Does opening a dispensary in the emerging cannabis industry markets sound like an amazing opportunity? Absolutely.
Are there some things you need to understand in doing so? 100%
Joining the cannabis industry is exciting, especially at this point in time when cannabis is legal in some form in over half of the United States, but federally we are all criminals.
There is a sense of rebellion to being a cannabis business owner, or even a bud tender.
Brand new markets often look to existing markets for what to expect. However, the media isn’t exactly covering the stories of the dispensaries that had few customers and made very little money on opening day.
So, let’s talk about 4 real things to expect the day your dispensary opens.
NOTE: Since brand new markets start out medically, the following 4 expectations for opening day are most pertinent to operations in brand new medical markets.
Prepare for these, but do not be discouraged by them! This is only the beginning. And of course there is always the possibility that your business will exceed expectations.
#1: No mob breaking down your doors
Opening day will probably not look like the hottest black Friday sale in town. In a brand new medical cannabis market, your customer flow depends largely on the number of medical card holders in your state and how many of them know that you are officially open for business.
The fewer cardholders in your state, the more difficult it will be to drive traffic, particularly on day one. Yes, this product essentially sells itself, but you have to sell people on your business before they show up to buy the product. Even a high end dispensary on the Las Vegas strip had only 5 patients on opening day.
Exception: Your dispensary may be an exception to this rule if you manage to be the first open in town and have a solid pre-opening PR strategy.
Tip: Find a way to partner with local cannabis friendly doctors, smoke shops and other small businesses such as local coffee shops. Referral sources are the best way to get medical patients to trust your dispensary.
#2: Bewildered buyers
Customers in new markets are not accustomed to buying legally, and many have had difficulty getting information from their medical providers. This means that verbiage, paperwork, rules, laws, product types, pricing and just about everything will be a whole new world for them.
Make sure your staff members are well equipped to inform patients and comfortably guide them through this new experience.
Tip: Train your staff on more than just products. To accomplish a comfortable experience for patients from day one, The J. Whitney Group’s consulting teams train our clients’ staffers not only on product, but also on communication skills, and consistent and well defined company terminology. Consistency and clarity are key.
#3: Four figures
Believe me I would love for all of our clients in brand new markets to generate six figures on day one. It turns out that the romantic tales of massive income on opening day in places like Colorado are not realistic for most states.
Tip: Do not panic, rejoice in those 4 figures, and launch with a thoughtfully formulated growth strategy to steadily increase those numbers as quickly as possible. The growth strategy seems obvious, but you would be surprised how many companies don’t start thinking this through until after the doors open and wind up floundering trying to simultaneously operate and create a strategy.
#4: Price resistance
Consumers are used to buying on the streets. If your market has product testing requirements (which hopefully it does/will), your prices will naturally be higher than street prices initially.
Not to mention the fact that customers aren’t used to paying tax on cannabis products so that’s something you have to help them get used to (products sold legally are taxed in most states, but because customers are used to buying cannabis tax-free, you may want to consider including the tax in your pricing). As fair as you may believe your prices to be, customers will likely be resistant.
Tip: Focus on explaining your product value not based on production methods but rather based on safety level, strain transparency and informed purchasing power. Your product may be a bit more expensive, but for that increase in cost customers get to rest assured that their product has been tested for mold, bacteria and heavy metals.
Secondly, because of seed to sale tracking, customers can be certain about what strain they are actually taking home. Last but not least, the increased amount of product information available gives customers more power in making purchase decisions based on quantitative data.
Keep these 4 expectations and tips in mind and you should have a pretty solid day one. Prepare for the probable, hope for the best and have an outstanding opening day!
Enjoy the ride!!