California has been the capital of cannabis since 1997, when medical marijuana first became legal. One year after it was legalized for recreational use, the state’s dispensary business is home to hundreds of legal, licensed cannabis stores. Open to all residents and tourists over the age of 21, these retailers are drawing interest from the rest of the cannabis world.
As a CEO of a software developer for dispensaries, I set aside the month of December to travel in California and learn just what these retailers are dealing with in this newly regulated era. I have had three main realizations so far.
California’s cannabis market truly is a gold rush. Though I’ve really only scratched the surface by visiting the southern half of the state (the tour will continue after the holidays), I am already overwhelmed with the sheer number of cannabis stores here. There is also a higher level of sophistication to these retail stores than I’ve seen in other states — evidence of big money at play.
Each metropolitan area’s dispensary scene has its own vibe, but most stores tend to provide an engaging and interactive experience, more akin to Sephora than your typical pharmacy counter. Customers are sometimes even allowed to touch and smell samples of cannabis products to help them decide on the right product.
California even has a market for home delivery services, expanding the dispensary footprint far beyond the immediate neighborhood.
Cannabis industry vendors have no shortage of retail partners to choose from in California. Plus, even one year later, many parts of the state are still awaiting passage of local regulations to open stores. That means the market will soon be ripe for even more legal shops, willing to pay a premium for high-end California product.
Cannabis products are flying off the shelves. Even with so many retail sites, and thousands of licensed vendors wholesaling, products are being sold to eager consumers at ultra-premium prices with high taxes. In fact, California cannabis can cost up to six times more than legal products in Colorado’s mature market, but local consumers and tourists are gladly paying up.
Cannabis retailers face a constant need to restock in order to meet high demand. Every day, dispensaries are bombarded with brands pitching the finest California-grown flower, the forefront of cannabis vaporizers, infused products, technology and security solutions for their shop, and much more. Larger dispensaries must designate specific days and times each week to meet with potential partners to handle the influx of business offers.
Although the supply chain is meeting the demand of legal retailers, there’s still the issue of the unlicensed market. Demand for cannabis is growing, and illicit providers continue to pop up and thrive throughout California, mostly in pockets where the local government has taken a restrictive approach to regulation, or banned sales entirely.
The “pop up” black market thrives in and around most major California cities, and fledgling cannabis companies must be ready to compete with the appeal of cheap product, higher potency edibles, and a more lackadaisical approach to ID-ing adult-age consumers before purchasing.
California state law requires that all workers at licensed cannabis operations be full-time employees; no temporary contract positions here. Overall, this has created a positive work culture in the industry, and with all the money pouring into the working environment and the products themselves, it’s hard for employees not to smile. In some cases, budtenders have even unionized.
Some but not all dispensary sales associates, or budtenders, are well-versed on the product spread, and able to aid customers from all walks of life in finding appropriate dosages and formulations of cannabis. After all, it’s not just millennials who are buying cannabis; seniors and middle-aged folks are also seeking it out for therapeutic and recreational purposes. However, it does seem like overall, there is a need for retail and customer-service training.
Demand is growing, and consumers are diversifying. Since more stores are always opening, more competent staff is always needed. Dispensaries who build strong teams and minimize employee turnover will foster customer loyalty and enjoy success in a sea of competition.
In conclusion, California’s cannabis market is a dream for consumers, entrepreneurs, career-pivoters and investors. However, in 2019, these retailers will be subject to a slew of new and very strict final regulations, which most currently aren’t ready for.
Kyle Sherman is the CEO of Flowhub, a Denver-based software company serving dispensaries.
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