How to Overcome the Top 11 Challenges Dispensary Owners Face

May 9, 2022

When Colorado legalized recreational cannabis in 2012, it set off a chain reaction prompting 18 more states (and counting) to do the same.  Meanwhile, up North in Canada, cannabis was legalized in 2018 and was quickly adopted across the country. 

These historical actions have subsequently made North America the leader of the legal cannabis industry, holding 80% of the market share, and it isn't slowing down any time soon.

The legal cannabis industry is a fast-growing business predicted to grow from $28 billion to $197 billion over just eight years (2021-2028). Yet as the industry grows, cannabis companies face the difficulty of a constantly changing and highly regulated environment, which causes a lot of roadblocks and unforeseen challenges.

Opening a cannabis dispensary comes with issues ranging from the high cost of license and application fees to no/limited access to banking services and strict regulations that vary from state to state. 

Although unique to the budding and growing cannabis industry, these challenges can be met and solved. In this article, we will discuss the 11 main challenges that every cannabis dispensary owner will face at one time or another — and we are going to tell you how to overcome them.

Top challenges cannabis dispensary owners face include:

  1. Challenges opening up shop.
  2. Challenges getting funding.
  3. How to run store operations.
  4. Finding great budtenders.
  5. Keeping great people.
  6. Training staff.
  7. Managing labor costs.
  8. Managing operating costs. 
  9. How to lock in dispensary branding.
  10. How to grow the business and traffic.
  11. How to scale. 

1 - Challenges opening up shop.

The world of cannabis is intensely regulated and riddled with strict laws that change from state to state. As of April 2022, 18 of 55 states have legalized recreational marijuana, and 37 0f 55 states have legalized medical marijuana in the United States of America. In Canada, however, cannabis is legal across the country. 

Despite legalization in these states and countries, there continue to be obstacles in setting up dispensaries because of licensing, funding, and region-specific rules and regulations. 

In the USA, it's hard because of:

  • Different state / federal regulations regarding selling cannabis for medical and recreational purposes. 
  • Laws governing cannabis dispensaries are different depending on the state. 
  • Lack of a central governing body to regulate and enforce laws and give licenses and permits. Each USA state is given the jurisdiction to set up its licensing bureau. 

In Canada, setting up shop is hard because of: 

  • Limitations on how to serve customers (online vs. in-person). 
  • The restriction of operation of privately owned dispensaries in some Canadian provinces like Nova Scotia and Quebec only allows government-owned entities to sell cannabis.
  • Extensive and complicated licensing processes

How to overcome it.

Before going into the cannabis business, prospective dispensary owners must find high-level information on what they need and what to plan ahead with. 

Our collection of How To Open A Dispensary series will help guide and provide pointers on all aspects of starting a dispensary, 

2 - Challenges getting funding.

When looking to open a cannabis dispensary, getting a license involves the authorizing body checking funds available for the business before issuing a permit. It is because setting up and operating a cannabis business is very expensive. 

Despite the legality of weed in some US states, federal laws make it difficult for cannabis businesses to access banking services from traditional banks, yet these businesses need to raise capital to grow. Money collected from cannabis companies is seen as risky and liable to money laundering by the Federal Deposit Insurance Corporation (FDIC). This discourages most banks from taking part in financing cannabis businesses. 

How to overcome funding challenges.

While it is an uphill task for cannabis dispensaries to get financing, it does happen despite the risk. Credit unions and cannabis-friendly banks do offer business financing to cannabis businesses. Fortunately, firms like Safe Harbor Financials and Naturepay offer banking and credit card processing services for cannabis businesses through banks they partner with.

Aside from taking advantage of financial institutions, there are other ways for owners to finance their dispensary business and these include:

  • Self-funding 
  • Friends and family 
  • Crowdfunding 

The Safe and Fair Enforcement (SAFE) Banking Act of 2021 is currently under consideration in the Senate. In the meantime, funding is possible with the right sources and partners. 

3 - How to run store operations.

Many dispensary owners have never run a retail store before, and this is often a roadblock when it comes to finding the right tools to run operations. Running a dispensary requires the creation of efficient and effective systems, hiring the right people, building a brand, and offering top-notch customer service and adherence to the state-specific laws that govern the cannabis industry. 

How to overcome dispensary operations challenges.

To handle and run store operations, dispensary owners could hire a consultant to assist in the initial set up of the store, advise and design a Standard Operating Procedure (SOPs), evaluate employees and suppliers, and help get the dispensary up and running. 

The tools we use to run store operations successfully are just as essential as the people we hire to support us. If a dispensary owner chooses to use cannabis-centric software tools like KayaPush to manage their people, all of their people's operations will be checked off and taken care of. They can manage their retail operations by using their integrated POS software —and, for the rest of the software suite, they might want to consider dispensary technology that will help the cannabis business to operate efficiently and compliantly. 

4 - Finding great budtenders.

Finding great budtenders is critical, as budtenders are the ones who interact with the customers. Therefore, dispensary owners need to work on finding and retaining great budtenders. 

Cannabis dispensaries commonly face high turnover, which can negatively affect any business. Recruitment and training of new employees cost businesses both time and money and is a challenge that needs to be resolved. 

How to find great budtenders.

Finding talented budtenders requires a mix of different methods. To achieve this: 

  • Do a referral campaign and utilize your existing employees who can tap into their industry network to refer talent.
  • Write a comprehensive and concise job posting indicating all details. 
  • Build a good dispensary brand with a positive work environment and competitive remuneration.
  • Use technology to assist in application tracking, interviews and onboarding experiences to make the processes smooth and manageable for prospective clients, new employees and the HR team. 

5 - Keeping great people.

They say, "Strike a balance between recruiting and retention, and you will retain a happy workforce." After recruiting the right talent, the next challenge comes with keeping and retaining these great people. 

According to the Leafly Jobs Report, America's cannabis industry created more than 280 new jobs every day in 2021. However, on the other hand, the National Cannabis Industry Association reports that the cannabis industry has a high employee turnover rate of 40%-60% within the first two months. 

These two reports show us how the cannabis job market is exponentially growing. There are people who are available to take on the jobs, but cannabis companies are struggling to keep their employees. What then can be done?

How to keep great people.

Keeping great people requires dispensary owners to invest in different techniques and practices like:

  • Tracking KPIs and empowering staff by recognizing and rewarding top-performing employees by giving the sales team bonuses and budtenders free samples to raise morale. 
  • Investing in training and learning programs for employees to help retain talent and inspire them to do their work better and increase the dispensary's profit margin. 
  • Providing fair and competitive remuneration with employee benefits, including early wage access to allow employees to access their earned wages way before the company's payday. This helps employees feel they are having their needs met which, in turn, makes them more productive and more likely to stay. 

  • Creating open communication lines within the company to help feel the pulse of their employees' status and welfare. 

6 - Training their staff.

Training staff is a crucial part of a cannabis dispensary business, but dispensary owners usually ignore it as they are more concerned with ensuring their employees are complying with the ever-changing laws and regulations. 

Training staff is key, and a 2020 Workplace Learning Report confirmed this, with 94% of respondents saying they would stay with their current employer longer if the organization invested in their career development.

How to overcome staff training challenges.

Dispensary owners would be wise to invest in training for employees right from the onboarding process. Do this by:

  • Prioritizing budtenders by using brands to educate/re-educate them about the products and online learning platforms like Toptender to provide education on the different aspects of the cannabis business.

  • Creating a Learning and Development budget that staff members can utilize to pay for courses and training to fill a skill/knowledge and work on performance areas that need improvement.

7 - Managing their labor costs.

For dispensary owners, it's hard to know where to staff and when, especially when it comes to larger dispensaries and multi-location stores. It's essential to have the right people at the right time/season, and scheduling correctly to meet the business needs is vital. This goes back to dispensary owners understanding the data (sales vs. labor).  

How to manage labor costs well.

This can be achieved by employing the use of software that helps give dispensary owners as much transparency as possible and also optimizes business operation. For example, suppose a cannabis dispensary integrates its people management software with its POS system. In that case, it can pull labor vs. sales data, and a dispensary owner can have schedules forecast using machine learning that has been proven to save up to 10% on labor and is more accurate than any human. 

8 - Managing their operating costs.

Operating costs are costs incurred in the day-to-day running of a business, including product costs, maintenance, marketing, and overhead costs, which if

not well managed, reduce the profit margin. Therefore, dispensary owners must evaluate and adopt optimal business practices that will better manage operational costs. 

How to manage costs.

Dispensary owners can manage operating costs by:

  • Getting good at ordering and making great relationships with suppliers and delivery people to get better deals on products and logistics. 
  • Acquiring an inventory management system to help the business make smarter product purchase decisions.
  • Streamlining daily business operations by creating Standard Operating Procedures (SOPs) 

9 - How to lock in dispensary branding. 

Branding is tricky, and when it comes to the cannabis world, it's a significant driver in the success of your store. Branding is your story, sets you apart from the competition, and sets you up for success. 

To lock in dispensary branding, dispensary owners need to envision what unique values they want the dispensary to embody. These characteristics can be customer experiences, core values, quality, culture and mission, bringing them to life in their brand. 

How to overcome it.

Building a brand for the dispensary can be accomplished by creating a branding and implementation plan: 

Creating a dispensary brand plan 

  • Understand what you stand for (mission statement vs. vision statement)
  • Find your target market 

Implementing a dispensary branding plan

  • Seek your target audience and share your story 
  • Remain authentic

This is an excellent resource for dispensary owners looking to build a dispensary brand. 

10 - How to grow the business and traffic.

The cannabis industry is competitive, with new stores entering the market. Therefore, it is up to dispensary owners to learn what they can do to grow their customer base and increase traffic to the store.  

How to overcome it.

Some great ways of achieving this are: 

  • Loyalty cards
  • Having your budtenders be your people on the ground talking up your product
  • Having events or giveaways and samples at your store 
  • Using social media to showcase products and the dispensary brand

11 - How to scale their dispensary.

One of the big goals many dispensaries have is wanting to scale, but this can be hard because of the greater responsibility dispensary owners will have when having to manage more employees, more schedules, more payroll, more products and more locations. 

How to scale your dispensary.

Scaling a dispensary, while viewed as a daunting task, can be done by the dispensary owner. The trick is to use technology and processes to manage the various facets of the dispensary business. This can be done by:

  • Using software that can handle multiple locations from one platform.
  • Having branding and communication channels locked in.
  • Having a clear understanding that different locations will have different wants and needs for products.  

So how can you overcome these challenges?

Unlike other industries, cannabis dispensary owners face unique challenges amid the constantly changing legal landscape that need equally unique solutions. As we have mentioned in the article, overcoming many of these challenges mostly entails using technology solutions and creating processes and procedures to streamline business operations. 

For technological solutions, dispensary owners get ROI from software specifically designed to serve the cannabis industry. For example, KayaPush is designed to grow and scale your cannabis retail store by simplifying HR, payroll, and employee management with our easy, all-in-one platform. In addition, KayaPush allows dispensary owners to easily handle People Management by providing solutions for hiring and onboarding, running payrolltime tracking, employee scheduling and reports and insights

Should you, as a cannabis dispensary owner, face any of the major challenges we have mentioned, this is the place you can come to for answers on how to overcome them. 

Want to learn more ways to simplify and streamline your dispensary operations? Download our free guide to implementing dispensary SOPs below! 

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