How Can Dispensaries Match The 'Pretty Damn Good' Consumer Experience The Illicit Market Provides?

It’s no secret that the cannabis industry has been struggling for a while now. Some of the key challenges include the lack of federal regulation and access to banking, the stigma that remains from the failed war on drugs, high taxes, sinking prices, illicit sales and record levels of inflation, which are affecting consumers' wallets.

For some marijuana operators, the main strategy to deal with these obstacles is to lower their prices. The question is – what else can dispensaries offer besides inexpensive products to stay competitive?

Several industry experts answered that question and shared their strategies for surviving the price compression at the recent Benzinga Cannabis Capital Conference in Chicago.

“For us, we built a lifestyle brand,” Justin Elias, CEO of Puff Cannabis Company, a Michigan-based vertically integrated business, told moderator, business journalist and editor at large of mg Magazine, Ross Gardiner. Elias explained that even though they do service those 20-30 percent of customers who are looking for the best deal, they created a brand that has so many customers who come “because of the service and everything else they get.”

Lilach Mazor Power, founder and CEO of Mazor Collective, the only women-majority-owned Arizona marijuana company, agreed, saying “beyond pricing is something that works.” Mazor Power added that it is important that a salesperson really listens to the customer and helps them match the products they need.

Overall Experience, Personalization And Diverse Menu

Gardiner further inquired if the design and the general experience also matter.

Mazor Power added that “just by the look of the store, even just the exterior, people choose to make a purchasing decision.” That’s why, Mazor Collective worked on creating a space where people feel comfortable, want to spend time and look around, be free to ask for help, or opt for a complimentary session with its budtenders.

Jim Amend, senior vice president of strategic partnership at 240L Logistics, a sales and distribution company connecting brands with retailers, added that it's also important to have the right product on the right shelf. He said it’s all about “making sure that that menu is diverse and able to provide something for everybody and consistently all the time.”

Chris Ostrowski, CTO at Dutchie, one of the largest retail technology providers in the cannabis industry, said there’s also a strong push towards personalization. “How do you, as a retailer, really understand your consumer,” or how do you help them explore new opportunities, Ostrowski pointed out, adding these are all things that we start to see from other retail verticals entering cannabis.

He further explained how technology can help create a stronger connection with your consumer by providing all history and data to the budtender so they know and understand what the customer is looking for. “Just leveraging that information and having it available at a glance is an extremely powerful experience.”

Brandon Barksdale, co-CEO and president at Maryland-based dispensaries, Remedy, said people are also looking for quick expedited service, “like how do I get what I need as fast as I can get it?”

While customer loyalty and keeping your customers instead of just looking to attract new ones is another way to differentiate the businesses, “just access to loyalty is restrictive at times,” says Ostrowski. He believes that upsells can be a really powerful model as well, as customers want to be informed about everything available to them.

How To Compete With Legacy Markets

Among strategies to beat the illegal market like education that would focus on the safety and the value of legal products and lowering the prices, Ostrowski proposes matching the “pretty damn good” consumer experience provided by the illicit market. “You can pull out your phone, text a guy named Plug, and in five, 10 minutes he’s showing up at your door with a backpack."

“The ease of use is often overlooked as to why consumers continue to choose the illicit market. So, you know, leveraging strong technology platforms, normalizing the shopping experience is going to really, really help the legal market thrive and continue to grow,” Ostrowski concluded.

Mazor Power suggests an increase in basket size by adding everything “from socks to coffee mugs to magnets to stickers, things that people buy on. You know, it makes them smile, it makes them laugh and think about their friend.” According to her, adding whatever people relate to can be very helpful. 

Photo: Image by Benzinga