Last week, we spoke at CannaCon Oklahoma, and met with many excited business owners looking to understand business and compliance software. Recreational cannabis has been legal in Colorado since 2012. In some senses, the early legalizers are a test tube where we can look for clues about the legalization process in other states. Business owners in states like Oklahoma and Illinois have access to ten years of Colorado data to understand what they can expect over the coming years. CUE Cannabis has helped cannabis businesses that have been in operation since the beginning and conducted our research into the market evolution. We have noticed three commonalities that cannabusinesses in newly legislated states should consider. A few of these themes were also explored during a Denver Startup Week.
Compliance is table stakes; it is what comes after that is more interesting.
Compliance can seem complicated and frustrating, especially if your state hasn’t decided on a tracking system yet. For example, business owners in all parts of the Oklahoma industry are watching to see what will happen with their state tracking system. Compliance is vitally essential, but once the state-based compliance has been sorted out, there will be many more interesting things to track. Specifically, cannabis product and customer data will help determine the future of the industry. Tracking this data will be useful for dispensaries, cultivators, fully-integrated business owners, and even ancillary businesses. As you implement your business plans, think about what data will help you scale your business and what software or services might help in this endeavor. FlowHub, for example, started as a compliance automation company but is now interested in the type of consumer data that can help businesses increase revenue and cut costs. Software companies like Cannabis Big Data provide analytics models for sales, marketing, operations, cultivation, and much more.
Building a reliable, high-performance team in a new industry can be a challenge, but fortunately, there are many solutions.
At the outset of the cannabis industry in Colorado, finding people with actual cannabis experience was understandably difficult. Carter Davidson, Chief Revenu Officer at Vangst recruiting, has been in the industry since the beginning. She attests to the fact that the startup-like nature of this industry, complex retail situations, and federal illegality make it challenging to find the perfect cannabis employee. Not to mention that in Colorado, turnover for Budtenders is high. Yet, business owners in newly-legalized states have increasingly more resources to make their business a success. The first is the knowledge that dynamic and multi-faceted teams with experience from outside the cannabis industry are still in a prime position to succeed, which is useful for both dispensaries and cultivators. Not only is team trust more important than any other factor, but the cannabis industry has many of the same business problems as other industries. Another valuable resource is the number of companies that have sprung up in recent years designed to train cannabis employees and staff cannabis businesses. The employee training companies can help your employees with everything from compliance certifications to product knowledge. Cannabis staffing companies are a low-stress option for recruiting new employees.
Think beyond the cannabis industry when it comes to the technological and brand strategy knowledge
In states where recreational cannabis is legal, business owners are no longer marginalized, but rather looked to as a fount of knowledge and experience. Further, the cannabis industry is also changing the way that other sectors conduct business. Initially, the cannabis industry borrowed extraction techniques from the essential oils industry, then improved upon it the technology. Now the essential oil industry is using these techniques to improve their operations. Stringent compliance and ID checking rules in the cannabis industry are useful for bartending and ID checking.
Besides technology, brands within the cannabis industry face the same loyalty and shopping experience challenges of other industries. Namely, consumers are happy to switch products frequently and often without any discernible reason, while the online vs. brick-and-mortar war rages on in every sector. For Andrew Duffy, CEO of Best in Grow, this is what makes the industry. He says, “in cannabis, we can build tools that are useful for this fast-growing market and will also address challenges in other markets.” Best in Grow is interested in using technology to improve the customer experience. FlowHub’s Nug also enhances the in-store experience by speeding up the check-in process. Cultivators, dispensary owners, and ancillary businesses all have a possible contribution not just to this business, but also to other industries.
The cannabis market in each state has its unique challenges. Compliance and regulatory decisions made at the state legislative level can impact how each state’s cannabis economy will unfold. When considering mature states like Colorado, there are some conclusions that we can draw about how markets like Oklahoma and Illinois will develop. If you are a business owner in a newly emerging market with questions about how to proceed, set up no-pressure consultation to discuss the next steps.