Thanks to booming markets in many states where cannabis has been legalized for recreational and medical use, cannabis retailers may find themselves sitting on some extra cash that hasn’t been earmarked for a specific use.
In this post, we’ll draw on current academic research and industry commentary to offer an overview of the best possible ways a cannabis retailer can spend (or save) surplus funds.
Using surplus funds to boost your dispensary’s marketing efforts is certainly a useful application of those funds. But what aspects of the huge range of marketing options available to cannabis retailers should you focus on, especially when legal issues might prevent cannabis retailers from advertising on TV, radio, and social media?
A working paper published in 2022 by the Social Science Research Network that examined the effects of online marketing for legal cannabis dispensaries in Washington State suggests that zeroing in on your dispensary’s online reputation can pay significant dividends.
Utilizing “online reputation platforms, such as Google, Yelp, and TripAdvisor, have dramatically increased the amount of product information accessible in the market and reduced the quality uncertainty consumers face in nearly every purchase occasion,” the paper’s authors report.
“Quantitatively, online reputation allows stores entering early in the market to increase margins (1.4%) and profits (105%), contributing to about 30% of the additional profits due to early entry, compared to late entrants,” the authors add. “However, stores entered later can also obtain similar profits in a relatively short period; thus, the review hosting platform contributes to the overall profitability of the industry.”
Of course, establishing an online reputation begins with building a functional, attractive website that clearly captures your brand’s goals and values, according to award-winning cannabis marketing agency Cannabis Creative Group.
“A rushed website will be noticed by your target audience, and you’ll sink to the bottom of a quickly saturating industry,” the agency advises. “In other words, the key to differentiating yourself from the competition is to have a visually appealing and effective website.”
Your budtenders are the face of your dispensary, the folks your customers interact with every day. Furthermore, as one recent literature review points out, customers frequently come to cannabis dispensaries with a wellness-oriented goal in mind, such as aiding sleep or relieving pain, and budtenders are often tasked with providing advice on what products are best suited to their goals.
One of the most important innovations in recent years - according to budtenders using this technology - is Spark, a cannabis AI trained on the medically reviewed articles published on Jointly. Spark now lives on the Jointly app rather than on the web, but it can provide detailed, scientifically valid answers to any cannabis related question you may have. Budtenders around the country are increasing sales and customer satisfaction by leaning on Spark to help them educate consumers and answer their questions.
“Preliminary evidence suggests that most dispensary staff report providing advice, guidance, or counsel to patients (94%; n=47), including advice on particular cannabis strains (88%; n=44), administration methods (88%; n=44), potential side effects (80%; n=40), benefits for specific symptoms (74%; n=37), and other recommendations (22%; n=11) such as natural remedies, travel/ shipping legal advice, dosing guidelines, and ailment or disease-specific information,” the review’s authors state. (The “n” number above indicates the size of the group surveyed for that particular statistic.)
Options for improving your budtenders’ cannabis knowledge include investing in classes specifically designed for current or aspiring budtenders. There is a huge variety of programs available, and many programs take place entirely online. The most reputable programs, such as those offered by cannabis education company Green Flower, offer an official certification and are often affiliated with an accredited educational institute.
If you’re enthusiastic about cannabis science yourself, you can also put together educational materials from reputable sources, such as peer-reviewed journals and marketing materials from your store’s featured brands. You can also provide resources designed for the unique demands of a retail environment, like Jointly Matches, which allows budtenders to match consumers to the best products for specific goals like relaxing or improving sleep.
Gaining a better understanding of your local cannabis market can give your dispensary a competitive edge, and investing in consumer research can reveal what your customers are looking for when making decisions about what cannabis products to purchase and where to purchase them.
Syracuse-based consumer research firm Drive Research recommends investing in one or more of the following types of research to get a better picture of market forces:
You don’t necessarily need to partner with a research firm to conduct research. If your brand has successfully built a following on social media or through, for example, a regular email newsletter, you likely have a great sample population available to you that is not only willing to participate in a survey but also directly reflects your customer base. Resources like Google Analytics also offer solutions for testing whether, for example, your online marketing efforts are working in the way you want them to.
Alternatively, your dispensary could explore how its surplus revenue might effectively be used for building out or improving a cultivation or production facility. Investing in an in-house brand allows dispensaries to benefit from at least some of the advantages of vertical integration, even if you continue to carry products from other brands.
Industry leaders cite a higher level of control over the supply side of the cannabis market, allowing for faster adaptation to market shifts and customer concerns regarding quality, as well as generally lower overhead costs, according to a 2022 article from investment news outlet Benzinga.
Growing and producing your own line of cannabis products also creates an opportunity for some old-school entrepreneurialism by allowing you to offer unique products suited to your core customer base. In a saturated market, carving out a niche is essential — providing customers with a unique, go-to cannabis product is just one way among many to do so.
Due to the complicated legal status of cannabis in the United States, the cannabis industry is particularly vulnerable to market volatility. Building a sizable cash reserve is one method by which cannabis retailers can set their businesses up to weather that volatility.
“Cash reserves are funds that companies set aside for use in emergency situations. The cash that is saved is used to cover costs or expenses that are unplanned or unexpected,” the Corporate Finance Institute explains. The CFI adds that cash reserves can also help businesses avoid taking on unexpected loans — something that is already difficult for cannabis companies in times of crisis, as the industry learned during the early days of the COVID-19 pandemic.
Banking options have historically been limited by the federally-illegal status of cannabis businesses, though organizations like the American Bankers Association are trying to change that. Until those changes occur, however, many dispensaries will continue to operate primarily through cash transactions, making the meaning of the term “cash reserves” more literal than usual.
Still, a federal-level solution may be on the horizon. In early September 2023, Marijuana Moment reported that Senate Banking Committee Chairman Sherrod Brown (D-OH) that the Secure and Fair Enforcement (SAFE) Banking Act “is one of the top bills on his fall legislative agenda” and that he hopes to pass the SAFE Banking Act, along with several other pieces of legislation, through the Senate in the coming months.
Jointly is the cannabis discovery app that makes it easy to find and shop the best cannabis and CBD products for your goals. Your matches are calculated from the real product ratings and experiences from hundreds of thousands of people using the Jointly app.
With Jointly, you can shop your top-rated products, and save lists of your favorites to share and bring to your local dispensary to help guide your shopping experience.
The Jointly app also helps you improve your cannabis experiences by uncovering what’s working and what’s not with reflections and personalized insights. In fact, the quality of your diet, how much you slept, who you’re with, and the time of day are just some of the factors that can impact your cannabis experience.
So if you're ready to find your best products and enjoy your perfect cannabis experience, download the Jointly app today on the App Store or Google Play, or shop your matches on the Jointly website. Discovery awaits.