The 101 Basics to A Successful Dispensary (Part 1)

Speaker 1: 0:55

Welcome to another episode of CanStrategy cannabis business masterclass. Today we're diving into an extremely important topic for aspiring entrepreneurs and seasoned business owners alike. We're talking about how to build a successful retail cannabis business. Yes, it's dispensary 101. You might be wondering why are we circling back to the basics of dispensary success? Well, here's the thing. Over the years, we've watched countless enthusiastic souls dive headfirst into the dispensary scene, oozing confidence, thinking it's a straightforward game. But let me tell you there's so much more under the surface. It's not just about opening up shop and selling some cannabis. There are layers, intricacies and a ton of behind the scenes work. The world of dispensary operation it's vast and it's complex, and people don't give it enough credit for that. So we're here to break it down piece by piece, ensuring that everyone's got a strong foundation to stand on. Trust me, understanding the basics, it's a game changer.

Speaker 1: 2:09

First things first, you need to understand your market, knowing who your customers are, what they want and how you can uniquely meet their needs as paramount. You see, in the cannabis industry, your customers could range from medical patients to recreational users, to brand new users, each with different purchasing habits, product preferences, levels of experience. You need to cater to these differences With a well-curated product range, knowledgeable staff and excellent customer service. The cannabis business is not just about selling a product. It's about creating a memorable experience so your customers will want to come back to your store every time they shop, and helping customers safely and confidently navigate the world of cannabis product types, thc levels and terpene profiles, without making it too confusing. Because here's the thing cannabis, different from other industries, has a ton of education to do in order to get to the point where we have a normal customer business relationship, with customers who come into the store knowing what they want, confidently, and knowing how to navigate the products that are available. All right, let's dive into a fundamental aspect of any successful dispensary understanding your customer. Here's the fact a dispensary is not just about housing a variety of strengths and products. It's about connecting with their customers, understanding their desires and ensuring that they leave your store feeling satisfied and valued. So how do you get there? A lot of dispensaries haven't, even some of the largest, most well-known, most well-funded in the country.

Speaker 1: 3:46

Firstly, let's talk about defining your customer. You need to dig deep into demographic data, customer feedback and buying habits. Are they medicinal users seeking relief or recreational users seeking new experiences. Are they connoisseurs or are they newbies to the cannabis world? Understanding here serving as the first step to crafting a strategy that effectively caters to their needs? One massive mistake that is made across the board is assuming that most consumers that come into a dispensary will be experienced consumers and therefore selecting products based on what an experienced consumer would need and not having enough products for those who are new to the scene. There's gotta be a balance, actionable.

Speaker 1: 4:36

Tip number one customer surveys and feedback. Regularly ask for feedback from your customers, and I mean really ask. Encourage your staff to start the conversations, engage with customers and glean as much information as possible about their wants and needs. This can also be done through online surveys, social media interactions and customer review analysis. It might take some time, but the return on that time investment will be beyond worth it.

Speaker 1: 5:06

Now, once you have a clear picture of your customer, let's talk about understanding their needs. This requires ongoing research and analysis, but also a certain level of intuition and empathy. Are your customers seeking education about different strengths and products? Are they looking for quick and efficient service? Do they want a more relaxed consultative experience? These are things that will differ for every dispensary, every state, every location within a state, based on what your surrounding market is. Who's visiting? Is it tourist? Is it locals? Are they high income, low income, old, young. These are the specific things that you need to understand through your analysis.

Speaker 1: 5:46

Actionable tip two marketable research and competitor analysis. Keep your finger on the pulse of the industry. Stay updated on canvas trends, popular products and competitive offerings. Understand what others in your space, especially in your specific market, are doing and determine how you can do it better or differently. For any company with multiple dispensary locations, this will differ based on each location, especially based on each state, so you cannot take an understanding from one of your stores and blanketly apply that to all of your stores. Customize it for every region in which you operate and you'll get the best results. Lastly, how can your dispensary uniquely meet the needs of your customers once you figure out what those are? Or perhaps it's your commitment to sourcing only the absolute best products or your expert skill for your location to quickly process transactions and get customers out of there, just as a usual retail location does for them on a daily basis? Actionable tip number three unique selling proposition. Identify what makes your dispensary unique and make it your cornerstone. This could be a loyalty program, educational workshops or exclusive products. Whatever it is, make sure it aligns with your brand and appeals to your specific customer base. Having a generalized approach is a mistake that a lot of dispensaries make, and because they're trying to target everybody, they wind up targeting nobody and therefore don't have a very sticky store that keeps their customers coming back. In the end, it's all about creating a customer-focused experience. The more you know your customers and align your dispensary's offerings with their needs, the more likely you are to build loyal relationships and a thriving business Next up to dispensary success compliance.

Speaker 1: 7:48

Compliance is king, compliance is queen. Compliance is the whole kingdom. The cannabis industry is heavily regulated, and these regulations vary by state and even by municipality, so you've got to know the laws and abide by them. This means staying up to date on licensing requirements, packaging and labeling rules, advertising restrictions and even more than that. Remember that non-compliance isn't just costly. It can shut your business down. So, when in doubt, consult with legal experts or consultants to ensure you're on the right track.

Speaker 1: 8:24

Actionable tip 1, engage a cannabis specific lawyer. Having a legal advisor who specializes in cannabis law is an invaluable asset. They can guide you through the legal labyrinth, keeping up with your business and ensuring it's compliant and protected from potentially costly penalties, but you need to take an active role in understanding these laws as well. Actionable tip 2, utilize regulatory websites to understand the laws and regulations as they are today and as they're changing over time. Many state and local governments have websites dedicated to their cannabis regulations, which are updated as laws change. Bookmark these sites and make it a regular practice to stay informed. Absolutely, make sure to sign up for the newsletters which just about every government agency has, and they will keep you informed as to when they're having public meetings, when they're considering changes in regulations and when changes in regulations are actually made. Actionable tip 3, join industry associations. Organizations like the National Cannabis Industry Association or your local cannabis alliance offer resources and updates on changing laws. They often host networking events and workshops where you can learn from others in the industry.

Speaker 1: 9:39

Lastly, actionable tip number 4, staff training. Ensure your staff is up to date on compliance matters. Regular training sessions can equip your team to understand and respect the laws and regulations to keep your dispensary in business. This is a huge deal because, especially for dispensaries, your employees are the front line of your company. They interact with customers, they make decisions and take actions based on your inventory, on products, on cash handling, and these are things that can get your business in trouble or keep it afloat for the long run. So compliance training is absolute key, and a trick to doing really great compliance training is figuring out how to take the regulations and to put them into layman's terms so that the everyday person can understand what they mean, so that your staff can understand what they mean. Once you do that, tie everything that you're teaching your staff about compliance with the regulations to the rules that they actually fill, so they know the why behind everything that they do in their job.

Speaker 1: 10:55

Alright, let's move on to the importance of location for dispensary success. You know the old adage location, location, location. It rings true in cannabis business as well. You want a location that's easily accessible, in a safe neighborhood and where you can attract the right clientele. And don't forget about local zoning laws. You'll need to ensure your dispensary complies with these two.

Speaker 1: 11:22

First, think about accessibility. Is the location easy to find? Is it convenient for foot traffic? Is there a bus or train station nearby? Or is there ample parking for cars? Once it's tooled, for determining the traffic level of a location is Placer AI, a web-based tool that provides businesses with location analytics and foot traffic data. It can give a detailed insight into the visitor behavior, dwell time and other important metrics that can help in determining the best location for a cannabis retail outlet. It's also possible to consult with local city planning or transportation departments. They often have data on foot and vehicle traffic counts for various areas and it's part of their role to monitor and manage transportation within the city. Your location should be easy to reach for your clientele and offer a welcoming frontage. Be beautiful.

Speaker 1: 12:18

Now onto the safety of the neighborhood. Evaluate neighborhood safety and remember that a safe neighborhood is a huge draw for customers. Use local police reports or community safety apps to assess the safety of your potential location. If you're knowingly selecting an unsafe area for your dispensary, then make sure to take that into account when you're developing your security and equipment plan and protocol. Cannabis businesses already require a hefty number of security measures, and a dispensary in an unsafe area will need an even more robust approach. Next, know your clientele and where to find them. Understand the demographic that your dispensary aims to serve and evaluate location options based on their proximity to your target clientele. Use census data, local market research and area specific reports to learn more about the community surrounding your potential locations. Look for information pertaining to population size, age and income level. Also, take into account the demographic of visitors to the area, especially if you're in a city that's known for tourism, as these tourists could make up a significant portion of your sales.

Speaker 1: 13:33

And, last but not least, zoning laws. Understanding and navigating local zoning laws can make or break your dispensary business. It's more than just about compliance. It's about finding a location that fits not just the legal parameters, but also your business needs and operations. Many times, the state regulations will not have a specific zoning listed for your zoning requirement, but the jurisdiction that you decide to operate within will have their own zoning laws, so that is important to figure out really before you even look into your properties. Okay, so cannabis dispensaries. These laws often dictate how close a dispensary can be to schools, daycare centers, public grounds and places of worship, but they can also include other restrictions, such as distance requirements from rehab centers, other dispensaries or even specific commercial areas. To understand the local zoning laws, the first step should be your city council's planning or zoning department. They can provide maps and other resources that outline where dispensaries are allowed In many jurisdictions. This information's readily available online. It might also be beneficial to engage a real estate attorney, specifically, who specializes in cannabis business, or a commercial real estate broker with experience in the cannabis industry. They can provide guidance on how to interpret zoning laws, potential pitfalls to avoid and perhaps even insights into how these laws might change in the future.

Speaker 1: 15:00

Another core element to dispensary success, no matter where your business is operating, is who you hire and how well you train them. Your team can make or break your dispensary business. A knowledgeable, friendly staff is key to building strong relationships with your customers. Your team should not only know about the various strains and products, but they should also be equipped to educate customers, guide them to suitable products and create an inviting atmosphere. A knowledgeable and friendly team can make a huge difference to your dispensary success. Let's explore how you can build such a team.

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First, let's talk about recruiting. You want individuals who are passionate about the cannabis industry and committed to serving your customers to attract this type of talent. Start by crafting a compelling job description. Highlight the opportunity to work in a rapidly growing industry with plenty of chances for growth and development. Utilize platforms like LinkedIn, indeed, or specialize cannabis job boards like Thanks and Cana Jobs, also cannabis specific hiring and recruitment firms that will help you find the absolute best candidates, so you or your management team don't have to navigate hundreds of resumes. Bring interviews. Look for candidates who not only have a good understanding of cannabis, but also those who exhibit excellent customer service skills. I like to look for individuals who have experience in high volume retail and food service. So, for instance, for a bud tender, I would love someone who has a lot of experience at like, a Starbucks that saw hundreds of people a day, dealt with a lot of cash and how to do a lot of transactions. In the end, remember that cannabis knowledge can be taught, but attitude and personality are inherent. Choose those who would fit in with your company culture. Many businesses will hire based on whether someone is a cannabis consumer or how much they already know about cannabis itself, but what really matters is that they're willing to learn more, because all of that really can be taught, and just because they're experienced with the product does not mean that they'll be a great employee, and it does not necessarily signify their ability to do what you need them to do, which is to maintain compliance within your store and to build relationships with customers and to increase your sales.

Speaker 1: 17:25

Once you've hired your team, training becomes the next crucial step. Comprehensive training should cover a variety of topics, from the specifics of your product offerings to the state's compliance regulations. As we discussed earlier, product training is key because your team should be able to answer any questions a customer might have about the products in your store, use resources such as product brochures, supplier presentations, or even bring in experts for more in-depth sessions. Because products change from cultivators and producers over time, it's invaluable to have them come in and train your staff so your staff can knowledgeably discuss their products, get a sell-through rate on their products and therefore benefit both you and your revenue bottom line for your company and the bottom line for the cultivators and producers. Remember, laws and regulations related to cannabis are subject to change. As a result, part of your training should include periodic updates on these changes. Some states require cannabis businesses to provide ongoing compliance training to their employees, so it'll say a required 4 hours every 6 months or required 8 hours every 6 months. Take advantage of those regulations and ensure that your team stays compliant and informed. In some states as well, there will be external training companies that are certified by the state to provide the training that the state wants to see your employees, and sometimes the ownership team, have, and it's not just about product knowledge and regulations.

Speaker 1: 19:04

Train your staff on customer service excellence. Educate them about how to handle difficult situations, the importance of treating every customer with respect and patience, and how to create a welcoming atmosphere. These things are skills. Finally, keep your team motivated, provide growth opportunities and, most importantly, create a workplace where they feel valued and appreciated. What we've seen in terms of customer service and actual sales skills is a lot of dispensaries will believe that just because they hired nice people, that sales skills and customer service will come naturally. It does to some extent, but when you do the training, you ensure that you have at least a minimum base standard of service from every employee in your store, and then you'll, of course, have the ones that exceptionally shine In terms of valuing and appreciating your dispensary employees.

Speaker 1: 20:03

A lot of stores, managers and owners don't want to put in the investment to have a reward, but you have to remember that some employees will sell a million dollars potentially of products for you within a given year. Another might sell a hundred thousand dollars worth of products within a given year. That million dollar employees should be rewarded for that, and if you have something like an Apple watch, that's a reward for that. The investment in that is so worth it to thank them for the revenue that they generated for your business. An argument that a lot of owners have is that that employee is supposed to do that, and that's true. That employee is supposed to at the least do sales. But when they excel, when they exceed expectations and they go above and beyond, well, that makes you very lucky to have found a valuable person for your business and you should thank them for that. Basically, in the end, your staff is the face of your business and best time and resources into their recruitment, training and retention. We have another episode that's about employee retention and it'll pay dividends for your dispensary success. All right, we are on to our final two.

Speaker 1: 21:18

Next up in developing a successful dispensary is effective branding and marketing. They're vital in distinguishing your dispensary from the competition. Developing a strong brand identity, creating an attractive store environment and deploying effective marketing strategies will help draw in customers and keep them coming back. But remember, marketing and the cannabis industry comes with its own set of rules, so be sure to understand what's allowed and what's not Certainly marketing in the cannabis industry. It's not straightforward. It comes with a myriad of regulations and restrictions that can vary significantly from state to state, which becomes a problem if you're a multi-state operator, and there's even municipality to municipality differences if you're within one state and have multiple locations. It's also an industry not fully embraced by some traditional media outlets due to its federal status, so let's talk about how you can navigate that tricky landscape effectively.

Speaker 1: 22:15

One of the biggest challenges for cannabis dispensaries is that they're not allowed to advertise on many major digital platforms like Facebook, google and Instagram due to their policies on promoting quote drugs. This can seem like a huge roadblock. I actually have to mention that TikTok is the worst at this. They will take a video down so quickly. Given that these platforms are often the backbone of a successful digital marketing strategy, especially in this age, this digital age, what do you do when these platforms will not allow your business? There's still plenty of ways to get your brand out there.

Speaker 1: 22:53

The first step, of course, is to fully understand the specific advertising rules in your state and local area. For example, some states prohibit advertising that targets individuals under 21. I would argue most states prohibit that advertising and they restrict the use of certain images and language or require specific public health warnings. It's pretty normal for states to limit the use of an image of the actual cannabis to limit the image of consumers consuming cannabis. It's actually having people actively consuming the products because they consider that to be promoting consumption. It's pretty normal to have a state that says, oh, you can't have anything that attracts children, no cartoony and type looking stuff in that. But then there's other states that go even further than that. For instance, florida doesn't allow really bright colors on packaging. You see, there is black and white and their ability to really brand is extremely limited.

Speaker 1: 23:58

Beyond that, there's other options to consider, such as SEO that drives organic traffic to your website. This requires creating a well-designed, mobile-friendly website that's optimized for search engines, regularly publish quality content like blog posts or educational articles that target your customer and that they would find useful. Videos now also are really effective, and you can get away with having some videos in Reels on Instagram, on Shorts, on YouTube, on some TikToks, if you can be careful about the way that you word things and what you show on the videos. So there's got to be some strategy to it. A lot of businesses don't realize how much strategy there is to it and they'll give it to someone who doesn't really have any expertise or finesse. And to get real traction, you need someone who understands what they're doing and who's being strategic about the way they're handling communicating with the public, about your brand, about your business. So you do want to invest in someone who already knows these things, or invest in training someone already on your team to know these things.

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A business may not be able to advertise on some social media platforms, but there can still be a presence and that's really valuable. Just be careful about staying within the community guidelines, making sure that you explicitly say that your content is for 21 and over people and never focus on selling your products, putting sales, putting dollar numbers. Any of that can usually trigger your account to get shut down. So you might talk about what products you have in store, you might talk about a deal a bit, but never make it seem like you are encouraging really anybody to come in. But everything is more so informative. It's a tricky process. There's an art to it, but you find the right person. You can have a lot of success with your social media presence. Also, consider using more traditional marketing channels, so, like print advertising and local newspapers or magazines, radio ads, billboards can still be effective. You see them everywhere, especially in local markets.

Speaker 1: 26:11

Email marketing is another powerful tool. People think it might be dead, but it turns out to be still pretty effective, especially if people want the product that you're reaching out to them about. You do have to have an opt-in, so your email marketing tool will be to anyone who's either signed up to give you their email online or given it to you in person in store and agreed to have you email them. So collect emails from your customers and keep them updated about new products, special promotions or educational events. Always ensure that you're following all applicable privacy laws when doing so, so you might not want to personalize it or mention anything that they've purchased in the past, but just tell them what is available now. You can even line that up with things that they have purchased in the past. Just don't mention that that's what it's based on. In order for you to do that, you would have to be tracking data effectively enough to really pinpoint what customers like which products and then sort them into different contact lists, so you can set each contact list to a different deal. Again, I have to mention. Whether or not you're able to do. Each of these marketing branding strategies has to do with the regulations in your state, so some of these would be explicitly off the table in a state and some states would allow you to do every single one of them.

Speaker 1: 27:36

Coming to the end here, this is definitely not all the tips to success in a dispensary, but we're at least covering the basics and we're going to wrap up with never underestimating the power of community engagement. Sponsoring local events or hosting educational workshops can do wonders for your brand recognition and reputation. Navigating the marketing landscape for cannabis dispensaries can be so challenging, as we just discussed. Both creativity, knowledge of the regulations and a willingness to try different strategies, such as reaching out to your community. It's entirely possible to build a strong brand and attract a loyal customer base.

Speaker 1: 28:15

As we discussed earlier, very much earlier in this episode, education is a massive focus for this industry because consumers have such little knowledge about this product that we need to get them to a base level of understanding. For that reason, while you would think, most companies, most businesses outside of cannabis don't tend to hold educational seminars about their products, unless it's maybe a total lines that has a sommelier that's doing some special presentation, because we have so much education that needs to get out to consumers and to the public for there to be a better understanding of the product and its consumer safety, but also just the product, how it works, how you select it, that kind of thing. So people are interested in these educational events and they provide a lot of value to you as a company, but also to the industry at large. All right, that brings us to the end of this insightful journey through the essentials of setting up a successful dispensary from understanding your customers and their unique needs, staying in line with ever evolving regulations, selecting the ideal location, building a knowledgeable team, all the way to executing a compliant and impactful marketing strategy. We have covered a lot. We haven't covered it all, so we'll probably cover more in another episode.

Speaker 1: 29:39

I'd like to note that, while compliance was listed as one of the things that you can use to make your dispensary successful, you probably noticed that for every single topic, we mentioned regulations and compliance with those regulations, somehow tying into that topic. The truth is that compliance is the foundation of your cannabis business of any kind. Without that compliance, you are operating a house of cards. Without that compliance, you have a business completely at risk of being fined, suspended, shut down. There could be some serious trouble without compliance with the regulations. So, as you go step by step, from the absolute very beginning, even if you've never had a cannabis business before you're starting your application, have compliance in mind and have a wildly compliant application submission. If you're already operating your cannabis business, then just ensuring that all of your compliance is in place before you use any of these tools in order to expand your business or to start to grow it, and focus more on the things that can help you be more successful. Number one thing that helps you succeed is having a baseline of compliance. Remember that operating a cannabis business involves many moving parts and success hinges on having a deep understanding of the industry and a willingness to adopt as it evolves. But with passion, perseverance and the right strategies and the right people, it's entirely possible to create a thriving cannabis retail business that serves your community and contributes to the industry's growing success story.

Speaker 1: 31:27

I hope you have found this episode of Dispensary 101 valuable. If you did, please take a moment to like this episode. Subscribe to our podcast Can Strategy Masterclass in Cannabis Business. We're always striving to bring you the most relevant, actionable insights in the cannabis industry to help you elevate your cannabis venture. In our upcoming episodes, we'll dive deeper into other aspects of the cannabis industry that are vital for your success, and we'll dive deeper into vital success tips for actual operators in the day to day and for operators who have an interest in scaling their company or simply improving the way that their current business is operating. So make sure you stay tuned and, as always, we encourage you to share this podcast with other budding entrepreneurs and scaling businesses in the cannabis space. Thank you so much.