There's no other retail experience like shopping at a cannabis dispensary. Comparing dispensaries to traditional retailers doesn’t work, since they're selling a federally prohibited, and state regulated drug. Comparing them to bars isn’t like comparing apples to oranges, either; it’s more like comparing apples to lasagne. Sure, they’re both edible, but outside of that, they have nothing in common. Bars are a place to socialize. Dispensaries are places to buy a product that for many, is life-saving, or at the very least, life-altering, and then you leave. And while a bartender can give you life advice, a budtender tells you exactly what it is you'll want for your specific medical or recreational needs.
Since cannabis dispensaries are a new relatively phenomenon, dispensary owners are still figuring out how their shops can serve as all-encompassing providers, addressing the needs of all types of consumers, from the 21-year-old looking to get high to the 80-year-old seeking to mitigate chronic pain.
To learn more about the challenges facing dispensaries, Civilized spoke with three cannabis tech companies — Seed, Nug, and Flowhub — about how they're solving these issues.
Seed Technology is a tech company that makes in-store touch screens that answer users' questions about cannabis.
What is Seed? How does it work? Where can I find it?
Matthew Cutone, CEO of Seed Technology: Seed is a self-guided, in-store touch screen cannabis education solution designed to help dispensaries educate and empower their customers. Seed is helping dispensaries around the country improve the customer experience and increase sales. Along with providing customers a digital interface where they can learn about and explore cannabis products, Seed also provides dispensary owners with valuable data so they can better understand their customer’s needs. Seed currently has a presence in more than 20 dispensaries, spanning six states in North America.
Why did you decide to create it? Which problem in the cannabis industry is it working to solve?
My career has been dedicated to solving real business problems with digital technology for brands like Tesla, Nike, and Drybar. The legalization of cannabis in many states has attracted thousands of new consumers, introduced thousands of new products, leading to tremendous confusion. This confusion creates a great need for education. Eliminating this confusion is the problem we solve. Seed educates and empowers new and experienced consumers, allowing them to learn about products, dosage, cannabinoids, terpenes, and more. With this education being delivered via an in-store kiosk, customers can do it in a self-service way and at their own pace. This also helps to address the stigma that unfortunately still surrounds cannabis. For dispensaries, the platform takes a huge burden off budtenders and gives valuable insight into what customers are looking for in terms of information, products and the retail experience.
Can you talk a little bit about the asymmetry of information between consumers, providers, and sellers when it comes to cannabis knowledge?
With cannabis being illegal on a federal level, quality research has been very limited. This translates into a finite scientific understanding of the cannabis plant and its benefits. This creates a lot of inconsistency when it comes to “cannabis facts,” which can confuse and easily overwhelm customers. This is especially the case when it comes to products that will be ingested. The burden then falls on the dispensary staff to educate incoming customers looking for specific answers to a wide range of questions and needs. Furthermore, dispensary staff often maintain a personal bias or preference for certain brands. This results in product recommendations that may not be in the best interest of the customer.
Speak a little about how tech can be better used within the cannabis industry.
In general, technology is making our everyday lives better, especially when it comes to the education and procurement of products. Today, people are accustomed to starting the shopping experience from home on their smartphones and laptops. There is so much more information available to shoppers to research, compare and ultimately decide on the right product. While statistics show that shoppers still prefer to do a large bulk of purchasing in-person at a retail store, they do expect to find a similar technology-enhanced experience. The cannabis industry poses a unique challenge being that there is a steep learning curve for a vast majority of people and it’s important to inform them in a way that they feel empowered and confident and not overwhelmed or unsure. By utilizing a solution like Seed, dispensaries can give customers access to reliable information that customers can navigate and explore themselves. They can go through a consultation to explore recommended products and dive in when they need to explore terms they are unfamiliar with — it’s a completely tailored and personalized experience that meets them at their knowledge level.
NUG, Inc. is a premier, state-licensed, and vertically-integrated California cannabis company. NUG cultivates, manufactures, and sells cannabis at their own dispensary in Sacramento and at other cannabis retailers.
What are the major issues facing dispensaries?
Dr. John Oram, NUG CEO and Founder: The short answer is that there is simply too much friction in cannabis retail. Undesirable retail locations, heavy security, cash transactions, restrictive return policies, and high taxes all create barriers to providing a positive retail experience. Cannabis consumers should be able to shop for cannabis products in the very same retail neighborhoods that they shop for other items, but that’s not happening. For the most part, if you want to purchase cannabis from a retail store you will have to make a special trip and will find yourself in an industrial area. Depending on where you are and the level of sophistication of the retail operator, you will likely not have the best experience. And to top it all off, you will realize you just paid a nearly 40 percent tax on your purchase. Overall, probably not the experience you were hoping for.
Are all these still issues? Or was this just when dispensaries started opening?
Fortunately things are changing. Some municipalities are realizing their residents want a better experience. Stores are slowly being allowed to open in retail-oriented neighborhoods. Sales associates (a.k.a. "budtenders") are becoming more sophisticated and gaining more conventional retail training. Product offerings are increasing as innovation happens. Point-of-sale software is becoming more efficient and even beginning to offer debit and credit card services. And delivery services are similarly becoming more sophisticated and more convenient.
Consumers are still paying nearly 40 percent in taxes though. And that is not likely to change anytime soon. The cannabis industry is still perceived as being flush with cash and regulators still want their cut. The industry needs to do a better job communicating the regulatory and financial challenges we face every day. We need to reset expectations. If we continue as we are now only the well-capitalized will survive. That may or may not be the best outcome for consumers. Time will tell.
Flowhub is the leading compliance and point of sale software for dispensaries in the United States.
What are the major issues facing dispensaries?
Kyle Sherman, Flowhub Founder and CEO: Dispensaries face many more challenges compared to traditional retailers due to strict compliance requirements. Cannabis retailers are required to report all sales activities and inventory movements to their state regulators, sometimes in real time. If physical inventory does not match what has been reported to regulators, their license is at risk for suspension. It's essential that dispensaries not only thoroughly vet all team members before hire, but also instill a culture of compliance and accountability within the business. Technology like Flowhub can help manage risk and compliance by providing a digital paper trail of every activity happening within your operation, allowing you to easily audit any discrepancies before reporting to the state.
When it comes to consumer experience, retail cannabis is becoming ever more competitive. The multi-location brands that are leading the industry have a primary focus on creating a modern, differentiated, and consistent experience throughout their marketing with seamless processes for check in, consultation, and check out. As cannabis consumption becomes more mainstream, creating a professional retail image is the key to successfully attracting and retaining some of the fastest growing segments of cannabis consumers like baby boomers, fitness enthusiasts, new moms, et cetera. Additionally, compliance comes into play again as there are restrictions about gathering and retaining customer data in most markets, as well as rules about using that customer data for rewards and loyalty programs.
What is Flowhub doing to create solutions?
Flowhub helps dispensaries tackle retailer challenges both at the front and back of the house. Custom-built for the highly regulated industry, Flowhub comes with features to ensure that they are following compliance guidelines like employee permissions, cannabis purchase limits, real-time activity feeds, and mobile solutions like the NUG Check In App to verify customer IDs before they shop.
Inventory managers also benefit from the ability to digitally move, transfer and audit inventory via a mobile app with built-in manager verification processes to help ensure that inventory is 100 percent accurate. For executives, Flowhub provides easy multi-location management and visual dashboard analytics to get insight into performance across all stores.
On top of that, Flowhub allows dispensaries to integrate other cannabis applications (or build their own) through our open API (application programming interface). Integrations with popular cannabis technology like Leafly, Dutchie, and BDS Analytics enable dispensaries to create agile tech stacks that solve specific needs, automate manual processes, and improve their overall business performance.