Massive legal marijuana dispensaries like Planet 13 in Las Vegas are writing the book on how to capitalize on the growing industry and scale their businesses across the continent. But how can eCommerce play a role in expanding these opportunities? Let’s take a look.
The burgeoning market for regulated cannabis products in North America is difficult to ignore. 33 states currently have medical marijuana legalized, some of which have mixed legislation regarding recreational availability, but 10 of those 33 have completely legalized cannabis products. Adding to that, in October of 2018, Canada legalized all retail sales of marijuana nationwide.
To provide a better idea of the scale and projection of the industry, Forbes commented on the growth potential of the marijuana market at the end of 2017:
“The State of Legal Marijuana Markets, 6th Edition” (SOLMM), Arcview Market Research and BDS Analytics report [show that] “Cannabis saw its first US$5-billion company in 2017, Canadian licensed producer Canopy Growth [CG].” Capitalized at that level, the company posted $54 million in cannabis revenue. It is no wonder the giant alcohol conglomerate Constellation Brands earlier invested $190.8 million in CG, an almost 10% stake in a company formed just four years ago.”
As with any expanding retail environment, this offers significant potential for eCommerce solutions. Large dispensaries like Planet 13 are poised to expand their reach and are certainly capable of offering an omnichannel approach to cannabis sales. Cannabis businesses of this magnitude could stand to benefit greatly from enterprise eCommerce platforms like Shopify Plus, which has embraced the projected US$22 billion worth of eCannabis by 2022, a strategy that is firmly planted within SmartOSC’s area of expertise.
“By 2022, legal cannabis revenue in the U.S. market is projected to hit [greater than] $19 billion (73% of the market). During the same period, Canada is projected to reach $5.5 billion (17%) and at $3.1 billion, the rest of the world will represent almost 10% of the legal cannabis market.”
To overcome the new and unique challenges presented by the cannabis industry, innovation is sure to take place within the realm of eCommerce.
“Sears, Kmart, Macy’s and other legacy retailers are closing stores in the hundreds, marking the continuing decline of old-school marketing. Social media, smarter devices, and digital cash have changed shopping. Customers access product instantly, review features and benefits and click to buy. Providers must have a presence on all channels and transaction technology in place if they're to compete.”
Despite the stigma and barriers present in selling the actual organic materials and byproducts of cannabis, there are a few ways that brands can look at positioning themselves within the cannabis industry at present:
There are large markets dedicated to offering accessories and marijuana-related paraphernalia from pipes and bongs, to merchandise and hydroponic equipment. Although the intentions of the individuals who purchase these items are quite blatant, there are no restrictions on selling them online.
This is a slightly abstract, but no less valid strategy where an online business could connect farms to the dispensaries and medical facilities that purchase and sell the product to the end user. This would allow a business to situate itself amidst the B2B side of the cannabis industry, presenting valuable networking and logistic opportunities to grow into in the future.
There are plenty of pro-marijuana technological and subscription model services that are laying the foundation for successful online transactions in the future. Companies like The American Cannabis Exchange and CannabisCardPay offer secure payment opportunities where banks and conventional credit cards won’t, by offering e-wallet (Apple and Android Pay) or prepaid credit cards that are approved for use in marijuana dispensaries.
Some eCannabis companies are building user bases by offering a green card which entitles members to news, benefits and deals. This will build brand loyalty and increase exposure while they await more leniency in shipping and payment regulations for online cannabis products.
The eCommerce cannabis industry is evidently still in its infancy. But with its enormous potential, any prospective or existing cannabis entrepreneur or brand should take deliberate measures to understand how they can integrate the omnichannel approach as relaxations continually happen to legislation surrounding it.
At this point, the recommendations above, as well as a strong social media and brand presence should be major factors in positioning one’s business intentions in anticipation of a more open eCannabis market. Get in touch with us to start the conversation today!