How the 2016 Election Killed the California Marijuana Business Model

While most people are busy talking about the potential doom from a Trump presidency, there is a much more real change undergoing. For the first time in American history, we have seen the country take steps towards acceptance of marijuana (for better or worse). California made history with the passing of its marijuana legalization bill, which presents a more interesting look at the substance than most understand.

California did not just legalize recreational marijuana, but rather said that ONLY recreational marijuana was legal and also took measures to limit the amount of weed people would be able to grow in their own homes. This means gone are the days of sketchy Venice Beach shops that hand out medical marijuana cards in exchange for $40~ and those sketchy neighbors with boarded-up windows in a house that smells like pot from down the block. California said they want to see as many people go to legal, recreational marijuana shops as possible and they want the consumption and sales to get as ~high~ as possible.

Never before in American history has the stance on marijuana been so pivotal. Even in states such as Colorado, Washington, and Oregon where legalization occurred years prior, medical was left an option and typically home-grows were as well. All of this aside, California had many more dispensaries and much more developed markets for the product even when these other states had full legalization, purely due to the size of the state. This all together means that California made the first push for marijuana to be viewed as a commercial and recreational product.

With these changes, dispensaries and store fronts need to understand the underlying ramifications it has for their business and the opportunities for their future success (or failure).

1. Customers do not understand product quality

No matter how much millennials and generation z like to think that they are marijuana connoisseurs, a minority even know there are two types of marijuana, let alone understand how to look at product and know if it good quality or not. Even after smoking it, most consumers will think weed is weed. This means that the stores that will do the best will not be those that have the best marijuana, but rather the stores that offer the best total product.

2. Packaging

As a California resident, the cheap pop-top bottles that look like they will give me cancer if I touch them, are everywhere and also extremely unappealing. When speaking with the CEO of Fendi, he said "Our product is the content, our stores are the container, and our communication is the magic." If dispensaries hope to stand out, they need to think of how they package their product and overall the entire appeal and user experience. California's new legislation makes it apparent the government wants more and more people to smoke and go to these stores and only the dispensaries that take the "Apple Approach" of making things aesthetically pleasing, will actually win.

3. Store fronts

Just as important as packaging, the store fronts will be pivotal for engaging with the mass market of California. Average people who want to try weed, do not want to feel like they are going into a drug deal. This means gone are the days of having a cheap warehouse in a bad part of town with bars on the windows and flickering lights over glass cabinets. If I were to walk into an establishment, I would want to feel like I do when I walk into Apple, Starbucks, or Brooks Brothers. These businesses have honed in on what consumers what to experience in the peripheral, even if they claim to only come in for the product. Just as Bernard Arnault of Fendi said "Our stores are the container." People care about aesthetics.

4. Social Media

Content marketing has been one of biggest buzzwords in business for the last few years. This pretty much means, your consumers demand X amount of content daily and have a specific niche of stuff they want to see. If you can give them that content, they will be more engaged with your brand and store and hence be more likely to buy from you and more often. So what do you post? Think about what your clients want to see. What type of articles do they read? What memes make them laugh the most? Which GIFs do they share? What clothing, music, books, etc. do they consumer? Overall, understand their tastes and preferences and talk about that, but DO NOT talk about weed. The goal here is not use social media to directly sell your product, but rather to develop a relationship with as many people as possible and make them WANT to purchase from you.

Owning a marijuana dispensary has no longer become about the marijuana, but rather the total product and display. As the coming years approach and more and more of this legislation kicks into effect, we will see a distinct change in the business model of what leads to successful marijuana dispensaries.