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!
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:
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.
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
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.
"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."
"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.
"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."
"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. "