Guest Post by Faai Steuer, Senior Marketing Strategist at Cova
All across the country, the burgeoning cannabis industry is primed for takeoff. With 29 states allowing the use of medical marijuana, 8 of them permitting its recreational use, and solid cross-party political support for these new laws continuing to grow, it is likely only a matter of time before you can purchase marijuana as quickly and easily as you can pick up a bottle of aspirin at the corner market.
Although the usage of cannabis has increasingly become socially acceptable, potential dispensary owners must always bear in mind that their industry must operate under a number of guidelines, strictures, and laws that set their business apart from more typical retail operations in terms of the tools and skillset an owner must possess in order to achieve success.
One of the most important tools a dispensary owner can invest in is a solid Point-of-Sale (POS) system. Essentially, a POS system aids with managing inventory, processing incoming cash, and other core functions of your dispensary. Properly implemented, this system can help save you a significant amount of time and hassle, help your staff maximize their sales, improve the customer experience you offer visitors, and even assist you with record keeping and compliance issues.
However, it is important to remember that all POS systems are not created equal. It is quite likely that either you or someone on your ownership team has previous retail experience or industry knowledge and may already be familiar with some of the more popular solutions available on the market. While it is certainly possible to operate a dispensary using a mainstream retail POS system, you will find that they often lack functions that simplify operations and make cannabis sales more efficient and profitable.
That said, let’s take a closer look at some of the most important criteria that you should be thinking of as you select the right POS system for your dispensary.
1) Product Design & User Experience
Don’t underestimate the power of intuitive design. A well-designed cannabis-specific POS isn’t just easy to set up and operate, but is also designed from the ground up to specifically address the nuances and pain points of the cannabis industry, helping you improve the quality of your customer interactions and saving significant amounts of time.
Save Time Training & In Daily Operations (picture of a budtender talking to a client)
Staff turnover has long been an issue in the retail sector, and the emerging cannabis industry is no different. With budtenders and other staff members frequently coming and going, it is imperative that your POS be simple to learn in order to get new people up to speed as quickly as possible. The best cannabis-specific POS systems have been designed with this concern in mind from the ground up, ultimately enabling you to save a significant amount of time and money when training new staff.
Such a system will also save you time when it comes to processing your actual sales, dealing with your inventory management, and even when staying compliant with all the various laws you will be operating under (we’ll see exactly how just a bit later.)
Improve Budtender Performance
A well-designed cannabis-specific POS system will also help to directly boost the performance of your budtenders, primarily through making product information available to them on the fly. For example, they won’t have to remember which strains of marijuana are best for which particular ailment or what a customer usually purchases; the POS will provide them that information directly.
Strain descriptions, conditions treated, prices, stock levels, and other critical information is available to your budtenders within seconds, enabling them to quickly and competently provide answers to critical questions right on your dispensary floor, with just a few simple swipes and taps.
Access Customer Info & Sales Data
Another major benefit of using a POS system specifically designed to address the challenges dispensaries face is that it presents your budtenders with the customer and sales information they need in order to maximize sales. Customers’ buying histories and preferences are tracked, including favored strain types, frequency and volume of purchases, and even their patient status (when appropriate, for medical dispensaries). This helps budtenders make the right recommendations, vastly improving their overall experience within your dispensary.
2) Features That Keep You Compliant
Compliance is easily the number one administrative burden dispensaries have to deal with. Given that violation of these laws can lead to revocation of your license to operate, and no license means no business, it is understandable that dispensary owners take this burden seriously.
While specific requirements differ quite dramatically on a state-by-state basis, a well-designed cannabis- specific POS system gives owners the opportunity to easily stay compliant at every stage of the process, while allowing for maximum flexibility. Let’s take a look at some specific examples:
Advanced Reporting Functionality
Dispensaries across the country are required to follow a strict set of regulations to ensure they are operating within the law. If your dispensary is found to be non-compliant in any one of a number of ways, you face the risk of large fines or penalties – up to and including losing your license.
One of the most burdensome aspects of these regulations is the reporting requirement. For example, when submitting a mandated daily report to the States of Colorado or Washington, dispensary owners are required to be 100% accurate in tracking exactly what was sold – down to the penny and partial gram of flower. Ultimately, the state wants to be able to track every cannabis sale all the way back through the production chain to the original grower. Ongoing inventory management is a concern for the same reason.
Mistakes that would be harmless in other retail sectors, such as minor errors in amounts weighed versus entered in the system, products pulled from the wrong shelf or container, mis-rings at the register, and even simple cash handling mistakes can become potentially license-threatening issues in the context of dispensary operations.
Using a POS designed specifically for cannabis dispensaries provides you with a powerful set of tools to help combat these problems. The reporting functionality and sales tracking capabilities will allow you to quickly and easily generate all the reports needed to stay in full compliance with the law at all times. It also should help minimize human error, saving further time and hassle in reconciliation.
Following Sales Regulations
Laws mandating product limits vary by state and present problems for many POS solutions. Say your state has a cannabis sales limit of one ounce per person per day. Now imagine that your store is extremely full and very busy, meaning your budtenders are hurried and under pressure. A customer approaches the register with half an ounce of flower, ten edible cannabis cookies, four large cannabis-infused drinks, two small drinks, and a couple of cannabis candy bars.
Your budtender must compute – on the fly or by cross-referencing product specifications – the THC value of the various edibles, compare them to the volume of flower, and determine whether or not this sale is compliant with your state’s sales guidelines. The potential for error is significant.
When you select one of the better cannabis-specific POS systems, these calculations will be done instantly, assuring both the customer and the budtender that every sale is compliant. Non-compliant orders can be easily adjusted, and state guidelines are consistently satisfied. Transactions are efficient, and everyone wins.
Labeling Your Product
Cannabis products also face a heavier burden than other retail sectors when it comes to labeling requirements. Far beyond simple weight and strain information, some states require labels to disclose lab tests done on cannabis products, along with testing dates, specific potency information, and even customer and package IDs which can be traced all the way back to the original batch of flower.
While it is certainly possible to cobble together your own custom solution to this problem, using a POS system specifically designed for dispensaries can help automate the process and eliminate potential human error at the same time, again saving you time and money. It will also help you stay abreast of changes in the law, and easily update your system to accommodate new regulations.
3) Reliability & Stability
Another top priority to think about when selecting the right POS system for your business is the reliability and stability of the platform. To illustrate why this should be a top priority for dispensary owners, consider an example from earlier this year, when a well-known marijuana POS product serving over 1,000 dispensaries experienced a security breach leading to a weeks-long service outage.
During this period, the affected locations could not perform or log any transactions, access their reporting functions, or even pull up their basic customer information. Ultimately, all sales during this period were lost, along with associated records, customer loyalty points, and most other important elements of these transactions. This ended up costing affected dispensaries millions in lost revenue, along with creating a logistical and compliance nightmare to deal with – not to mention upsetting a substantial portion of their customer base.
This is why it is important to consider platform stability, emergency backup, and operational features alongside the day-to-day feature set of the POS systems you are evaluating. Newer market entrants may provide cutting-edge UI and functionality, but may not quite be up to par in terms of operational reliability. Doing a little research about each of the POS systems you are considering can help educate you on their different approaches to these concerns and enable you to make the best selection for your needs.
Speaking of things like emergency backup features, you’ll also want to ensure that your dispensary develops a set of policies and procedures that enable it to continue operating just in case something ever does happen to your technical infrastructure, since no service can guarantee true 100% uptime. Since dispensaries are cash businesses, technically you can operate with a pencil and a pad of paper, but you’ll be running at a snail’s pace. Better quality cannabis dispensary POS systems offer an offline mode, designed to help you continue to make sales when internet or connectivity is lost.
4) Cloud-Based or Locally Hosted
Perhaps the most fundamental choice you’ll make when it comes to your dispensary POS system is whether you want to host and manage it locally or use a cloud-based solution. We’ll take a look at the pros and cons of each method:
Local hosting of your POS system entails setting up and running your own server. This most often entails absorbing the cost of the required hardware as well as hiring an additional staff member specifically dedicated to IT concerns. This person would be responsible for not only monitoring the equipment and software, but also keeping in contact with the support team behind the POS system in order to keep both your teams’ skills and the system up to date.
Local hosting may also require additional investment in facility renovations, as servers can have specific cooling requirements or other issues. Hosting your solution locally is definitely the more expensive of the two options.
However, this added cost does come with the benefit of having greater control over the system and its operations. There is also something to be said for the benefit of having an effective expert (your dedicated IT staffer) onsite at all times.
Cloud-based solutions for your POS system hosting entail storing your data on remote servers operated and maintained by a third party. This is probably the more popular of the two options, as it is both cheaper for the dispensary, and poses a lower technical barrier to entry at the same time.
These services offer superior ease-of-use as opposed to self-hosted options, as you don’t need a full time IT staffer to operate your own server architecture; you simply pay the third-party cloud provider instead. Setup and maintenance is similarly streamlined and accessible even for non-technical individuals.
They also are superior from a system backup perspective, as cloud-based solutions typically incorporate much higher levels of redundancy in data storage than a dispensary can employ on their own. If lightning strikes your facility, both your system and your external hard drive backups could be lost, but cloud data stays secure.
The biggest drawback of using a cloud-based solution for your dispensary POS system is that it places you at the mercy of their system in terms of uptime and accessibility. If your provider’s system goes down, there is literally nothing you can do other than wait for their engineers to address the issue. Similar issues may occur if your connection to the service cannot be established: imagine local road construction accidentally cuts your internet cable leaving you without service for a few days.
Thankfully, dispensary owners are able to mitigate this risk by selecting a POS system developer with a demonstrable track record of providing secure and reliable data infrastructure. Pay specific attention to their track records and customer satisfaction ratings, and you should be able to get an accurate idea of which POS products are likely to be a good fit for you.
5) Ease of Inventory Processing
Anyone with retail experience in any sector likely has first-hand experience with the difficulties of inventory management. It’s stressful enough keeping accurate track of a store full of shoes, let alone a suite of products that is constantly monitored by the state, who expects accuracy in reporting down to the gram.
Many of the best POS systems designed specifically for dispensaries can almost entirely automate this process for you, along with direct integration into its reporting module. All it takes is a little setup and configuration based on the way you intend to receive your products (daily batches versus accurate package reception times) and operate your sales floor (are you prepackaging flower or weighing it out in front of customers) and the system will largely run itself.
Remember, many states expect to have a clear paper trail on every officially grown gram of cannabis, all the way from the original farmer to the consumer. As cannabis products or flower are delivered to your dispensary, you scan it into your POS system, creating documentation as to what specifically has arrived, and in what quantities. You then parcel the products or flower out based on how you run your dispensary floor, which enables the POS system to track each and every sale no matter how you choose to make them. At the end of the day, you can scan your remaining stock, cross-reference it with sales, and in minutes you generate the reports that satisfy state requirements.
Effective inventory management can also directly improve your bottom line and enable you to deliver a better customer experience for your clients.
A dispensary-specific POS is going to provide you the sales trend data you need in order to most accurately judge the various weights, strains, and products you want to stock to maximize your revenues. This means less money tied up in inventory and better cash flow.
You’ll also deliver a better experience to your customers over the long term. With good visibility into your inventory, you’ll never run out of their favorite strains, and you’ll be able to make product recommendations based on specific expertise with your own stock.
6) Ease of Integration with Other Systems
It is always important to remember that your POS system isn’t a complete standalone solution to running your dispensary, though it is certainly a critical component. Your dispensary will definitely be using multiple hardware and software solutions, and how the POS system you select integrates with your other services and technology is an important consideration.
Consider all of the physical hardware that will be used in all areas of your dispensary, from shipping and receiving, to product processing, to the sales floor. Computers, tablet or mobile devices, office and label printers, scales, hand-held or shipping scanners, cash registers, and security or surveillance equipment are just a few of the devices that may need to be integrated with your POS system, and each one that you can’t make work will require the development of a special work-around or solution to compensate for it.
Along with all the physical hardware your POS system may need to interact with, you’ll also want to consider the various software programs it needs to run alongside. Your dispensary will almost certainly have its own website, and savvy dispensary owners employ tools like digital signage, menus, and even e-commerce solutions to enable them to offer a superior user experience to online visitors as well as those who visit the dispensary in person. Sales and marketing tools, data and system backups, surveillance footage storage systems, and every other program you use must all be evaluated for compatibility. One stellar solution is an open-platform product, which provides a publicly accessible API for other software developers to use in order to help make the process of systems integration easier to manage.
7) Cost of Ownership
The cost of purchasing a POS system for your dispensary can be deceptive in a number of ways. Many owners will focus on minimizing the initial investment to their detriment over the long-term, ignoring what support or upgrades may cost them in the future. Additionally, some POS systems provide you the ability to actually increase your revenues through better customer targeting, upsells, or online ordering, so remember to consider positive factors as well.
Here are a few questions to keep in mind that may help you more accurately gauge the true long-term cost of ownership of your POS system:
- How solid is the company? Years in business, customer counts? Financial strength?
- Does technical support cost extra?
- Is the response time sufficient, or will I need to pay more for faster service?
- Is the reporting system user-friendly enough for us to operate without a lot of time invested in reconciling data?
- Does the system help me reduce my operational costs or incrementally improve my sales? If so, how?
- Is there a monthly or annual service fee in addition to launch costs?
- Is the system upgradable? If so, how much does this cost? Can I continue using an older version of the system if I choose not to upgrade?
- Does the system help me enhance my customer experience? If so, how?
- What is the historical system uptime, and what do I do if the system is down?
- Am I locked into any long-term contracts or tied to purchasing hardware from specific manufacturers?
While this list is hardly exhaustive, it should provide you a good basis to begin your evaluation of various POS systems and what their real impact on your dispensary would be over time.
A good POS system and company will help you do everything you can to minimize your risks and expenses, while giving you all the tools and data necessary to maximize your profits and customer experience.
About the author:
Faai Steuer directs Cova’s marketing strategy and oversees its execution, including website, content, social media and PR.
An entrepreneur at heart, Faai was a top-ranked UBC grad student whose business savvy and innovative approach garnered her three marketing awards and a scholarship during her MBA – enough to make the entire course a free ride.
Before joining Cova, Faai directed go-to-market strategy for iQmetrix’s enterprise clients. She brought with her more than fifteen years of marketing experience, combining new and traditional media strategies across a range of industries locally and internationally. At Unilever, she launched communication campaigns that changed the fate of an underdog brand to become a second largest brand in the market. At Mars Inc, she introduced Pedigree Denta Stix to Asia-Pacific market for the first time, making dogs in Asia happy.
Cova is a cannabis retail software solutions company that designs and builds products to elevate the dispensary experience.
Our Point of Sales Suite is designed to run a modern dispensary easily and smoothly. We make complex tasks simple so you can focus on doing what you love and grow your business fast. Our digital signage and touchscreen menus integrate seamlessly with our POS, providing an array of tools to help bring dispensaries to the next level.
The legal marijuana market is one of the fastest growing industries in North America. Cova operates as a start-up within a solid, well-established parent software company. Collectively, our software can be found in over 19,000 stores across North America in various verticals.
We are a mix of dreamers, strategists and technologists determined to leave the world better than we found it. We know the future is unwritten and subject to improvement, so we try to imagine what that future looks like and devise ways to build it.
We want to work with you to solve Cannabis retail problems so we can create great experience for you, your budtenders, and your customers.
Let’s talk Cannabis Retail!