The Evolving Cannabis Retail Environment – Cannabis Business Executive


The industry is a long way from the big box future of national brands dominating retail

Imagine a future where purchasing any cannabis product you desire is as easy as pushing a cart down the aisles of Walmart. A future of unlimited choices where you can buy products online if you would rather not visit the physical store. Imagine cannabis brands selling directly to their customers. Imagine an Amazon of cannabis with a consistently reliable supply of your favorite brands and products.

See the best guide for how to grow weed fast the dankest pot on Earth for beginners or advanced tips and tricks for growing marijuana.

Sounds too good to be true, right? And that is precisely the point. The fantasy described above may be a long-sought dream of cannabis industry pioneers past and present, but it is a world away from becoming a reality.

In today’s cannabis retail environment, small and local rule the day, although larger multi-location retailers are gaining ground. If previous industries like pharmacies, booksellers and movie theaters are any indication, there will likely be a gradual trend toward consolidation in our immediate future. Think back 20 or 25 years ago when there were thousands of independent pharmacies, bookstores and movie houses across the country. Slowly, regional companies began to consolidate. Eventually, coast-to-coast brands dominated their categories on a national scale. But will there ever be a CVS, Barnes & Noble or United Theatres of national cannabis retailing?

THC University

The answer is: Maybe. But first, we have to figure out how we get from where we are today to where the visionaries would like to take us. The challenge, of course, is multifaceted. First and foremost, the federal designation of cannabis as a Schedule I drug poses a serious barrier. But for the purposes of this discussion, we can ignore the obvious roadblocks federal prohibition and current state regulations impose. Instead, let us focus on the business requirements within our grasp and how they can be obtained.

Creating a truly national player in cannabis retail

First, we should define what is meant by a “truly national player.” Ideally, it would look very much like my opening scenario. A national player will possess broad wholesale distribution capabilities, with the ability to offer their own products as well as competing brands. It will have multiple locations, first in a metropolitan area, then statewide and eventually regionally, before taking the leap to a national presence. Consider how regional grocery chains like Publix and Ralph’s have become known brands nationally. A true national cannabis retailer will most likely follow this model.

Finally, a true national cannabis retailer will remain as agnostic as possible, demonstrating no brand favoritism that is not bought and paid for by the brands themselves. Following the grocery comparison once again, store brands will live right alongside a retailer’s brands as selection, service and price become the store’s primary differentiators. Under this scenario, a regional retailer could undoubtedly expand to hold a nationwide presence, quite possibly through acquisition that will maintain each regional brand’s presence (think of Cincinnati-based Kroger Co. and its dozens of regional grocery brands).

However, this scenario will be highly challenging under current state regulatory conditions, which are unlikely to change even under federal legalization. Many states have imposed limits on how many retail locations or licenses a single company can possess within their borders, which caps the “depth” that large operators can achieve in a particular state.

By limiting operators in terms of licenses and number of dispensaries allowed, it becomes exponentially more difficult to attain widespread brand awareness and distribution. Storefronts must be strategically located to attract the most business, and brand awareness must be promoted through wholesale distribution to reach the maximum number of consumers.

While entirely attainable, establishing a well-known brand in this manner is an uphill climb.

Learning to walk before we run

The entire premise of scaling retail footprint is predicated on having enough product to secure and maintain consumer loyalty. None of this works if your cannabis supply is not consistent and dependable, still a significant challenge in many markets. States requiring vertical integration while limiting wholesale opportunities create additional hurdles to reaching broad brand recognition. If you are unable to consistently stock your shelves with enough product and consumers cannot find what they are seeking, they will go elsewhere to purchase from your competitors or the illicit market. All that work you did to get a customer into your store goes out the window once this happens.

In addition, supply factors strongly into retail footprint growth as well. With many cannabis retailers relying on the product they have grown themselves, supply becomes a crucial component in the ability to open up additional dispensaries. With the cannabis market in its infancy and cultivation output fluctuating, knowing your supply chains are secured and you have enough product to stock your shelves will ultimately determine whether or not you are able to open additional locations.

As you can see, there is a long road to travel yet for the cannabis industry to reach the sophistication of modern consumer retailing. As the old saying goes, we have to crawl before we can walk–and walk before we can run. At present, the industry has mostly mastered crawling and is steadily working up to walking upright. But we can see the steps we need to take can create a truly national player:

  1. Gain a foothold in your core market to establish your brand, build a customer base and refine your cultivation, manufacturing, distribution and retail operations.
  2. Strategically deploy your retail locations for maximum exposure. Retail licenses in specific states can be limited, so choose your locations wisely.
  3. Utilize wholesale as a marketing channel. With limited dispensary footprint, having your product in other dispensaries can serve as an advertisement for your own retail brand.
  4. Secure your supply chain to ensure consistent access to products on your shelves.

We have a long way to go before we ever reach the level of mass-market saturation that mainstream national retailers enjoy today. But the fantasy vision described earlier offers a glimpse into what is possible, however distant or far-fetched it may seem. More so than any other retail environment, thinking strategically is a requirement. There can be no missing or weak links in the supply chain. And a national player must be able to use limited license assets to its best advantage and maximize every brand touchpoint as a marketing tool. Without this sound strategy and approach, the dream of a true national will remain a fantasy.

Source link


Please enter your comment!
Please enter your name here