Creating and managing a highly-effective and successful cannabis retail outlet depends largely on building customer loyalty and effective customer engagement. This is why loyalty programs are of utmost importance to cannabis retailers and dispensaries.
The success of dispensaries relies much on the kind of loyal clientele they can build. It is estimated that loyal customers are likely to spend 60% more every time they visit their favorite outlets. What’s more is that they are 5 times more likely to provide business referrals and may account for as much as 80% of the revenue garnered by a dispensary. [1]
Regulatory Challenges for Retail Cannabis Dispensary
The cannabis industry is one of the most heavily regulated industries and there are a number of regulatory challenges that retail cannabis businesses may have to face.
1. US Regulations
The compliance requirements pertaining to retail cannabis in the U.S. varies from state to state and municipality to municipality. While some states are very liberal in issuing licenses via an open application period, others are pretty strict with issuing these and may restrict the total number of licenses issued to single digits.
That apart, there are other restrictions with regard to the residency and background of those who may own such businesses or work as their contractors and employees. Some states also mandate that product and building security may be put in place. They may also place restrictions on the amount that can be sold to an individual, as also how one prices one’s product.
The state of Nevada for instance requires that those running a cannabis business hold at least $250,000, as an unencumbered liquid asset that can be liquidated within 30 days of such a request being placed. [2]
2. Canada Regulations
The Cannabis License Act, 2018 (CLA) and Regulation 468/18 empower the Registrar to put in place the necessary standards in place for retailing cannabis. These come in the ambit of Registrar’s Standards for Cannabis Retail Stores. [3] The regulations require that the licensee carry out a criminal background check of their employees prior to their hiring. They must also ensure that the employees have received the necessary mandated training before they start working.
As regards the sale of cannabis in Canada it is important to remember that adults of age can legally purchase no more than up to 30 grams of dried cannabis or an equivalent amount of cannabis oil. [4]
Challenges for Engagement and Loyalty Among Retail Cannabis Consumers
With a lot of players hoping to cash in on the so-called “green rush” attributed to the cannabis industry, it is quite challenging for retailers to create a loyal clientele of their own.
The biggest marketing challenge comes from the fact the regulatory framework governing the cannabis industry hasn’t matured enough to allow cannabis retailers to leverage major marketing initiatives.
Marketing Restrictions for Cannabis
One of the biggest issues faced by cannabis retailers in Canada is the fact that legally bought cannabis is 60% more expensive than that procured from illegal sources. [5]
The retail scenario in Canada is a mix of government-operated stores, private licensed stores and online retailers. That apart, the growth in the number of stores is often not in proportion to the population of the place in question. Ontario with 14 million residents, for example, has only 24 stores, compared to Alberta’s more than 300 stores for a population of only 4 million.
Consumer Behavior
As far as the legal cannabis market is concerned, some retailers influence consumers and retain their loyalty in the face of a number of marketing restrictions through smart publicity. A prime example of this is associating one’s product with trusted brand and celebrity names. However, with the very competitive market this may not be enough.
How TrackMatriX® Can Help
TrackMatriX® Cannabis Management platform is packed with inventory management and supply chain security features that can help enhance the marketing and branding efforts of dispensaries by enabling fast inventory audits, real-time product tracking, and smart sales & inventory analysis.
The underlying technology behind the TrackMatriX® platform makes use of NFC tags or QR codes on the product packaging.
Consumer Engagement
Consumers can simply scan a QR code or tap an NFC label on the product packaging using their smartphones and they can access digital experiences via custom-branded landing pages. The ability to facilitate real-time consumer engagement even while keeping counterfeiters at bay with cutting-edge track and trace ability can help empower cannabis retailers and dispensaries to build customer loyalty in a more effective manner.
Some of the consumer engagement features include marketing campaigns, lucky draws, reward points, offers, etc.
TrackMatriX® solutions make it possible for the cannabis industry to provide customers with a personalized experience by way of an app that makes them experience one’s brand and interact with it on a one to one basis. This can also help motivate them by way of sales, rewards and offers made to them via a white-labeled app.
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