plan to provide $5 million in funding to community colleges in that state to support programs to get New Yorkers into the cannabis industry. So New York is becoming becoming the central hub of cannabis in the U.S. And quickly and not to be outdone, in the northeast, Connecticut says they're about six months away from having adult use cannabis sales. And me, personally, I do love when elected officials use Twitter and use it often, because sometimes you can learn a lot. Like last week, we learned about Connecticut's timeline for adult use via a tweet from Governor Ned Lamont, who responded in "Ask Ned Anything", he said, "I just got my latest briefing on an adult use cannabis this week. We're about six months away from opening a safe and equitable market." Good luck from your tweet to cannabis consumers pockets and from the Dutchie blog this week. We've a great piece, a great conversation with Nathan Mison of Diplomat Consulting about all things cannabis consumption lounges in Canada. You can find that on our blog at business dot dotcom Lindsay on our team also posted four strategies for surviving and thriving as an MSO in the cannabis industry. And yesterday so Thursday we went down south for a webinar or virtually went down south. For our friends and partners at Mississippi Medical Marijuana Association, known as 3MA, as well as our friends at Green Check Verified to talk all things banking and payments for cannabis business and the emerging cannabis market of Mississippi. You can find a link to that recap of that event in the description of below, but it's on business dot dutchie dot com. So head over there to find out. 

Jay Rosenthal [00:04:52] Next, as this is the pilot episode of This Week in Cannabis Retail, we wanted to launch with, you know, something great. So we're excited that we had a chance to connect with Zach Lipson. He is the Co-founder of Dutchie, but also the Chief Product Officer here to talk about the news that we dropped this week about Dutchie Pay. 

Jay Rosenthal [00:05:13]  Zach, thank you so much for being here. I'm excited to connect with you, one, because I like talking to you, but two, because we're we're talking about Dutchie Pay this week which is a super exciting project to dive deep into. But before we even get to that, we hear a lot and probably you'll particularly hear a lot from Dutchie customers about pain points in the cannabis industry, especially in dispensaries. Talk a little bit about sort of the key pain point that Dutchie Pay is going after. 

Zach Lipson [00:05:50] Great. Yeah. This is something that we're always doing with our customers as we're talking about the challenges that they're facing, particularly looking at what the, you know, kind of challenges are in the industry right now and what's holding back these operators, you know, from being more efficient for running better businesses, for being able to serve their customers in a better way? Payments is one of the largest challenges that these operators are facing. And the reason for that is that, you know, cannabis basically because of its federal status, the fact that is still illegal at the federal level, particularly with credit card companies, you know, they are not willing to allow payments happening, you know, through through their networks, right. So if we can't take credit cards in the space, what that does is it it forces these dispensaries to rely very heavily on cash. And we're still seeing that today. You know, the vast majority of payments happening in the cannabis industry are you know, the retail level are happening in cash. Cash is still king here. And the reason that that's a problem, aside from the fact that it is just that's not something we're used to from a consumer perspective, but for the businesses, it creates a lot of challenges. So let's talk about a few of those. One cash is expensive. So when you're managing large amounts of cash at the retail level, you're having to pay for security. You're having to pay for things like transportation of that cash. So it is it's a cost. It's an actual cost for these dispensaries. 

Jay Rosenthal [00:07:20] It's crazy to think about.

Zach Lipson [00:07:22] It's wild to say that, right? It's like ironic. So there's that. And then you look at it from an operational perspective and it's inefficient to manage cash. You know, you're going to be introducing human error as bartenders are handling cash. It's just natural that, you know, from time to time you're going to have some sort of error when you know, a value is in, put it into the system. And that leads downstream to all kinds of challenges. When you do reporting or you know, you're working on your taxes, you know, just a number of challenges there. And then let's talk about the biggest problem, and that is that it's not safe and it's not safe to handle cash, large amounts of cash. And what that leads to at these businesses are you know, some pretty dangerous and scary things we're seeing, you know, dispensaries that are dealing with theft and robbery. They're being targeted because they're having to handle this, you know, large amounts of cash. You know, so it's something that we've taken really seriously with. We talk to these dispensaries. We want to be able to provide a solution here. You know, our mission as a company is to provide safe and easy access to cannabis is something we've been doing for you know, we've been we've been leaning into hard since the beginning of the company five years ago. So when we looked at this problem, this was an opportunity to to really lean into that mission even further and hopefully provide a normalized, more normalized cannabis solution for payments. 

Jay Rosenthal [00:08:55] And then thinking about it from a product perspective and we are, as you said, consciously listening to our customers dispensaries and cannabis retailers and what will ease some of these pain points. In this case, it's around cash. Then talk about how we come up with that. Talk about what Dutchie Pay actually is, because I think it's important for folks to be able to wrap their minds around that. 

Zach Lipson [00:09:15] Yeah. So, you know, we started to talk to these consumer customers about what they were looking for or the types of experiences that they want to offer. We started looking at how to normalize payments in the space. You know, what were you know, what are the avenues that we had at our disposal to do that? We started working with NACHA which is the, the national governing body of the network, which is the way that money moves digitally, you know, here in the United States. And that was an opportunity for us to to basically work with them and to utilize a digital payment solution that uses the ACH network to basically allow consumers to hook into their bank accounts and do a direct debit out for, you know, their orders. I think the unique thing for us when we started to look at the opportunities that we had is that we basically because of our other offerings, our ecommerce solution, as well as our point of sale solution, we had the opportunity to build kind of a fully integrated system and that was what was unique. So instead of just offering, you know, bank payments through our commerce solution, we said, you know what, let's utilize the power of of the ecosystem that we've built and let's create a more seamless solution for our dispensaries. And that was kind of the the the origin of of the product. So when we actually looked at what it was going to be like, when we actually started to work on this and started to build out the solution, you know, we wanted to create something that was just very convenient, very simple, very familiar for customers. And what that manifested is an express checkout option. So if you're using as a consumer, a Dutchie online menu, it's actually an ecommerce menu, you're going to get to checkout, you're going to see a green button at the top of the experience, at the top of the page. And that's going to say Dutchie Pay. And it's an express option. Clicking that for the first time you're going to go through a very simple sign up, a few steps, you basically fill out a couple of pieces of information, takes just a minute, you hook it up to your bank account and that's it. The customer never has to do that ever again. It's stored to their account with the ecommerce solution that we have and every time they come back, Dutchie Pay is already connected. And that's great, that is that is the familiar experience that we have. You know, when you think about buying something on Amazon or shopping for something, you know, maybe like getting your lunch on DoorDash, you're not putting your payment information in every time it's set it and forget it. That's the experience. That's the convenience and the simplicity of of payments today. And we haven't had that in cannabis. In fact, it's been the total opposite. You've got a breach in your wallet, you've got to get cash out. You maybe have to go to the ATM, right? Pay a high fee, maybe. You know, you even you even just walk out of the dispensary because you're like, I don't want to do that and I'll go home. I'll come back tomorrow and, you know, with some more cash I have at home. These experiences are just horribly disjointed. So from the consumer perspective, Dutchie Pay just provides that convenience and that simplicity that we've come to expect from payments. And furthermore, you can utilize it at any of the dispensaries that utilize dutchie pay, you know, that utilize our ecommerce solution and actually pay in conjunction with it.  So there's this really incredible network effect. And if you see that green button, you know that you're going to have a simple experience to log in and pay for your order. 

Jay Rosenthal [00:12:40] All right. So now we understand a little bit about Dutchie Pay. I'm going to show something that I don't know if someone leaked it to me internally, but I have a little video that that I think will give people that are that are watching a little bit of context of what it actually looks like in real life. So we'll run that and then we'll come right back. Sounds good. 

Zach Lipson [00:12:55] Great. Yep. Sounds great. 

Jay Rosenthal [00:13:47] Okay. So we just saw sort of what it looks like and feels like. And we get we get the gist of it and and how it comes to life. And that's like the consumer side. Like that's why it's so important, obviously. And like, if I lived in the States, I'd be downloading it right now and getting my like getting my bank account attached to my favorite dispensary. But talk about what it means as like a budtender or a store owner. Like how does that integrate with the rest of my point of sale; with the rest of my compliance stuff? How integrated is it? How seamless is it? 

Zach Lipson [00:14:14] Yeah. So as you can see, the experience is really simple. It's really convenient for consumers. What was really important to us in building out Dutchie Pay and creating the solution is that we were able to bring that convenience and that that sort of efficiency and that simplicity to the bartender experience as well. So as we kind of like turn to look at what the budtender now experiences, that Dutchie Pay order is going to move seamlessly from the ecommerce solution, the ecommerce experience directly into the register, right? So that customer then walks into the store, they walk up to the budtender or someone to the front counter. They say, I'm here to pick up an order for X for their name. And basically the budtender has an incredibly simple experience. In the past, they'd have to go through a number of different steps to tender, to, you know, basically grab cash, input the amount of cash, grab the change, give it back to the consumer. Of course, we talked about the potential for human error there. Now, with the Dutchie Pay order, it simply just says this order's already been paid for with Dutchie Pay and that's it. That's really it. And again, we have the exact value, of course, that we can just simply move into the transaction. It literally eliminates the risk of human error, and it creates a really simple and efficient process for that budtender. Now compound that. Like, look at that on a much higher level. Imagine that that's happening all day. What that leads to is businesses are dispensaries being able to serve more customers and serve more customers in a safer way? It's easier. It's simpler. It's going to, again, reduce, you know, human error and any type of risk. And and they're going to just be not relying they're not going to rely on cash anymore because of this. So that's that's kind of another really, really exciting part about this is just that budtender experience. It's like incredibly simple, the feedback that we've gotten from our our customers, our testing, this is just like they love it. It's, you know, it just makes their job so much easier and so much faster. And that's really important for these dispensaries. 

Jay Rosenthal [00:16:19] Amazing. I love it. And I've been following, obviously, as this has been tested in market. And actually that's what I want to ask you about, because what has been you know, we've been through like beta testing with with with some Dutchie customers in in the wild, if you will. And what has been the result? Because we talk a lot about sort of cashless payments and what that means from a from a dispensary perspective, all the things compliance and ease and safety and all that. But from a consumer perspective, does it impact the way consumers shop? 

Zach Lipson [00:16:52] Yeah. So that's one of the one of the exciting things about this product so far. We've been in testing with it for for many months now with real dispensaries that have been giving us incredible feedback. And you know, of course, when we build products like this, we want to see the data. The data tells the story. And the data is telling an interesting story for us. We're seeing average order values go up 20%, sometimes even 30%, which is really, really exciting. So because consumers are able to use a simple payment method, a digital payment method, they're not reaching for cash. We're actually seeing them purchase more, which is which is great. It's something that's very exciting. We're seeing a decrease in abandoned carts, you know, so they're actually completing the shopping experience. I think when we peel back the layers of that and start to do a little bit of more analysis, it really comes down to drop off at the final piece of the funnel, which is checkout. And oftentimes we're going to probably see that because they're going to look at the payment methods that are accepted and the customer is going to go, well, I don't have cash on me and I don't want to pay in cash. So, you know, I might go somewhere else. And that's the beauty of Dutchie Pay. It's not it's breaking down that barrier at the end of the process and allowing that customer to just quickly and seamlessly checkout. So really exciting stuff there. We're seeing customers come back more frequently, which is also super exciting. Higher retention rates are of course, great for our dispensaries. It means that, you know, the service is really working. You know, the offering is really complete and in giving a great experience for that customer. And then of course, we talked about the problem of cash and the fact that it actually costs money to handle cash. We're seeing those numbers go down as well. So roughly about 15% is the reduction that we're seeing in cash management fees so far for dispensaries. 

Jay Rosenthal [00:18:36] It's a lot of checkmarks on the on the "good" column that would seem like. 

Zach Lipson [00:18:41] Yeah, yeah, you know, it's early, right. But these are good early indicators, you know, and of course, it's giving us a lot of confidence as we take the product out to market today. 

Jay Rosenthal [00:18:49] Yeah. Zach, I want to let you get back to talking all things Dutchie Pay with the rest of the world. Thank you so much for making time because obviously you're extremely busy, but always nice to see your bright, smiling face and we'll connect with you. I'll check with you soon. 

Zach Lipson [00:19:29] Thanks so much. It was great to be chatting with you about Dutchie Pay.

Jay Rosenthal [00:19:34] Thank you, Zach, for making time this week. It was a busy one, of course, here at Dutchie as we talked and launched Dutchie Pay. Now a few things coming up: on August 10th, that is a Wednesday, we'll be having a webinar with our friends in Vermont, titled "Launching a Cannabis Business in Vermont". The next day, we'll have a another webinar about how cashless payments boost dispensary sales. That will be focused a lot on payments, but specifically around Dutchie Pay. So you can find out the registration on our LinkedIn page as well as in the description below. And you can see all our upcoming Dutchie events and register today on business strategy Ecom or as I said on our LinkedIn page. We hope you enjoyed the first episode of this week and Cannabis Retail will see you next Friday for our second episode of This Week in Cannabis Retail. Have a safe weekend. 

About the author
Jay Rosenthal
Lead Content Producer @ Dutchie