What are the things that you should know as a first time cannabis business owner?
1. Know your customers.
The cannabis industry has some of the most engaged customers in the world. They are not just content with just being consumers, but they are also fighting for access. They want your products and they want to be able to get it easily. As business owners, you should know the different market segments that you serve. What are these?
If you were to believe movies and pop culture, you would think that the average cannabis user is a dumb college kid. According to Headset, the typical cannabis customer is male, aged 37.6 years old. But this data is dependent on the customer loyalty program that Headset has. A more thorough study would be from the Cannabis Consumer Coalition that came out with a report detailing the demographics of today’s cannabis consumer.
According to the Cannabis Consumer Coalition, there are more female consumers than male. Women accounted for 58%, while men accounted for 42% of those who bought cannabis and related products. This might be because women make healthcare and purchasing decisions for their households.
Around 42% of consumers spend $200 or more on cannabis per month, with most of them buying products with 10 milligrams or less. On the other end of the spectrum, only 9% wants to have cannabis products with more than 100 mg of marijuana in it.
There are other target markets that you could focus on:
Newbies. With the legalization of cannabis rolling forward, you will encounter people who have never tried cannabis before. These are people who are curious about marijuana and its effects on the body. Studies show that newbies tend to be female between 25 and 44. Most newbies try marijuana for medical reasons.
Nibblers. Nibblers are those cannabis consumers who are consuming less THC per serving. They prefer low doses of THC, or around 5 milligrams or less. This is a sizable target market as studies show 1 in every 3 consumers are nibblers. In fact, Colorado reports that in 2017, growth in this segment reached 83%!
2. Find the most affordable options.
It is understandable that because of the continued federal prohibition, there is a lot of risk in operating a cannabis retail outlet. This goes for your suppliers as well. this is the reason that CBD and THC based products are quite expensive now. However, as the prohibition relaxes, prices are expected to drop. This is what happened in both Washington and Colorado, where the prices for concentrates and flowers have declined significantly. It is always good practice to review your suppliers every so often to ensure that you get the best prices for your inventory.
3. Invest in your brand
As it turns out, people are trusting brands more in the cannabis space. in 2014, Colorado reported that close to 1 in every 5 purchases was for a well-known brand. Just a little over three years, in November 2017, the branded products accounted for 38% of sales. This is even more pronounced in the concentrates area. in Washington and Colorado, at least 70% of concentrates sold were branded.
4. Invest in variety.
Cannabis consumers want variety. You should first know your customers and find out what they want and be able to offer it. You certainly do not want to put all your eggs in one basket and just focus on the bestsellers. Even in mature markets such as in Washington or Colorado, best selling products only account for up to 4% of the sales. What’s more, you should be able to go beyond the bong. Consumers are finding a lot of ways to ingest their cannabis. Some prefer to smoke it, other prefer to put it under their tongue, and still others love to eat edibles. Then you also have products that you slather on your skin, or use as patches. Aside from that, you also have to carry Terpenes, CBD, cannabinoids, and other compounds on stock as well.