Getting the products you need to satisfy customer demands hinges on building strong, long-term relationships with cultivators. Building those relationships can be difficult, especially if each group isn’t meeting the other halfway. Cannabis Dispensary reached out to growers from across the country for insights on what they want and need from retailers to help you get the products you need, when you need them.
Tips from Daniel Wacks
CEO, State Flower, San Francisco and Las Vegas
State Flower operates 20,000 square feet of cultivation space at its San Francisco facility and 40,000 square feet at its Las Vegas facility (at full capacity). Founded in 2015, the company offers flower-centric product offerings, including prepackaged grams and eighths and various pre-roll sizes.
1. Pay on time. Wacks has worked on all sides of the cannabis supply chain—cultivation, manufacturing, distribution and retail—and although each has its own unique challenges, cash flow is an issue in all areas of the industry, he says, especially because many cannabis businesses are experiencing rapid growth.
“It’s very rare that people have many months of cash on hand,” he says, and the cultivation process—from actual cultivation to harvest and post-harvest processing—takes four to eight weeks to complete. If payment terms are net 30, for example, a cultivator would need up to three months of operating capital on hand to take them from initial cultivation stages through harvest and delivery.
“And that’s assuming they’re able to sell out of products consistently as soon as [they’re] ready, which is not always the case for everyone,” Wacks adds.
Therefore, retailers should respect payment terms and pay on time to help eliminate further financial stress on their cultivation partners.
2. Understand the cultivation process—and timelines. Most cultivators are willing to alter the quantities of certain cultivars—or grow new ones altogether—to accommodate a retailer’s request, but changes take time, Wacks says. If a retailer wants a cultivator to produce a new variety, for example, that variety may not be ready for delivery for six months or more, depending on the grower.
“I think there have been occasions, especially in the early phases in Nevada, where a lot of retailers weren’t very familiar with the cultivation process, and we’d get these requests: ‘I want you to grow more of this, and I’m expecting it 10 weeks later,’ which just isn’t realistic,” Wacks says. “We can make small changes to our process—grow a little more of this or a little more of that, or reserve more for a certain retailer, but ultimately, a minimum of 17 weeks are going to pass from the time we have a request to the time we can actually deliver upon that request.”
3. Don’t be afraid to showcase multiple brands in one display. Having your brand alongside different vendors in the same display might seem like unfriendly competition, but Wacks has a different perspective.
“We love to see State Flower on shelves with other top brands that we really admire,” he says. “I think some people might think that might seem like more competition, but ultimately, we want to be listed amongst those brands that we really respect.”
Tips from Thomas Schultz
President, Connecticut Pharmaceutical Solutions, Portland, Conn., and Co-Owner/Co-Operator of Willow Brook Wellness, Meriden, Conn.
Connecticut Pharmaceutical Solutions is one of four licensed producers in Connecticut, and Willow Brook Wellness is a licensed dispensary.
4. Share data to solve shared problems. The cannabis industry faces several major issues stemming from federal prohibition—including section 280E of the IRS tax code, the lack of basic banking services and insufficient research—that hinder its ability to overcome many market challenges.
Partners in the cannabis supply chain can improve their competitive position by improving their data-sharing capabilities, Schultz says. For retailers, that could mean regularly sharing sales breakdowns and insight into what’s selling and what isn’t. “The dispensaries work directly with patients, and the more data the producers get, the more they will make products that satisfy the dispensaries’ consumers,” Schultz says.
He likens the scenario to a candy manufacturer, such as Hershey’s, using retail data on consumer buying trends to determine whether certain ingredients are more appealing to different types of customers. “If I have a problem with millennials, I can work on solving it,” he says. “Maybe they really want nuts in there, or maybe they really want toffee. I’ll work on it, but I need the information in order to work on it.”
Similarly, this type of information sharing can provide mutual benefits for growers and retailers, he says. “What’s really important here is to understand how beneficial it is for all of us to work together, to be connected to one another, to understand each other’s problems,” he adds.
“What’s really important here is to understand how beneficial it is for all of us to work together, to be connected to one another, to understand each other’s problems.” Thomas Schultz, president, Connecticut Pharmaceutical Solutions
5. Collaborate to improve processes. All cannabis businesses have myriad regulations to follow, and they should work together to help guide the regulatory direction and structure to their advantage, Schultz says. Otherwise, both ends of the supply chain suffer.
“Regulations that are either impractical or impossible don’t help anything,” he says.
Cultivators and retailers can also help each other streamline compliance processes, Schultz adds. For example, a retailer could ask cultivators to provide certain batch information to help that retailer prove to a regulator it is properly handling inventory.
Retailers and cultivators can also work together to develop industry standards, Schultz says, particularly when it comes to pesticides and testing. For example, if pesticides are allowed on a soybean crop near a cannabis grow, the chemicals could make their way to the cannabis plants, which would affect both sides of the supply chain when the cultivator’s products fail testing.
“We all have a similar interest to make sure regulators are aware that behavior that they allow elsewhere in America affects us,” he says.
Tips from Laura Day,
Director of Operations, Yerba Buena Farms, Hillsboro, Ore.
Yerba Buena cultivates 7,000 square feet of canopy in a 15,000-square-foot warehouse. Founded in 2015, the company keeps 30 cultivars in rotation with a library of more than 100 genetics.
6. Know what sells. If a dispensary has a system to track which products are selling versus which ones aren’t, then the retailer can more efficiently plan the menu and order accordingly.
“I think many retailers have room to improve their menu planning,” Day says. “Understanding sell-through rates on different SKUs and product categories can help with forecasting orders, which in turn helps purveyors to plan ahead for what the client will need. It’s crucial to watch market data and trends.”
7. Collaborate with cultivators on marketing efforts. When it comes to marketing, it should be a collaborative effort from both sides to reap the most benefit, Day says.
“We try to promote the stores that carry our product, but it should go both ways,” she says. “Doing social media posts and promoting the farms and products that you’re working with is not only going to bring customers who are seeking their product through your door, but will help drive traffic in general, building loyal clientele, which is good for everyone. Cross promotion is important, and not all stores are doing a great job with this.”
8. Keep fresh product on the shelves. Stale product not only reflects poorly on the cultivator who produced it, but also on the dispensary, Day says.
Retailers should store product properly—in a cool, dark environment—and the storage space should have environmental controls, even if it’s just a thermostat, Day says. This keeps the flower from getting too warm and being exposed to light that will rapidly degrade the product.
“That’s one of my biggest frustrations, to walk into a store and see the wall of weed,” she says. “You’ve got a wall of flower and light shining directly on it, and it hurts my heart, because I know that’s just degrading the flower. The best shops that we work with keep their display flower out in smaller quantities and the flower that they’re selling from is behind their counter or … kept somewhere to preserve it. It’s really simple. You want the longest shelf life on your products, right? Take care of them, and they last longer.
“Not all farms will do this, but our farm will replace products if they’re getting old or not looking their best,” she adds. “That way, the flower that has our brand on it represents what we’ve done in the grow.”
9. Let cultivators help train your budtenders. Every grower has his or her own unique approach to cultivation, and it’s important for budtenders to know how the cannabis was grown in order to discuss it with customers.
“Particularly in cannabis, everybody grows a bit differently and uses different mediums and IPM [integrated pest management] practices, and it’s important to know what those are,” Day says.
Most growers will provide training for budtenders, Day says. She suggests dispensaries take advantage of the opportunity to increase their staff’s knowledge. “If the budtenders know particular tidbits about how a cultivar was grown or how they hunted that pheno or whatever it is about that particular strain, then it’s going to be much easier to sell,” she says. “The same goes for other products. Extraction methods, infusion methods, where the material was sourced, the quality of ingredients—all of this needs to be translated to the budtenders. Customers are looking for information. It’s your job to be able to give it to them.”
10. Stop selling based on numbers. Retailers should communicate to their customers what the experience of a particular variety of cannabis will be like, not just what the THC content is, Day says.
“It’s frustrating when a client says, ‘Oh, if it doesn’t reach 25 percent THC, we’re not going to buy it or we won’t pay as high of a price,’” Day says. “That thinking is becoming obsolete. Educating themselves and the customers on the importance of all of the different compounds in cannabis, not just THC, [is important]. We are not here to sell numbers. When was the last time you went to a bar and asked for the beer with the highest alcohol content? It’s time to level up, and it all starts with retail.”
Tips from Jade Stefano,
Owner/Operator, Puffin Farm, Ellensburg, Wash.
Launched in 2014, Puffin Farm operates 30,000 square feet of cultivation space, including two greenhouses and a large field. It produces flower, CO2 oil, bubble hash, pre-rolls, infused pre-rolls and rosin.
11. Take advantage of grow tours. Grow tours allow retailers to get a behind-the-scenes look at cannabis cultivation, which helps them better understand not only the overall process, but also the particular brand.
“We love giving grow tours to retailers,” Stefano says. “Grow tours are a really good way for retailers to learn about the inside operations … and see that we are a clean operation and that everything is well taken care of and that we love our plants, and how healthy they are.”
“Grow tours are a really good way for retailers to learn about the inside operations.” Jade Stefano, owner/operator, Puffin Farm
12. Be aware of regulations—and be compliant. Washington has particularly strict regulations, Stefano says, especially when it comes to cultivators offering price discounts to retailers. If a retailer approaches Puffin with aggressive negotiating after viewing the farm’s price list, Stefano walks away.
“Even though discounts are illegal, they are commonplace in the Washington industry,” she says. “There are aggressive retailers out there who are known to be aggressive and pushing producers and processors into noncompliant deals, [having them give] special deals and discounts and kickbacks and that type of thing. Any time any retailer might suggest something like that or appear to be asking something like that, we don’t engage in business with those retailers.”
Instead, Puffin works with retailers that are not only compliant, but that also believe in quality. “We really try to work with people who are following the regulations and who want our product because they believe in it.”
13. Offer fair prices. Retailers should be focused on quality and reputable brands that they can stand behind and build long-term relationships with, Stefano says—not just getting the cheapest cannabis possible.
“For retailers to … buy really cheap product on an ongoing basis means that they’re never going to have long-term relationships with brands or establish an industry based on a sustainable economic model,” Stefano says. “I really like retailers that are looking for good quality or good brands and want to maintain good long-term relationships and aren’t in it just for the cheap, quick turnover and easy profit with diminishing returns.”
Tips from Paul Henderson
CEO, Grupo Flor, Salinas, Calif.
Grupo Flor is a vertically integrated cannabis operation with more than 2 million square feet of cultivation space.
14. Share customer feedback. Cultivators crave customer feedback on their products, and retailers are on the front lines, seeing the shifts in consumer preferences that can help growers decide which cultivars to produce.
“The cultivators tend to just grow what they grow and what strains they have in their genetic bank and what they do well,” Henderson says. “That doesn’t necessarily mean they’re growing for what the customers want to buy at that time.”
15. Filter out the cultivators that don’t take regulations seriously. California has particularly stringent testing regulations for pesticides and heavy metals, Henderson says, and retailers should be choosy about which cultivators they work with, ensuring that all product on their shelves passes testing standards and no good player is displayed with a less-than-scrupulous one.
“You can start to weed out … the groups that don’t take it seriously,” he says. “You want to align yourself with the groups that are really spending the time on the compliance, licensing, all of that.”