Canada’s cannabis market is maturing, but it’s still an exhilarating space to be operating in. Considering MJBiz predicts our country will spend more than $4.8 billion by the end of 2022, with sales hitting more than $12 billion by 2030, it’s no wonder that everyone wants into the cannabis business.
Every day new storefronts are opening up as Canadians from all walks of life seek to get a piece of the cannabis-infused pie. Unfortunately, many newcomers dive into cannabis with a lot of personal experience with the plant but perhaps little professional intel.
This means the myths, assumptions, and speculation about selling legal cannabis in Canada are rampant. If you want to get into selling weed in a licensed capacity, do yourself a favor and put aside the following three misconceptions.
3 Cannabis Business Assumptions About Opening a Dispensary
1. Everyone Wants to Work in Cannabis: Finding and Keeping Staff is Easy
Maybe it was easy on the first day of legalization, but today’s marketplace is different. Triggered by COVID-19, the Great Resignation is hitting the cannabis sector just as hard as other service industries. There is an ongoing shortage of people applying, especially for the front-line positions.
In more mature markets, like California and British Columbia, competition is fierce among dispensaries and retailers. As a result, potential employees now have options and can compare notes between your store and the one around the corner.
Offering competitive wages, professional opportunities, and benefits is just the start. Once you hire employees, the challenge is to keep them by operating a supportive, enriched, and understanding environment.
Marijuana Ventures suggests planning beyond haphazard pay raises. As author Terry Smith suggests, “Be sure your company’s compensation philosophy is clear and understood by all. (That starts with you.) And make sure accountability is in place so that those current employees are not shorted when new people are hired.”
We’d also recommend sending your budtenders to local networking and educational events. If you support the growth of your employees within the industry, you’ll have greater staff satisfaction and better retention.
2. You Won’t Need a Marketing Plan for Your Retail Cannabis Business
In many growing markets, there is still the assumption that you’ll attract customers by simply being open and licensed. After all, everyone wants access to legal weed, and you are the one selling it.
But, it’s not so easy anymore. With several thousand retailers now operating from Nova Scotia to British Columbia, consumers have options. Increasingly, you have to do much more than exist. You have to invest in marketing your brand.
Yes, there are clear restrictions on advertising as a cannabis store, but there are ways to work within the regulations. For starters, install integrated in-store digital signage. It’s an excellent method to advertise discounts, new products, and weekly sales to those already shopping in-store
A second valuable component of compliant marketing is to take advantage of your email list. With regular email campaigns, you’ll stay top of mind for your current customers. Return customers typically make up more than 61 percent of your annual sales and spend 67 percent more than new customers.
In a world where customers can easily get distracted by the next shiny new storefront, you have to find creative ways to keep them shopping with you and not with your competitors.
3. You’ll be Making Money Hand Over Fist
In the good old days, working in cannabis was about high risk and high reward. For example, Leafly reported that Black Market operations could expect returns of up to 1000 percent. But these astronomical returns are no longer possible due to layers of regulation, compliance measures, and taxes biting into your bottom line.
According to one source, profit margins for a licensed dispensary or retailer usually range between 15 to 20 percent after taxes. The 2021 report from Leafly supported the 15 percent profit margin.
This isn’t a statement to dissuade you from opening up, but it’s a critical reality check that the cannabis space today operates a bit differently from the days of old.
There is still substantial money in cannabis, but profits come from long-term stability rather than payoffs for high short-term risk. These days, the long-term payoff comes from establishing yourself as a mainstay in your neighborhood, offering consistent products and service, and paying close attention to the customer experience.
Set Yourself Up for Success in Your Cannabis Business with TechPOS
Whether you are gearing up to open or in the initial planning stages, TechPOS offers real-time analytics, compliance reporting, and more, that empower intelligent decision-making. We help you understand your customers, beat out the competition, and boost sales through an integrated hardware and software solution.