With the industry being so new and many cannabis leaders wearing many hats, there is often a gap in understanding of software needs and solutions these decision makers are assessing. That gets to the heart of the mission of "How to Cannabis Data"; Deepen understanding of cannabis software and data for better industry tools, systems, reporting, and ultimately a better more data cultured cannabis industry.
With cannabis being so new, many processes are being established in real time. This can be a recipe for overkill software or not enough while business owners are understanding their business and changing landscape in real time.
In this blog post, we will explore what software layers that exist within a regulated cannabis dispensary and what purpose they serve in the cannabis supply chain and analytical framework.
Dispensary Point of Sale (POS) Software:
A reliable and feature-rich POS system is the backbone of your retail business, including cannabis dispensaries. It facilitates seamless transactions, inventory management, and compliance tracking.
This is the foundation of all data and software configurations for your dispensary. You want to asses this point of sale software with real purpose. Many businesses will sell to your need, which your need can be limited by your understanding. So, it is imperative you understand the role a dispensary point of sale software plays in the cannabis retail business to be able to assess solutions against a well scoped set of needs.
You will read below about the key functions that a dispensary POS should have and the kind of insights that are possible at this software layer and should include in your requirements.
- Dispensary Sales Data & Revenue
- Inventory Management
- Dispensary customer insights (can be limited at POS layer)
- Compliance monitoring
Below we will explore each of these verticals as well as identify the popular cannabis companies that exist within this vertical.
Dispensary Sales Data and Revenue:
Tracking sales data is fundamental to understanding the financial health and performance of your dispensary. This software positioning & reporting follows a pretty standard set of KPI's & tracking to traditional retail.
The chunk of store level sales data exists within your dispensary point of sale. This makes establishing data standards and overseeing them imperative in this backbone layer.
1. Total Sales:
- Monitor overall sales volume, including daily, weekly, and monthly totals, to assess revenue trends and identify peak periods.
2. Average Transaction/ Order Value (AOV):
- Calculate the average amount spent per customer transaction to evaluate purchasing patterns and identify opportunities for upselling or cross-selling.
3. Product Performance:
- Analyze the sales performance of different product categories, individual products, and brands to identify popular items and optimize inventory management.
4. Discounts and Promotions:
- Assess the impact of discounts, promotions, and loyalty programs on sales and customer retention.
Inventory Management:
Efficient inventory management is crucial to ensuring product availability, reducing waste, and optimizing profitability. To paraphrase Future, "Ayy, move that dope, ayy, move that dope".
Inventory management can mean a lot of things to a lot of dispensaries based on the needs of their local regulations. For example, some recreational markets require a recreational & medical store to keep all the same products available on their medical menu with 30% supply of recreational.
Negating unique regulatory requirements, there are some overall metrics that are universal to managing inventory in your dispensary point of sale.
1. Cannabis Inventory Stock Levels:
- Monitor inventory levels to avoid stockouts or excess inventory. Analyze stock turnover rates to identify slow-moving or obsolete products that may require promotional strategies or discontinuation.
2. Product Variants:
- Track the popularity of different product variants, such as strains or potencies, to optimize purchasing decisions and stock assortment.
3. Reorder Points:
- Set and review reorder points to ensure timely restocking and avoid out-of-stock situations.
Dispensary Customer Insights and Engagement:
Understanding customer behavior and preferences is essential for enhancing customer satisfaction and loyalty.
Again, dispensaries are unique in their industry that the point of sale will have varying levels of insight based on wether medical or recreational. For example, medical customers are absolutely required to have all customer information stored in the Point of Sale. This is all the patient information (age, gender, address, etc) as well as all purchase information tied directly to this profile with historical purchase trends. This is information should be readily available and structured ready for insights out of the box.
On the other hand, to store recreational customer identifiable customer data you generally need explicit consent with record of opt in. This is generally accomplished through your dispensary CRM system (see below), but pushed much of the data back to the point of sale.
This is another need for purposeful and meaningful data governance (naming conventions, entity responsible for updating data, etc). Recreational will have generally all of the medical fields available to you, but it is up to the data leaders to give clear and strict guidance on what info is entered where and how the data is structured and input for it to be structured and ready for analysis.
1. Customer Demographics:
- Analyze customer data to gain insights into demographics, such as age groups, gender, and location. This information can guide marketing campaigns and product offerings.
2. Repeat Purchases:
- Measure customer retention by tracking the percentage of customers making repeat purchases. Identify strategies to improve customer loyalty and retention.
Cannabis Data Tip:
This becomes an unreliable figure in the point of sale for recreational stores. Customers can transact anonymously, thus generating a new profile, which will show less repeat purchases because you have repeat customers transacting under multiple anonymous profiles with one purchase
4. Average Purchase Frequency:
- Calculate how often customers make purchases, helping you tailor marketing strategies and loyalty programs to encourage repeat business.
- Similarly, if a recreational dispensary customer is not opted into your CRM, you can never get a true figure for their repeat purchases because they will have an anonymous profile for each visit making it impossible (legally) to track repeat purchases for this one customer.
Compliance Monitoring
For cannabis dispensaries, compliance with local regulations is crucial. Utilize analytics to ensure adherence to compliance standards:
1. State Traceability Reporting Reporting:
- If your POS system integrates with Metrc or similar regulatory tracking systems, review compliance reports to ensure accurate reporting of cannabis-related activities, including inventory movements and transfers.
2. Taxes Configuration:
- Monitor the success rate of age verification processes to ensure compliance with legal requirements.
Popular Dispensary POS Software Companies:
Dispensary Compliance and Reporting Software:
Due to the heavily regulated nature of the cannabis industry, compliance and reporting software are almost always mandated by the state to commence dispensary operations. This software is provisioned from the state usually with limited configuration locking state specific requirements, such inventory tracking requirements for med/ recreational, allotment limits, batch sizes, and more.
In reality, they accomplish nearly none of these and just plague operators with the requirement to push data to this system in the format and workflow they demand. These data limitations are at the root of much of cannabis system inefficiencies, but are unfortunate reality to cannabis regulatory compliance.
These systems are the systems that your point of sales integrates to and is the subject of state inspections for accuracy. When the states audit your system for inventory accuracy and compliance they audit the state traceability system, not your dispensary point of sale.
One of the uniqueness of this industry is traceability is a state mandated system and ultimately the state regulatory agencies are their customer. Unfortunately, you, the dispensary owner, are the user, which causes a natural disconnect between the feedback loop of user needs and customer requests.
You, as the user, can communicate with the traceability systems, but they are under no obligation to help or support without the state requiring it or influencing it.
Metrc:
A widely mandated cannabis tracking system, Metrc provides end-to-end seed-to-sale tracking, enabling dispensaries to track and report on cannabis plants, products, and inventory accurately.
Metrc is the dominant state traceability system and has recently become the traceability provider for states that used to use Biotrack, such as Illinois, Maine, and others.
BioTrackTHC
This software offers comprehensive compliance and inventory management tools tailored for the cannabis industry. It helps dispensaries stay compliant with state regulations, streamline reporting, and maintain detailed records for auditing purposes.
There are more traceability systems and limitations which are outlined here in the How To Cannabis Data State Traceability Systems in Legal Cannabis States: An Overview (2023).
Online Ordering and Delivery Software:
In the digital age, providing customers with the convenience of online ordering and delivery is crucial for a successful retail cannabis dispensary.
The online ordering software landscape is one of the most active and changing verticals in cannabis software. There have been a number of new companies releasing technology in the space and a number of notable cannabis acquisitions. This has resulted in many dispensary crm software businesses emerging or acquiring into the online ordering vertical.
When evaluating cannabis online ordering systems, dispensaries should consider key functions and expectations to ensure they choose a platform that meets their specific needs. Here are some important factors to consider:
1. User-Friendly Interface:
The online ordering system should have an intuitive and user-friendly interface, both for customers placing orders and staff managing the system. It should be easy to navigate, search for products, and complete transactions. A streamlined and user-friendly interface enhances the customer experience and improves operational efficiency.
2. Product Catalog and Inventory Management:
The system should provide comprehensive product management capabilities, allowing dispensaries to showcase their inventory effectively. It should support detailed product descriptions, images, pricing, and real-time inventory updates. The ability to easily manage and update the product catalog ensures accurate information and minimizes order errors due to out-of-stock items.
3. Customization and Branding:
The online ordering system should allow dispensaries to customize the platform to reflect their branding and unique identity. This includes the ability to incorporate logos, colors, and design elements that align with the dispensary's brand image. Customization options enhance brand consistency and create a cohesive online presence.
4. Seamless Integration with POS and Inventory Systems:
Integration with the dispensary's point-of-sale (POS) system and inventory management software is crucial for smooth operations, and more importantly smooth operators 😎.
The online ordering system should seamlessly integrate with existing systems, enabling real-time inventory updates and ensuring accurate order fulfillment. This integration eliminates the need for manual data entry, reduces errors, and improves overall efficiency.
5. Compliance with Regulatory Requirements:
The cannabis industry is heavily regulated, and dispensaries must comply with specific laws and regulations. The online ordering system should have built-in compliance features, such as age verification, purchase limits, and required documentation. Compliance functionality ensures that dispensaries adhere to legal requirements and mitigates potential risks.
7. Order Tracking and Notifications:
Customers appreciate transparency and updates on their orders. The online ordering system should provide real-time order tracking, allowing customers to monitor the progress of their purchases. Additionally, automated notifications, such as order confirmations, order status updates, and delivery notifications, enhance customer satisfaction and reduce support inquiries.
8. Integration with Delivery and Pickup Services:
If the dispensary offers delivery or pickup services, the online ordering system should seamlessly integrate with these options. It should support features like scheduling delivery/pickup times, tracking drivers, and providing updates on delivery status. Integration with third-party delivery services can also be beneficial to streamline the logistics and ensure a smooth customer experience.
9. Analytics and Reporting:
The online ordering system should provide robust analytics and reporting capabilities. Dispensaries can leverage this data to gain insights into customer behavior, order trends, and overall performance. Key metrics to consider include sales data, popular products, customer demographics, and average order value. Analytics and reporting help dispensaries make informed business decisions and optimize their operations.
10. Ongoing Support and Maintenance:
Select an online ordering system that offers reliable customer support and regular system updates. The provider should be responsive to inquiries, provide technical assistance when needed, and continually improve the system's features and functionalities based on customer feedback and industry trends.
Cannabis Online Ordering Companies
Delivery Logistics Software
Customer Relationship Management (CRM) Software:
The cannabis dispensary CRM software is the bridge to connect more deeply and market to your customers. This software enables dispensaries to collect customer data, track preferences, and personalize interactions.
This is one of the areas of the cannabis software stack proverbial venn diagram that has large overlap, mainly with the online ordering software layer. Though they share the same software company the hybrid online ordering and dispensary crm solutions still have the same required functionality, just different integrations and data sources.
Similarly, dispensary crm software have recently tried to enter the ordering or direct to consumer space with offering of dispensary apps alongside their CRM software!
When evaluating cannabis CRM (Customer Relationship Management) software, dispensaries should consider key functions and expectations to ensure they choose a platform that meets their specific needs. Here are some important factors to consider:
1. Customer Data Management & Segmentation:
The CRM software should offer robust customer data management capabilities. It should allow dispensaries to capture and store customer information, including contact details, purchase history, preferences, and communication preferences. The ability to segment and organize customer data facilitates targeted marketing campaigns and personalized customer interactions.
2. Sales and Lead Management:
The CRM software should enable dispensaries to effectively manage sales leads and track the customer journey. It should support lead tracking, lead scoring, and sales pipeline management. The system should provide visibility into customer interactions, allowing dispensaries to identify sales opportunities, track conversions, and measure the effectiveness of their sales efforts.
3. Communication and Engagement:
The CRM software should facilitate communication and engagement with customers. It should support email marketing, SMS campaigns, and other forms of communication to keep customers informed about promotions, new products, and special events. The system should allow for automated and personalized communication based on customer preferences and behavior.
4. Integration with Other Systems:
Integration capabilities are essential for seamless operations. The CRM software should integrate with other systems used by the dispensary, such as the POS system, online ordering platform, and loyalty program. Integration ensures data consistency, reduces manual data entry, and provides a unified view of customer interactions across various touchpoints.
5. Loyalty Program Management:
If the dispensary has a loyalty program in place, the CRM software should support its management. It should allow for the creation and management of loyalty programs, including point tracking, reward redemption, and customer segmentation based on loyalty tiers. Integration with the CRM software ensures a seamless and personalized loyalty program experience for customers.
6. Analytics and Reporting:
The CRM software should provide robust analytics and reporting capabilities. It should offer insights into customer behavior, sales performance, campaign effectiveness, and other key metrics. Dispensaries can leverage this data to make data-driven decisions, optimize marketing strategies, and identify areas for improvement.
7. Compliance and Security:
The cannabis industry operates under strict regulations, and dispensaries must ensure compliance and data security. The CRM software should have built-in features that support compliance with data privacy laws and industry regulations. It should also offer robust security measures to protect customer data and prevent unauthorized access.
8. Scalability and Customization:
The CRM software should be scalable to accommodate the dispensary's growth. It should allow for the addition of new users, expansion to multiple locations, and handling increased data volume. Additionally, the software should be customizable to fit the unique needs and processes of the dispensary, allowing for tailored workflows and configurations.
9. Ongoing Support and Training:
Select a CRM software provider that offers reliable customer support and training. The provider should provide assistance during the implementation process, offer training resources, and be responsive to inquiries and technical issues. Regular software updates and improvements are also essential to ensure the CRM software stays up-to-date and meets evolving business needs.
Dispensary CRM Software Companies
- Alpine IQ
- Springbig
- Sprout CRM (owned by WeedMaps)
- Dispense (aspects of it)
Operating a retail cannabis dispensary requires efficient software solutions to manage various aspects of the business. The software mentioned above, including POS systems, compliance and reporting software, online ordering platforms, and CRM software, can significantly streamline operations, enhance compliance, and improve the overall customer experience. It is essential to research and select software solutions that best meet the specific needs of your dispensary to ensure a successful and compliant operation.