Until recently, automation in the cannabis industry was a far-out concept. While acceptance has grown in the cultivation and manufacturing realms, dispensaries have been significantly slower to adopt automation.
Some have even said the topic is a no-fly zone as far as single-location and legacy dispensaries go as management tends to remain skeptical about the changes that automation will bring.
“Our salespeople manage relationships; they bring donuts to each of our stores once a week and that’s what keeps us on the shelf – you can’t automate that” one executive on the supply-side mentioned during a call as the reason for an anti-automation stance.
Perhaps the skepticism is well-founded – cannabis’ status as a sacred herb is undeniable and the corporate-approach has produced fairly questionable results thus far, but it seems almost impossible that the old ways of selling cannabis to consumers can be maintained.
“Smaller retailers are definitely struggling right now,” Thano Provatas, Wholesale Manager of Columbia Care, stated during a recent conversation.
Provatas, who is based in Boston and represents brands like Tyson 2.0 and Triple 7 in the Mass Market, pointed to the struggling economy and the continued issuance of retail licenses as drivers of the liquidity issues for retailers in the state.
“We’re seeing more and more shops ask to extend terms – 60 days net is becoming the norm for smaller shops – and we have hundreds of licenses still to waiting to come online,” Thano expressed during the conversation, referring to pending brick-n-mortar licenses as well as delivery licenses, the latter of which are reserved for social equity applicants until 2025.
Whether caused by global economic conditions or state-market conditions driven by oversupply, cannabis dispensaries across the country are facing liquidity challenges leading some retailers to “fish” for the lowest price to lower their overhead or improve revenue production.
Fishing is a term used when a retailer prioritizes the lowest price over brand reputation in order to maximize their revenue. While it’s not always the case, a retailer who relies on this methodology is often taking advantage of the consumer’s trust, leveraging past customer experiences or public reviews to make sales. Alternatively, the practice is a race to the bottom and is arguably what caused Oregon’s depressed market conditions, which persist to this day.
According to Provatas, “[fishing] is an unreliable, unsustainable approach that some shops have resorted to as things have gotten tough,” a sentiment echoed by Lisa Barlick of Holyoke Cannabis.
“Our consumers don’t care about the price – they really don’t – they trust us to have something they’ll enjoy, and they come to us because of our relationships with our suppliers, namely our growers.”
While it’s not the automation you might be thinking of, with just 1900 total square feet, Holyoke Cannabis is using automation in the form of a customer-centric menu and repeatable experiences to maximize every inch of their shelf space.
“We always have every category covered and we listen to what our regulars are looking for or want to try. Our customers are still buying in about the same volume as they were this time last year and that has to do with the experience they get when shopping with us,” Barlick stated during a recent conversation.
“It’s important to keep your identity and to deliver something unique yet familiar when times get challenging, especially as a single-location cannabis retailer.”
While there’s little doubt that automating the shopping experience without losing a personalized touch will help to sustain revenue, the answer to maximizing revenue via automation remains largely a work-in-progress, something Kris Walker, President and CCO of Hoodie Analytics, points out is both a product of liquidity challenges for some and rapid success for others.
“It’s a complex problem,” Walker stated, “On one side you have companies that are cash strapped and are likely spending on older technology which fail to prioritize or effectively automate the use of available public and private datasets. These companies are forced to choose between keeping the lights on and facilitating the changes to their businesses need.
“On the other side are the MSOs and new businesses where you have more and more executives and managers coming from traditional supply chains,” Kris pointed out during a recent conversation.
“These executives are coming in and asking, ‘Where’s the automation and the technology I’m used to using,’ – The reality it is, it can be difficult to create processes when the tools aren’t sharp enough but larger organizations are shifting their approach, they recognize it’s time they figure it out.”
Ultimately, cannabis businesses, particularly retailers, will have to adopt the automation, technology and process found in other supply chains if they wish to thrive once weed is federally legal but before then, the value of these improvements seem to still be out-of-reach for most retailers.