3 surprising things I learned from visiting 50 California marijuana dispensaries

  • Written by MarketWatch
  • Published in Economics

California has been the capital of cannabis since 1997, when medical marijuana first became legal. One year after it was legalized for recreational use[1], the state’s dispensary business is home to hundreds of legal, licensed cannabis stores. Open to all residents and tourists over the age of 21, these retailers are drawing interest from the rest of the cannabis world.

As a CEO of a software developer for dispensaries, I set aside the month of December to travel in California and learn just what these retailers are dealing with in this newly regulated era. I have had three main realizations so far.

California is a cannabis wonderland

California’s cannabis market truly is a gold rush. Though I’ve really only scratched the surface by visiting the southern half of the state (the tour will continue after the holidays), I am already overwhelmed with the sheer number of cannabis stores here. There is also a higher level of sophistication to these retail stores than I’ve seen in other states — evidence of big money at play.

Each metropolitan area’s dispensary scene has its own vibe, but most stores tend to provide an engaging and interactive experience, more akin to Sephora than your typical pharmacy counter. Customers are sometimes even allowed to touch and smell samples of cannabis products to help them decide on the right product.

California even has a market for home delivery services, expanding the dispensary footprint far beyond the immediate neighborhood.

Cannabis industry vendors have no shortage of retail partners to choose from in California. Plus, even one year later, many parts of the state are still awaiting passage of local regulations to open stores. That means the market will soon be ripe for even more legal shops, willing to pay a premium for high-end California product.

Product is plentiful — legal or not

Cannabis products are flying off the shelves. Even with so many retail sites, and thousands of licensed vendors wholesaling, products are being sold to eager consumers at ultra-premium prices with high taxes. In fact, California cannabis can cost up to six times more than legal products in Colorado’s mature market, but local consumers and tourists are gladly paying up.

Cannabis retailers face a constant need to restock in order to meet high demand. Every day, dispensaries are bombarded with brands pitching the finest California-grown flower, the forefront of cannabis vaporizers, infused products, technology and security solutions for their shop, and much more. Larger dispensaries must designate specific days and times each week to meet with potential partners to handle the influx of business offers.

imageFlowhub
Flowhub CEO Kyle Sherman inside a southern California marijuana dispensary.

Although the supply chain is meeting the demand of legal retailers, there’s still the issue of the unlicensed market. Demand for cannabis is growing, and illicit providers continue to pop up and thrive throughout...

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