By Luke Ramirez
On Jan. 18, my dispensary made a drastic shift.
After selling medical cannabis to more than 30,000 patients since 2009, Walking Raven pivoted to the recreational market and became primarily a retail store.
Since making the transition – the store now generates 90% of its sales from the adult-use crowd – we’ve seen a substantial change in our target market and customer base.
The same general business principles of running a medical cannabis facility apply, such as ensuring efficient production, operating during consistent hours and offering a large selection. But there are important differences when it comes to customer preferences and how we run the business.
Here’s a look at several of them and some related advice for entrepreneurs who might find themselves making a similar transition down the road:
Convenience and packaging
The recreational market puts a much higher value on convenience, such as parking, wait times, efficient payment processing, etc.
This can be a huge challenge at first. When converting to recreational sales, my store immediately saw a 300% increase in foot traffic, in large part due to the lopsided ratio of demand and supply. The first stores to open in Washington State this month are experiencing similar issues tied to crushing demand.
This sudden increase in customers means you have to take a serious look at implementing time-saving procedures, such as moving to a pre-packaged model. This is where the customer does not choose their buds from a jar or container – instead, they simply select pre-weighed and sealed packages.
Other Colorado recreational facilities, such as The Clinic, successfully moved to this model and can offer their customers very low wait times as a result.
In terms of convenience, it’s also important to have staff trained to ring up orders in your point-of-sale (POS) system very efficiently so that you can process customer quickly. But you also have to ensure they are complying with state laws in the process.
To do this effectively, it’s crucial to use a cannabis-specific POS software system. This will save loads of time on the front end – allowing your staff to easily enter in weights and prices – and also on the back end, as you can upload and report sales to your licensing agency very quickly.
Surprisingly, we found that pre-rolls and pipes are very popular in the recreational market, whereas medical marijuana patients drifted away from these types of products years ago.
Recreational customers are looking not only for convenient ways to buy, but also convenient ways to consume your product.
I recommend picking up a selection of pipes that are low or moderately priced. Also, schedule specific staff hours around preparing pre-rolls to ensure that your store is never out of supply.
We’ve also seen sizable interest in edibles from the recreational market. This form of consuming cannabis is mostly appealing to inexperienced or new consumers.
Recreational customers are much more willing to spend a lot for edibles. My store saw an increase of approximately 200% in our edible sales, even though our prices more than doubled from our previous medical price points.
Diversity of customers
The recreational market is much larger, of course, than the medical market. And the types of customers we see is much broader as well.
As a recreational store, we get elderly folks looking for the medicinal value in cannabis, younger tourists on a spring-break style vacation, businessmen in suits stopping by on their way home from work, soccer moms and consumers who haven’t used marijuana in years.
The customer base really runs the gamut.
You can – and should be able to – cater to all these customers. But we’ve found that it’s good to narrow down the list and determine what kinds of customers you primarily want to target, as it will help you establish appropriate branding and ambience.
In the medical market, we mostly saw patients with a large amount of cannabis expertise and knowledge. They therefore demanded that our staff and product keep up with their levels of sophistication.
Generally speaking, the average customer shopping in a recreational store is less educated on cannabis. They aren’t as knowledgeable about the effects of cannabis, the different types of strains, THC ratios, usage, etc.
They are also likely to be using your product for different reasons than patients seeking treatment of a serious medical condition. This means, of course, that they will have different considerations when purchasing cannabis, but also that they will often need you to cover the basics.
You will need to train your staff to repeatedly, possibly even hundreds of times a day, explain what the difference is among indica, sativa and hybrid strains, for example.
“Come up with little catch phrases – like “Indica means, ‘in the couch'” – that your staff can easily repeat and your customers can easily remember. This may also present an opportunity to cut costs if you are paying above-market rates for highly knowledgeable, or “expert,” staff that are required to discuss medicinal attributes of cannabis in the MMJ market but are no longer needed with recreational customers.
Lastly, make sure that your staff is also trained on how to recommend edible usage and dosing.
This is a not only a major compliance issue, but it also could prevent one of your customers from having an awful experience of an edible “overdose”.
Luke Ramirez is co-owner and managing director of Walking Raven Retail Marijuana Center in Denver