Guide on how to transition from medical to recreational cannabis dispensary. Consider Licensing, Laws, POS, Marketing, Staffing, & changing layout.
There are many dispensaries in the United States selling medicinal cannabis. In fact, 38 states allow it for medical use, and 24 of those also allow recreational adult-use selling.
Most of the time, when dispensaries start selling for medical use, at some point, they think about introducing recreational cannabis sales to expand reach and boost sales. Stores that make the transition from med to rec report selling three to four times more and bigger purchases.
So, if you want to make more money from your dispensary, and your state allows it, then it might be a good idea to transition your medical cannabis dispensary into a recreational use one too.
Adult-use or recreational cannabis refers to laws that permit individuals aged 21 and older to purchase cannabis products. As of April 2023, 24 states, two territories, and the District of Columbia have legalized recreational cannabis. These laws treat cannabis similarly to alcohol, allowing adults to buy it without needing a doctor's recommendation.
It can be tricky to understand the best path to follow, if you’re looking to turn your medical cannabis dispensary into a recreational cannabis dispensary. Just like with any other business venture, when making this move, there are several things to consider.
Such as, it’s important to figure out the legal side of things, including licensing in your state, as well as the rules around how you are allowed to market your new recreational products.
Another consideration will be how to promote recreational cannabis. It’s a little different to selling medical cannabis.
Without effective promotion, sales opportunities can be missed, and people won’t know about your dispensary and your products. When promoting, you also need to keep in line with the rules and licenses around marketing recreational cannabis.
Some dispensaries also find that selling recreational cannabis requires more thought in terms of customer experience and journey.
When customers buy medical cannabis, they like to buy from a dispensary they trust. When customers buy recreational cannabis, however, there is more of a buying journey involved.
This “journey”, as such, can span several things. Firstly, your USP – why should customers buy from your dispensary? Secondly, what is it like to buy from your dispensary? Consider things like customer experience, overall wait times, customer satisfaction, and customer care.
A lot to think about, right? But you have your heart set on the transition from med to rec cannabis sales, so here are all things to keep in mind when turning your medical cannabis dispensary into a recreational dispensary.
Key consideration: Remember, each dispensary's shift from medical to recreational sales can be different. It's important to check with your state's regulatory agency to make sure you're doing everything you need to do.
There are more restrictions and laws around the recreational use of cannabis, which are often less strict with medical cannabis sales. Currently (February 2024), there are 24 states in the USA which allow recreational sales of cannabis.
Everyone connected to the dispensary will need to pass strict checks on where they live and their criminal history. Staying legally compliant is a constant challenge for dispensaries, and it's something you'll have to work hard to maintain.
Laws also dictate how you market your dispensary and products. There may be things you aren’t allowed to promise, or words you may not be allowed to use, depending on where you’re based. Regulators like to keep an eye on how much cannabis is sold, how it's advertised, and how much people can buy. Everyone who buys cannabis must show their ID to prove they're old enough. There are also limits on how much cannabis someone can buy in a day, and these limits might change. Lawmakers want to make sure people access cannabinoids in a certain way. Sometimes, rules about testing and labeling products can change suddenly. If that happens, stores might need to send their products to be tested again or get new labels.
As long as you familiarize yourself on the legal side of transitioning your business into a recreational cannabis dispensary, you should be one step closer to that switch.
When switching from med to rec sales of cannabis at your dispensary, you’ll need a new license because your medical license doesn’t cover recreational adult-use product sales.
First, find out how much a recreational license will cost. Getting one might have some significant expenses, but it's usually worth it because it opens new ways to make more money.
Next, gather all the necessary paperwork. Your state's cannabis regulatory agency will ask for specific documents when you apply for a rec license. The approval process time varies by state, and you can't start selling adult-use weed until you get the license. So, it's a good idea to apply sooner rather than later.
Also, check if you need a transportation license. When you start selling recreational products, you might need a special license to move them between your places or from the supplier to your store.
Cannabis Zone: Start by getting to know the rules in your area. Make sure your store is in a zone where it's okay to sell cannabis and is away from places where kids hang out such as schools and youth clubs. In some states, there are rules about having separate locations for selling medical and recreational cannabis. Double-check that your store is in the right zone for selling to adults. Check with your state's regulations to confirm that your current store location is allowed for adult-use sales. Keep in mind that not all places or towns allow stores to sell recreational cannabis. For instance, there are usually rules about how far away a dispensary must be from schools and churches.
Availability of recreational licensing in your area: Check if you can get a license to sell cannabis for rec purposes in your area. If you already sell it for medical reasons, you might have an advantage. Regulators usually prefer to give licenses to businesses that follow the rules. In many places, there are only a certain number of licenses available to sell rec cannabis. Luckily, in many states, they give first dibs to stores that already sell it for medical reasons before they let new businesses apply.
Additional Municipality licenses: Research the local rules with your cannabis control board. See if your dispensary requires a special license to move products between your dispensaries or from the supplier to your store. Moving cannabis around has additional laws which include being clear about what you're doing, and keeping track of everything. When you switch from selling for medical reasons to selling for recreational use, you might need other licenses too, like ones for delivering or bringing weed orders to customers at the curb.
As with any business, managing your inventory is an essential thing to work out. With an efficient inventory system, you’ll know what you have in stock and what you need more of.
In addition, this also helps your staff, because they will be able to accurately let your customers know what is available at any given time.
Some states require a separate inventory for recreational products. Others allow dispensaries to use the same inventory for med and rec, but sometimes they have potency rules that stipulate products can only be sold as med or rec, not both.
Check your state’s regulations on how recreational dispensaries must manage inventory compared to medical dispensaries.
If you’re able and choose to include both medical and recreational inventory in your dispensary, you will need to create a separate product catalog and strain catalog for each so your POS system stays up to date.
One of the most important things when it comes to the transition from medical to recreational cannabis dispensary is how you market yourself.
When the time comes, you need to establish your new recreational dispensary’s USP. What does your company do well – is it customer service, or the type of products you sell? Once you find what makes your new business special, you’ll know the direction to take in terms of marketing.
You will most likely have a customer base already, who will need to be aware of this transition, so this is a good starting point. Communicate with them first. Invite them to a special relaunch event,
This comes down to launching a new brand or rebranding at least slightly. Sometimes the use of the medical cross with green leaves might still give off the image that you’re a medical only dispensary. So, you’ll need to represent the change to your business properly, which may include the use of a new logo, color scheme, and maybe even a new name and premises.
In addition, make sure you communicate with your previous client base, inviting them to try out your new products and services if this is appropriate. It’s worth noting that some customers who buy medical cannabis may not be interested in recreational cannabis, so it’s a good idea to look through your current customer base and figure out if they’re ideal customers for recreational use.
Just like with every company and business you’ll ever run, you need to be sure that the levels of supply and demand are right.
This can come down to several different factors. For example, when it comes to the demand side of things, you need to be in the right location for recreational cannabis. If the demand is low in your area, it may be worth considering moving location or sticking with the medical dispensary business.
Market research can be a great way of scoping out demand. This way, you’ll be able to get a good idea of what people are looking for, and whether your new recreational cannabis dispensary will get much business.
There are some areas, such as Colorado and Washington, in which recreational cannabis has experienced something of a boom, but this is where it’s so important to establish the supply side of things, too. As you’d expect, if there are too many recreational cannabis dispensaries in a certain location, regardless of the amount of demand, yours will be a small fish in a big sea.
As part of your transition plans, make sure you scope out the demand, and then understand the supply in the area, and what your competition will look like.
Once you’ve established that you’re transitioning from medical to recreational cannabis in an area where the supply and demand is balanced, it’s time to understand what your business is going to look like.
This can include several things, including what your premises is going to look like and what kind of experience you’ll be giving your customers.
Naturally, as we all have different personalities, we all have different preferences in terms of how we like to shop and buy things. While some people like to be informed along the way by an expert staff member, others may prefer to do their own research and shop alone.
When setting up a recreational cannabis dispensary, remember to cater to the different types of buyers and their personalities and preferences. This can include adding in self-service stations and screens, as well as having staff on hand to educate and inform the customers who prefer an interactive experience.
Each customer will want to do things a certain way, and if you don’t cater to this, they might not feel comfortable and they might not enjoy their experience in your dispensary. This could lead to you losing customers.
For a thriving recreational dispensary, you must cater to all the different types of customers who enter your premises.
When it comes to transitioning from medical to recreational cannabis dispensing, it’s essential to understand what your finances will look like.
This means delving deep into the costs of making your products and selling them for the right price to reflect this.
However, this price must also be competitive based on what the market is looking like now, so it’s always a balance you’ll have to keep.
It’s also a good idea to set aside part of your monthly budget to put towards your marketing efforts. If you track your Return on Investment when it comes to marketing, this will be a good way to understand how much you should be spending on promoting your products, and how much business this will get you.
Another cost to consider is the one-off setting up your premises. If you’re staying in the same building when transitioning to recreational cannabis dispensing, budget for the interior décor and other works you’ll need to do, to keep up with your business’ new brand and identity.
When you’re rebranding and changing the nature of your business by turning it into a recreational cannabis dispensary, it’s a good idea to make sure all your current staff members are on board and happy to stay on when the transition takes place.
Some team members may wish to move on from their roles when the change happens, which is perfectly fine. If this happens, it’s a good idea to work out how many staff members you’ll need per shift, and what their roles will be.
This is because, with recreational cannabis, it is more likely that customers will enjoy an interactive shopping experience, with staff members discussing their options and educating them about the products. In turn, this requires more staff members on hand to talk to customers.
If you’re relocating to a larger space, you might need more team members, especially if you have an ideal ratio of staff to customers in mind.
As mentioned before, sometimes customers want less interactive, more self-led shopping experience, which is completely reasonable too.
That’s why it might be a good idea to consider self-service screens or stations when setting up your premises for your new recreational cannabis dispensary.
When you’re transitioning from medical to recreational cannabis dispensing, you’ve probably got lots of things to consider and figure out right now.
At Seed Technology, we’re specialists in providing self-service and entertainment screens for cannabis dispensaries.
Simply put, we create digital entertainment tech for cannabis retailers, stores, and dispensaries.
We can help you create a better shopping experience for self-led customers in your store. We offer our customers excellent aftercare and customer service, to help give you peace of mind when you’re setting up your new recreational cannabis dispensary premises.
Just like you, we want your customers to be able to walk through your shop without getting stuck in queues. Our in-store digital engagement software for cannabis retailers are simple, and easy to use, to help you seriously cut down on wait times.
Our products help to bring recreational cannabis retailers, stores, and dispensaries into the modern age with the new, quicker way of purchasing.
When you’re turning your medical cannabis dispensary into a recreational cannabis dispensary, you’ll want a good reputation, fast – we’re here to help you get customers on your side, by providing you the means to deliver a smoother and modern customer experience.
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