STORES Convention Daily - 2018 Big Show Day 1 - 30
Continued from page 18
The new consumer
The stereotype of cannabis users may
trigger images of hippies or slackers,
but surveys indicate they span a range
of socioeconomic classes. A study in
the Journal of Drug Issues revealed the
proportion of marijuana users who smoke
daily has rapidly grown, and Gallup's
research found usage doesn't necessarily
correlate to income or education.
The industry uses the term "cannabis" instead of marijuana, and branding
often focuses on medicinal or positive
benefits rather than the idea of getting
high. Jeffrey Zucker, president of cannabis investment company Green Lion
Partners, says most consumers don't fall
into the category of "stereotypical stoners," and legal cannabis is often seen
more as a health and wellness product.
Many dispensaries almost look like
pharmacies. LivWell stocks a variety
of pipes, topicals, edibles and flowers
in glass cases. Digital screens advertise
specials and new offerings, while the retailer's website lists strains with cannabinoid breakdowns and customer reviews.
LivWell even has a rewards program.
"We work with experts from numerous industries to help us design our stores
so that they ensure proper customer flow
while creating an inviting, comfortable
atmosphere for patients and customers
from all walks of life," Brown says.
Because of its new legal status, dispensaries are attracting new consumers.
Lincoln Fish, CEO of startup incubator
OutCo, says curiosity will drive the next
wave of consumers to seek cannabis as an
alterative to alcohol or some pharmaceuticals. He believes use will triple in the
next five years as legalization removes
the threat of penalty and offers an opportunity to buy quality products, and says
the ability to buy product in a licensed
store rather than from a black market
dealer will open new doors for many.
"They want products that are tested
to know where it came from and how it
was produced," Fish says. "There are a
lot of people staying out of the market
because it's illegal and they can't know
where it's coming from."
Cannabis retailers say a big part of
the retail process is educating consumers
in 2015, has
grown into one
paid cards, most dispensaries are left to
operate in cash with tens of thousands of
dollars on site at any given time.
"It's causing unnecessary risk for
the companies and their employees by
having to hold large sums of cash and
having security teams just to keep them
safe," Zucker says.
Since companies cannot take out
traditional business loans, the banking
issue has also limited access to capital
for expansion. Fish says most cannabis
businesses are financed internally or by
private investors. "There are a lot of
[private investors] who want to jump into
the industry and be a part of it," he says.
"But there is no such thing as a legitimate
Federal law does not allow cannabis
Many dispensaries look much like pharmacies, and focus on creating an inviting atmosphere. to be transported across state lines. Even
in border states such as Washington and
about their products, the different strains own dispensary. Fish, who previously Oregon, products must be cultivated
and how it can impact users. LivWell owned a nutritional supplement company and manufactured in the state in which
stocks at least eight different strains and spent years selling to stores, founded they're sold.
Cannabis retailers also face the same
across three tiers of cannabis flower of- OutCo in 2015 and has since grown it to
ferings, as well as products from leading be one of the largest licensed producers challenges that many ordinary retailers
industry brands. The dispensary chain of medical cannabis in the southern part do. There's a growing demand for pointof-sale and inventory management syscurrently has more than 600 full-time em- of Colorado.
ployees; Brown says every employee unFish has high hopes for the industry tems to meet the unique needs of the indergoes two weeks of training at LivWell and believes "sizeable players" will dustry. Zucker says many companies are
University where they learn everything to move in soon, should federal regulators "winging it" with off-the-shelf solutions
excel in their jobs, from how to complete loosen the reins. When that happens, that don't serve their industry - some
a compliant transaction to the science of he says these comusing spa software
the endocannabinoid system.
panies won't start
The stereotype of
to manage their opfrom scratch but
erations, he says.
A highly regulated market
will instead acquire
cannabis users may
Green Lion curIn most legal states, cannabis prod- the pioneers in the
trigger images of
rently has an investucts are highly regulated from seed to sale industry.
hippies or slackers,
ment in FlowHub,
in how they are manufactured, distributed
Rachel Weinbut surveys indicate
a cloud-based POS
and sold. Retailers must check identi- garten of marketing
fication to confirm anyone who enters and consulting firm
they span a range of
specifically for the
their store is age 21 or older. They must Cannabuzz NYC
also ensure all products are in the state- says manufacturers
which enables dismandated inventory tracking system, and retailers will
maintain updated security plans and fol- need to cultivate their brands much in the pensaries to manage their inventory and
low strict protocols on expired products. manner that artisan food makers do. She compliance by automatically handling all
"The ever-increasing cost of compli- believes large national players and local reporting with state agencies.
"The industry is on the way there,
ance adds further pressure to business growers and retailers can coexist in the
in terms of being in better shape on the
operations," Brown says. "Regulations marketplace.
are changing almost daily at the state and
Similar to the food industry, some software side from a retail perspective,"
consumers will seek out quality and Zucker says. "As the adult-use market
While some dispensaries acquire premium locally sourced products while grows, I think the companies out there
cannabis from farms, others grow their others will seek out low-cost, mass- will continue to improve, and more players will pop up."
own - Brown says plants take six produced options.
Like many in the industry, he bemonths to grow from clone to harvest, on
lieves the balance is tipping so far that
average. OutCo cultivates its own canna- Challenges remain
bis, performs research and development
The biggest challenge the industry the federal government will have to
with scientists, manufactures infused faces is that marijuana remains a Sched- respond. Many more states are considerproducts and sells and distributes at its ule 1 drug under the federal Controlled ing legalizing medical use in the coming
Substances Act and is illegal under fed- year, and Vermont, New Jersey, Arizona,
eral law. That is the same category as Michigan, Rhode Island and Connecticut
heroin, cocaine and LSD, meaning it has are likely to put recreational initiatives to
a high potential for abuse and no legally vote in 2018.
Zucker feels confident that within
accepted medical use treatment under
federal law. Removal from Schedule 1 is the next five years or so, marijuana will
the only path to nationwide legalization. be removed from the list of scheduled
Federal authorities may be abstaining substances, at which point it will be defrom enforcement, but the classification criminalized on a federal level and offer
leads to a number of pain points for the the retail industry an entire new category.
"The goal is to continue to get states
industry - including limited access
to traditional banking, as most FDIC- on board, and as we get medical, the
insured banks will not accept cash from states generally realize that there's no
cannabis companies. Zucker says while reason for this product that everyone is
there are new options such as indepen- using everywhere to not be safe, regudent banks, cryptocurrencies and pre- lated and taxed for adults," Zucker says.