MJBizMag September 2022 - 36

STRENGTH AT ANY SIZE
THE MICE THAT
ROARED
By Omar Sacirbey
I
n Colorado, the 10 biggest
marijuana businesses account for
more than 70% of cannabis sales,
according to MJ consultant Chris Cox.
The same will eventually be true
in California, where the top 10
companies account for more than 30%
of marijuana sales, says Cox, a partner
with Sacramento-based cannabis
consultancy BeGreenLegal.
With statistics such as these, small
cannabis businesses might find it
challenging to gain market share.
But experienced business owners
know there are ways to get ahead and
improve chances for success.
Following are 10 strategies cannabis
executives recommend to keep costs
low and margins high.
1
SMARTER INVENTORY
TRACKING, MANAGEMENT
A common mistake small marijuana
businesses make is carrying too many
products or stock-keeping units (SKUs).
Many eventually reduce the number
of SKUs they carry, but some SKU
reductions help the bottom line more
than others do.
Hope Wiseman, CEO of Mary &
Main, a dispensary she launched
in 2018 in Prince Georges County,
Maryland, said the first step to better
inventory management is paying
closer attention to key performance
indicators, or KPIs.
Monitoring KPIs can help reveal
which products are driving the
business and which are not. For
example, the KPIs revealed that
when Maryland's marijuana market
plateaued, loyal clientele kept coming
back to Wiseman's store.
36 September 2022 | MJBizMagazine
When margins are tight, experts
recommend carrying only the bestselling
items. Photo by Jared Charney
" We see the same people, and
we know what they like, " Wiseman
observed. " It's about getting smarter
with the types of products and really
leaning into our patients. "
Equipped with that data, she decided
to reduce the number of SKUs that
Mary & Main carried, cutting the
least popular items and maintaining
products that loyal customers
purchased most frequently.
" We just honed in on things that
had more bang for your buck. We
focused less on getting top brands and
focused more on getting value into
the store, " Wiseman said. " We want
to have a variety, but we don't want to
stock things that are taking more than
two to three weeks to move. ... We cut
anything that we could not prove was
making us money. "
Peggy Moore, CEO of Love's Oven,
took the same approach at her Denver
edibles business. The company
conducted " SKU rationalizations " every
six months but has since started doing
them every month.
Love's Oven also developed a survey
for the retail stores it sold to, to dig
deeper and find out what kinds of
products they wanted.
" Maybe it's less about lowering prices
on this product or that product and
(more about) seeing if there's some
other variation on a product that we
can do that's less expensive, that the
retailers think would really help them
improve sales, " Moore said. " Because
we've been at this a pretty long time,
we can have an edible developed in
pretty short order. "
David Cichocki, co-founder of
Pioneer Valley Extracts in Florence,
Massachusetts, did something
similar. When flower prices started
dramatically dropping from $4,000 per
pound a couple of years ago to $3,000
per pound and lower, the extraction
and manufacturing company saw the
margins drop on its packs of dried
flower pre-rolls. Extraction and
manufactured products such as infused
pre-rolls and edibles, meanwhile, are
still doing well.
" We're thinking about discontinuing
(the items that have slim or no profit
margins) so we can focus on our
extracted and manufactured products
that have higher margins, " Cichocki
explained. " Extraction is where we
have our competitive advantage. We
can buy the biomass cheaper and turn
that into craft concentrates and vape
products. That's where we see a benefit
from the downward pricing. "
2
PRICING AND
DISCOUNTS
When outside economic factors such
as inflation or a recession cause
consumers to tighten their spending,
many businesses will automatically
lower prices in hopes of keeping
money coming in. But cutting prices
10 strategies
U.S. cannabis executives
use to strengthen their
small businesses

MJBizMag September 2022

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