What I Learned From Visiting 50 California Dispensaries
Free Book Preview Cannabis Capital
Since California legalized recreational marijuana, I’ve been curious how its new cannabis market has evolved. So I decided to clear my calendar recently for a road trip up and down Southern California’s highways, visiting as many storefront dispensaries as possible. As a CEO in the cannabis space, with a company that develops software for dispensaries, I wanted to learn just what these retailers have been experiencing in this transition from the “gray market” to a new era of hyperregulation and compliance -- and what it all means for the future.
All over the state, retailers are creating familiar and welcoming environments like you might find at popular high-end stores like Sephora, where the floor plans lend themselves to multisensory browsing experiences. Customers are often encouraged to touch packaging and smell cannabis products as they shop, appealing to connoisseurs as well as novice consumers who might not yet know exactly what they want.
More people are shopping at dispensaries for the first time. Also, in California, it’s not just college students or millennials buying cannabis; older adults and seniors are increasingly choosing it for both medicine and recreation. Across the board, consumers expect high standards of quality and purity from their purchases.
Premium product, premium prices
There are more products than ever to choose from. In fact, California dispensaries are inundated with requests to work with brands offering flower, edibles and other infused products, technology and security solutions, and much more. The stream of vendors is so endless, many dispensaries have special procedures to meet with potential partners.
Strong cannabis brands have emerged—like Cookies, Henry’s Original, Flow Kana, Marley Natural, Viola, and Lowell Herb Co., just to name a few. However, these products can cost up to six times more than similar ones in other legal markets, like Colorado. Why? Consumer costs are driven up in California by a combination of high taxes, high demand, limited licensed providers, and a supply chain with kinks still to be worked out.
The black market flourishes
Legalization has not stopped the black market from thriving. There are still tons of illicit shops operating quietly in California. Because they aren’t complying with the state laws, they’re able to charge a lot less than licensed dispensaries do. In urban areas, pop-up black market events are popular among consumers looking for cheap product.
Since legalization, applicants and licensees have received nothing but mixed messages and postponed due dates from regulators. All licensed retailers are now required to track and trace both their inventories and activities with a software program called METRC. Yet basic definitions are still being clarified by way of emergency regulations, and cannabis operators are expected to comply immediately or risk shutdown.
Retailers will have to consolidate or diversify their offerings to stand out from their competition. But the larger issue is regulation. I foresee retailers having trouble adopting and leveraging the compliance-based tools because current workflows are not yet established to scale. Many of these businesses need to write SOPs (standard operating procedures) for the first time, or make adjustments to their intake process for packages. There will be a lot more at stake with increasing regulations. For example, dispensaries are going to get audited, and many license holders will risk being shut down because they aren’t ready to comply with METRC.
At this point, from what I’ve seen, California retailers need to spend less time focusing on cool features and trends, and put more emphasis on learning how compliance works and what it means for their business. There is a general lack of concern surrounding the transition toward a regulated market. The mindset is: We’ve done this for years. Wake me up when the government starts cracking down. My professional opinion: It’s time to wake up.
My tour isn’t over yet - follow Flowhub’s journey and peek inside California’s cannabis market by following #CAonFlowhub on Instagram.