New independent cannabis retailers frequently go through a variety of concerns and focus on the wrong things before they begin live operations. In our experience working with 30% of the licensed retailers in Canada, these are the top 7 misconceptions that retailers encounter.
1. Planning for customer labels per sale at recreational stores.
This misconception stems from the old medical cannabis industry where prescription forms are provided via stickers for each sale. In the recreational market, there is no need to supply stickers or labels that are customized per customer, per sale. Focusing on this wastes time and money through the purchase of unnecessary hardware.
2. Investing in government ID scanning hardware and software.
In Canada, you are not obligated to collect client info in detail as per the old medical cannabis system. Many clients are unwilling to give any customer details, and you can expect over 85% of your clients to refuse ID info collection requests. Don’t be tricked by consultants and companies that stress the collection of private details to sell you on software and hardware you do not need. Collecting this info will only increase data liabilities without
3. Saving money with cheaper, generic POS systems not designed for cannabis retail.
Using a $100 non-cannabis POS system compared to a $500 cannabis POS system looks nice on
4. Planning for transfers between locations.
Under the current regulations, provincially licensed cannabis retailers need to purchase items from the provincial distributor directly to the store location it will be sold at. Products are not allowed to move between locations or from a central distribution area. The only exception being Saskatchewan, which doesn’t have a provincial distributor. In Saskatchewan, you can apply for a distributor license to
5. Buying an American POS system for batch tracking.
Health Canada doesn’t require or support the infrastructure for batch tracking. In fact, there is no coordinated barcoding standard for licensed producers in Canada. Some producers use double or triple stacked barcodes that may batch track, while many others just operate with GS1 barcodes. Implementing a batch tracking POS in Canadian recreational stores will only create more operational roadblocks.
6. Planning for full customer profile databases.
Many stores are planning for extensive client profiles and databases for use in customer analysis and mass marketing. However, the current industry climate makes it difficult to collect in-depth info. The vast majority of customers are unwilling to give any details. At most, they will provide emails just for electronic receipts. Don’t use too much time and money planning for client databases, as it provides little value beyond emails.
7. Expecting accessory sales to be a significant portion of your revenue.
A trend we observe among prospective cannabis retailers is an excessive focus on accessories or having a dedicated accessories division in their business. This is not the best use of time, as accessory sales on average fall more along the lines of 5% of total revenue, not the 50% that new stores are hoping for. Expectations for accessory sales need to be curbed for more realistic projections of store profits.
Want to see what is required for compliance in Canada? Read more here.
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