Business

Summer Business: Dispensaries Are Cautiously Optimistic

By Hilary Corrigan Jun 26, 2020
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More from Summer Business Week: 1) Cannabis Jobs Market Surges 2) Brands Retool for Pandemic 3) Sales Hold Up as Consumer Dynamics Shift

Like many pot shops, California mega-dispensary Harborside Health Center has customers whose conditions make them especially vulnerable to severe COVID-19 related illness. This makes them reluctant to visit dispensaries.

To support them, and its business, Harborside has overhauled its operations. It’s working to improve its online ordering platform. It tries to reach people through email and figure out what channels work best for connecting with both current and new customers. It plans to step up its social media and digital advertising. At shops, it tries to reduce wait times and lines.

“2020 has been such a doozy,” Harborside head of marketing Alexis Mora said.

Sales Hold Strong

This year, dispensaries start summer–the cannabis holiday season–with new protocols in place. They have implemented new sanitation and social distancing steps. Many set up curbside pickup and improved their delivery service. 

They’ve had to limit the number of people in stores and in-person contact with customers. And they’ve largely halted events and brand visits, in favor of developing their digital channels. Various technology companies have offered ways to help them adapt to the new realities. A new AI-powered self-checkout machine called anna is one example.

Despite operational changes, as summer begins industry insiders don’t expect drastic disruptions to normal seasonal buying patterns. In Oregon, the last three months have seen a consistent increase in cannabis consumption and sales. May sales marked the state’s best month ever, topping $100M. In Colorado, at least one dispensary chain has seen an increase in sales coinciding with the unofficial June 15 start of summer in the mountains. 

With new protocols in place and some strategies they’re trying out, dispensaries begin the cannabis holiday season with cautious optimism. And they look to the July 4 holiday as a gauge for this unique summer’s trajectory.

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Marketing shifts, ramped-up wellness

This week, Harborside’s Oakland dispensary began hosting brand representatives to talk with customers waiting in socially distanced lines outside. The company is also considering a virtual vendor day, but wants to avoid “Zoom fatigue,” and wonders if the format will work well for demos, Mora said.

For its Desert Hot Springs, Calif. location, Harborside plans to focus marketing efforts on locals rather than the tourists who usually flood the Palm Springs area. For example, it will promote mini pre-roll packs, as a more cost-effective option to either use alone or share more safely.

Summer cannabis marketing normally celebrates get-togethers like concerts, barbecues and July 4 events. This year, Harborside and other players are adapting their messaging to focus on health and wellness. 

The company plans to roll out a campaign in August, distributing wellness and cannabis information via email and a blog. Online wellness seminars or events like yoga sessions will tie in with related cannabis products, such as those which purport to help with sleep. 

A community forum at Harborside’s website will let people share stories and get consultations. Mora calls the entire effort a way to re-engage with people at “a more intimate level and more targeted level.”

A new tasting room—opened at the Oakland site early this year for non-combustible products—may now turn into some kind of wellness space.

“That was going to be a huge experiential part of the in-store experience.” Mora said. “You just can’t have that anymore.”

‘New normal’

Harborside already had delivery, but it set up curbside pickup service in response to COVID. It soon outpaced in-store and delivery purchases. “This now feels like it’s going to be part of the new normal,” Mora said. The company hired delivery drivers and curbside staff and shifted other staff to those positions.

It also continues safety practices, such as requiring masks, wiping down surfaces, checking staff members’ temperatures. “Checking off all of those boxes,” Mora said.

In Colorado, Green Dragon co-CEO Alex Levine expects to extend certain changes, such as limiting the number of people in stores, and providing hand sanitizer. “I don’t see this going away anytime soon,” he said.

The company started summer by moving forward with some store remodels initially planned before the pandemic. “Things for us are kind of inching back to normal,” Levine said. “We’re getting back on schedule.”

Green Dragon has gotten used to adapting. Early in the pandemic, Colorado regulators mandated that sales take place outside stores, while still following rules on checking identification and completing transactions within camera range. 

But local city ordinances prevent moving cash registers around stores. The conflicting rules meant workers had to walk back and forth all day from cash registers to front doors. It lasted about a week before the state scrapped the sudden change.

“We had these crazy lines down the street,” Levine said. “It was a nightmare.”

Levine expects the July 4 holiday—without parades and festivals this year—to serve as a gauge of summer sales. 

Because of the pandemic, the dispensaries continue promoting online orders, of which Green Dragon has seen a big increase. Levine will also be monitoring the possibility of a second virus wave and any resulting shutdowns. As an essential business, he expects the stores would stay open. And now they have a game plan.

“We kind of know what to do,” he said. “We’re ready for it.”

AI to the rescue?

A new device, soon to be operational at two Colorado dispensaries, aims to help shops offer quick checkouts. The machines, designed by a company called anna, use artificial intelligence to function like a cross between a high-tech vending machine and a grocery store self-checkout.

They’re about the size of a refrigerator. Anna founder and CEO Matt Frost, who comes from a healthcare analytics and data background, said the device doesn’t collect personal or identifiable information. 

Frost came up with the idea after noticing the lack of self-checkout options at dispensaries. Before the pandemic, he and a team developed the device through the CanopyBoulder accelerator program in Colorado.

They aimed to maximize efficiency, increase revenue per square foot and modernize the cannabis retail experience to make it more like other stores. But with the pandemic, the machine’s ability to keep visits quick — customers can also order ahead — and limit personal contact could help dispensaries.

“Our solution sort of fit what people needed at this point,” Frost said.

Here’s how it works: Store workers still check customers into the store and wirelessly unlock the machine for each customer’s use. The customer then scrolls through the machine’s screen and selects products. When the customer checks out, a store worker is wirelessly notified. The worker reviews and authorizes the order. After the device accepts the customer’s cash, debit or mobile payment, it dispenses the purchase.

The idea is consumers will be “In and out in 50 seconds,” Frost said. 

The company plans to place machines at two Colorado stores next week—Strawberry Fields and Starbuds. Frost plans to expand to Massachusetts soon, then Nevada in 2021.