Self-service technology will continue to play an important role in the expansion of cannabis related products — medical use, recreational use and non-THC and low-THC CBD products as lawmakers recognize the rising consumer demand.
(Editor’s note: This is part three in a four-part series on cannabis self service.)
Cannabis stores are one of the fastest growing industries, and self-order technology is playing an important role in this emerging sector, currently valued at more than $18 billion, according to Leafly, a cannabis industry information resrouce, supporting the equivalent of over 300,000 full-time jobs.
A total of 17 states currently have legal adult use, as shown on the accompanying chart. More states are expected to legalize adult use, given the fact that polls show strong public support for it.
|Image courtesy of Cannabis Business Advisors.
The cannabis industry’s job growth in 2020 doubled that of the prior year, according to the Leafly Jobs report. One reason was that during COVID-19, governors in most states declared cannabis an essential product.
While the pandemic boosted cannabis sales, the job growth would have been greater were it not for the social distancing, shelter-in-place orders and occupancy restrictions that limited the number of employees.
In this environment, many dispensaries have begun to investigate self-order kiosks, as described in parts one and two of this series, in addition to online ordering, curbside pick-up and delivery.
Dispensaries face a learning curve
As with restaurants and other retailers that have preceded them on this journey, cannabis dispensaries face a learning curve with self-service technology.
Industry veteran Juan Perez, former CEO of Adusa Inc., a kiosk software and digital engagement provider, outlined some of these challenges in the 2020 Kiosk Industry Census. One of the biggest challenges is integrating the payment processing on the kiosk with the dispensary’s point-of-sale system.
|Chart courtesy of Cannabis Business Advisors.
Regulatory constraints also create challenges for self-serve kiosks, such as guest identification and purchase limits. The hardware needed to for identity validation, especially if paired with cash processing hardware, can impact the device’s ROI.
Software integration issues
Moe Asnani, co-founder of iLava, a Tucson, Arizona cannabis cultivation company that operates two dispensaries, has found integration between kiosk software and his dispensary POS software challenging.
“It’s really incumbent upon the software companies in the kiosk space to make something that works well,” in terms of integrating with the retail POS, Asnani told Kiosk Marketplace in a phone interview. His company uses a cannabis POS software called Treez.
Asnani introduced 12-inch iPads for medical cannabis in 2017 when he launched the dispensary.
First-time medical cannabis customers cannot use the iPads to register. This is because there is a lot of information to fill out and Asnani feels it makes more sense to have someone assist customers with this process.
“If you’re an existing patient it’s very easy,” he said. “Because then you have done your order and it shows up in our system. It automatically matches your information to the record.”
“New patient registration for kiosks is something we would like to figure out in the next three to six months,” he said.
About 5% of the medical cannabis transactions are done on the iPads. One reason more medical users don’t use the kiosks is that many choose to order online from home, Asnani said.
Asnani recently introduced Frank Mayer and Associates Inc. kiosks with Elo software for the recreational cannabis kiosks, which account for closes to 10% of the recreational cannabis transactions. He thinks the Elo customer interaction is good, although it is not a cannabis specific software. Integration with the POS has taken some work.
|Moe Asnani wants kiosk software to integrate better with dispensary POS software.
“The most important part for us is reducing transaction time,” Asnani said.
There will be three kiosks for recreational cannabis and three for medical at both of the company’s stores.
Asnani expects to invest more in self-order kiosks as the software improves.
Arizona does not permit cannabis to be dispensed by a machine, Asnani said, such as the one used by Kind Love in Glendale, Colorado described in part two of this series.
“Cannabis and liquor are very similarly regulated,” he said.
State laws vary, challenging software providers
One of the challenges facing kiosk software providers in the cannabis market is that state regulations are not uniform.
“A lot of the states are just getting comfortable with the sale of marijuana,” said Maxime Kot, director of licensing at Cannabis Business Advisors, a cannabis consultancy based in Phoenix, Arizona.
Self-order kiosks which allow customers to place an order without entering the showroom, such as the ones that iLava uses, are fairly well established in states that allow recreational cannabis, Kot said.
Two of the most common menu ordering platforms the kiosks need to integrate with are Leafly and Weedmaps, she said.
The outlook for vending machines that dispense the regulated cannabis is less certain than self-order kiosks since some states, like Arizona, do not allow unattended cannabis dispensing.
“It’s something cool to have,” Kot said for cannabis vending machines. “It’s a new concept. With COVID people might not want face-to-face with an actual person.”
|The ILava dispensary has separate kiosks for recreational and medical cannabis orders.
“It depends on whether or not the regulations allow for something like that,” said Kot. “If it does, then it’s a matter of how much is it going to cost to have a vending machine type setup to make it worth their while.”
Cannabis without THC less affected
Cannabis products that do not contain THC are less stringently regulated, and can usually be sold in vending machines.
Chemesis International Inc., a CBD development company, has placed vending machines that dispense CBD products that do not contain THC in various locations nationwide, including health, fitness, liquor, retail, institutional, workplace and multi-tenant residential locations.
“Our sole focus today is CBD and like broad use functional care products including but not limited to; topicals, tinctures, consumables, cosmetics, and in some cases, smokable CBD flower,” said Josh Rosenberg, president of Chemesis International. “None of which have THC in the various products offered.”
Self-service technology will continue to play an important role in the expansion of cannabisproducts as lawmakers recognize the rising consumer demand. related offerings — medical use, recreational use and non-THC and low-THC CBD
Photos courtesy of iLava.