Legacy vs. licensed consumer choices & turning up the focus
By Kaitlin Domangue
It’s always interesting to compare the legacy and licensed market.
Scott hit the nail on the head: legacy market loyalty was with the seller and not the strain or brand.
There are a lack of options AND a lack of sellers in the illicit market for plenty of consumers. When you find someone decent, you typically stick with them.
But does this translate to the licensed market? How are consumers purchasing products from dispensaries?
A recent study found that price is the most commonly discussed purchasing factor for dispensary shoppers. Quality, packaging, and social influences are also part of the customer’s decision making journey.
Interestingly, consumers don’t perceive quality the same way. The study found quality is broken into three main categories:
- Meeting federal regulation standards (which aren’t a thing. Not surprisingly, most people who considered this a measure of quality are new consumers)
- Safe and effective
- Cultivated to the user’s experience
But this is just product selection. Consumers also have their choice of retailers.
Product availability & variety, location of proximity, hours of operation, and knowledge of staff are all factors that determine where a consumer is going to shop, according to the research.
What I’m Thinking 🧠
The legacy market is built on trust.
People are more likely to stick with their people because it’s who they trust. When you find a consistent, nearby seller who always has product available: you go to them first and hope they’re available.
The licensed market almost removes that aspect of trust because the dispensary always has products available and they have standard hours of operation.
So it’s no longer a matter of trust or convenience, but a matter of choice. Starting with the retailer, then the product itself.
The study ultimately concluded that before anything else: price is the most important consideration among consumers.
With that being said, consumers do have trade-offs with pricing.
Choosing a higher quality product, something with great recommendations from friends and retailers, improved customer support, and convenience can all make even the most budget-friendly consumer pay more.
Turn up the focus, cannabis
Times are kind of tough in cannabis right now.
It feels like nobody really knows what’s coming next and we’re all sort of waiting around for American legislation to set more balls in motion.
The industry has been in a capital dry spell for several months, as Ave alluded to in his post.
Tension between operators is rampant. Layoffs are sweeping the industry. And some companies are completely going out of business.
The iced tea lemonade accounts for 31% of total sales from the iced tea, lemonade, and fruit segment product category.
Succeeding in California’s industry is tough as nails. There’s an extreme amount of competition, regulation, and financial stress in all verticals.
Maintaining a strong lead on your competition in California requires unparalleled focus – which Ave and his team seem to have mastered.
His key points:
- Don’t overcomplicate processes
This holds a similar sentiment to Sunday’s newsletter, which you can read here! It’s actually one of my new favorite Green Paper pieces.
You don’t need to be constantly innovating or looking for new processes. Replicate traditional business practices where you can to save time and energy.
- Cut the noise. Zero in on your core product and customer
Ave gives the example of retailers paying brands late. Cut your losses, stop fronting products. and move on.
At the end of the day, connecting with your customers is all that matters. Get in front of them and learn their pain points.
Ave’s brand, Uncle Arnie’s, knows their target audience: high-dose consumers. Every drink is 100 total milligrams of THC.
Unlike Cann’s drinks (also delicious), the casual & social consumer isn’t their target audience. It’s the every day consumer who wants a strong cannabis drink.
Plus, the brand’s legacy experience means Uncle Arnie’s is tapped in to cannabis culture, a key component to long-term brand success in this industry.
- Find solutions and lead with a positive focus
Sunday’s newsletter is proving to be relevant again and again.
I mentioned the cannabis industry often makes mountains out of molehills (me being one of them).
We are often focused on our hurdles and it puts us in a negative state of mind. There are challenges everywhere.
Leading with a positive, solutions-oriented mindset is always the right response. Research shows that a positive mindset leads to better decisions, team work, and negotiating.
- Be realistic with yourself and your business
37% of American cannabis operators aren’t profitable.
Cannabis businesses will inevitably make tough decisions. Practice realism in every choice you make.
Then, just do it. Rip the band-aid off and move on.
What I’m Thinking 🧠
All cannabis companies have different challenges, but all challenges can be overcome with extreme focus.
It’s incredibly important to understand every aspect of your vertical. If you don’t – build a knowledgeable board of advisors immediately.
Making strong, focused decisions in cannabis comes from understanding the minefield around you.
In a nutshell, all businesses should be wary of all partnerships they pursue, know their customer, and make simple, quick, and calculated decisions.