You can use basic skills to run a basic dispensary – but if you apply specialized knowledge, profits go up…
A couple of weeks ago, I discussed the most important skill to have in the cannabis industry.
I’m talking things like terpene content, grow style, cannabinoid content, bag appeal, trim quality, names…
Because without the ability to judge flower to market, you simply cannot run a successful cannabis business.
Today, I’m going to talk about another essential skill you need: Know the industry you’re getting into.
Now, when I say, “know the industry,” I don’t specifically mean the cannabis industry. I’m talking about something else entirely.
It Was August 23, 2017
I was just handed the keys to our newly purchased dispensary in Astoria, Oregon. To say I was excited would be an understatement. But there was a lot of work ahead of me.
You see, the old owner did a great job of running the shop into the ground. Everything that could be wrong, was. And it all started with how the place looked.
When I first walked in, I saw cracked and missing tiles on the showroom floor. The tiles that remained were mostly dirty.
If you were there with me in those days, you would have seen half-working light fixtures, a broken ceiling grid, and unpermitted walls literally everywhere.
Visually, the store was about as appealing as a wet rat scurrying down a Manhattan alleyway.
That alone stopped a lot of potential customers from coming inside.
While the look of the place was a huge problem on its own, a dive into the store’s operations revealed more pressing concerns.
To help you sort out which companies have the specialized skills and experience to run a successful operation, our experts compiled the ultimate list of top stock picks in the 2020 Pot Profits Roadmap.
The first day I took over, I asked the manager, “when was the last time you balanced a till?” She said it had been months. When I asked why she simply said the last owner would raid the cash drawer and randomly take cash without telling management how much was missing.
When we started keeping track of the tills (another term for cash register), we saw discrepancies of more than $20 per day. After digging deeper, I found some workers had sticky fingers. We ended up firing every employee in the store except for two people, who are still with the company today.
Anytime I buy a dispensary, I do an inventory of everything in the store on day one. And when I asked the last time a product inventory was taken, I learned it had been months prior to my purchase.
In Oregon, a dispensary must inventory cannabis products at the end of each day. If regulators find major discrepancies, a store could lose its license.
There were even problems with the technology the store was using.
For example, when I dove into the point of sales (POS) system, I quickly discovered that it was clunky, time consuming, and made errors on basic arithmetic. It was a fine waiting to happen.
Those were just some of the issues with the store. But the reality is that anyone who understands how to run a retail business could have fixed all of them.
Experience, Experience, Experience
“Risk comes from not knowing what you are doing.” – Warren Buffett
When someone buys stock in a business they don’t understand, I call that gambling.
And when a person buys a business they don’t understand and tries to run it? That’s reckless endangerment of the financial kind.
If you’re looking to get into the cannabis industry, know the industry you’re getting into.
If you want to open a growhouse, make sure you have a commercial grower leading the way. A hobby or closet grower won’t do – you need someone who has worked in and understands a commercial grow environment.
They will know how to rapidly respond to changing conditions. They know what equipment to use, how to set up your facility, and other important details that could make or break your operation.
If you want to open a dispensary, always have a management team that understands retail sales theory and how to apply that to the real world. You can use basic skills to have a basic dispensary. But if you apply specialized knowledge, profits go up.
And if you want to start a wholesaling business, make sure you have people who understand how it’s supposed to run.
Over the long run, having these specialized employees in place will save you money.
But learning these specialties “on the job” could cost you your business.
Now, you know the two big skills needed to make it in the cannabis industry:
- Know the flower.
- Know the industry.
In the third installment of this series, I’ll discuss how to navigate the licensing process.
Advisory Board Member, National Institute for Cannabis Investors
2 responses to “The Specialized Skills That Could Make or Break a Cannabis Business”
May 18 2020