How cannabis companies who aren’t delivering their product to dispensaries in retail-ready packaging are leaving money on the table AND hurting their brands.
The selective digging for prime flower by tenders, subsequent breakup of buds to make sellable weights, and continual opening of jars, means the last ounce of ‘deli-style’ flower is of much poorer quality than the first.
As someone who has worked in product marketing and development for years, and now sells packaging products for the cannabis industry, I will first admit my obvious bias in regard to this subject. Putting that aside, flower should be packaged for retail sale before getting to the dispensary. Always. Seriously.
As a longtime grower and consumer, the thought of buying a $65 1/8th of flower, that has been opened 300 times, been exposed to the uncontrolled humidity/dust/pathogens of a high traffic retail environment, had 200 peoples’ noses breathing into it, and 10 bud tenders hands cherry picking and breaking down choice nugs, makes me more than uneasy. (It also kinda reads like a depressing 12 Days of Christmas parody….)
“300 Times Opened”
“200 Noses Breathing”
“50 Nugs Broken”
“10 Tenders Digging”
“FIIIIVE RUINED OUNCES!”
“4 bad reviews, 3 forgotten brands, 2 lost customers”
“And a $1000 less from your hemp tree.”
If you are a grower and your product is being handled this way, (even if you like Christmas song parodies), this should make you uneasy too, but for a lot more reasons:
1. Loss of Brand Awareness in Store and After Point of Sale
This one might irk me more than any other. If you are a grower, you sell to dispensaries and distributors, but secondarily, you sell to their customers. This means that the value of your product to the dispensary is directly related to the value of your product to the dispensary’s customers. Ignoring the second part of the sales process is neglecting the true source of your income: If no one buys from the dispensary, the dispensary doesn’t buy from you.
When the customer buys deli-style flower, they often can’t remember what they bought and definitely don’t know who grew it. Just as often, the bud tenders don’t know which company produced which bud. So, how do you expect a customer, who intends to be a repeat customer (also known as: literally the most valuable thing any business can earn), to repeat? How do you expect them to share your brand with their friends? How can they follow you on Instagram or find dispensaries that stock your brand online? How can they get a feel for what your brand represents, and the energy you put into growing your product?
It’s simple: They can’t, and they won’t.
2. Lower Perceived Value
Creative, informative packaging raises the value of your product, from distribution to beyond the point of sale.
The impact of a lower perceived value starts when the product is presented to the dispensary’s buyer, and continues throughout the life of the product, through the customer’s selection process, at the point of sale, and once the product is home with your customer, and other people see it. At each step, unpackaged product takes a hit to its overall potential value.
The numbers are straightforward:
1LB of Flower = (130) 1/8ths
The cost to package (130) 1/8ths ranges from $200 for the most extravagantly embellished custom jars with boxes, to just $20 for custom mylar pouches. Of course, packing and tagging the product costs money too, generally $100–200 per LB, for 3rd party dry processing.
All-in, your added costs for packaging are as low as $120 per LB, or about $1 per 1/8th.
Could you raise your prices by $250 per LB and $5 per 1/8th with well-designed packaging, and maintain your current rate of sale to double up on this investment? Likely yes, but in hyper competitive markets, maybe not. If so, a grower producing 1000LB of flower per year adds $250,000 to their revenue, $130,000 being profit.
But let’s assume you can only raise prices by $120 per LB to cover the costs of packaging, or better yet, you can’t raise your prices at all. I’d argue that because you will see an increase in repeat customers, the return on investment is definitely worth to cost. More numbers to illustrate my point:
Remember your $120 cost to package 130 1/8ths? That created 130 mini-advertisements, that went out to 130 people, who now have already bought your product! How valuable do you think that is? Well, the average cannabis consumer spends $600 per year. So, if you can get just 1% of those 130 buyers to become ‘loyal’ customers, who will spend 20% or more of their annual budget on your brand, they will pay for the cost of packaging and then some. If you can achieve a 3–5% conversion rate from to 1st time customer to loyal customer, the growth from your returns is exponential.
Working to retain your existing customers, and turn them into promoters of your brand is by far the best investment of your time and your dollar. The probability of selling to an existing customer is about FIVE TIMES greater than selling to a new prospect, and the process of acquiring a new customer can be FIVE to TWENTY FIVE times greater than retaining an existing one. Moreover, word of mouth referrals are free, and are by far the most effective means of acquiring new customers. Making sure your customers have access to your brand via your packaging is the cheapest way to enable them to share your product.
3. Degradation / Improper Storage
The result of ‘Pound Fatigue’: broken buds, loose stems, and shake.
This one is simple. Refer to the Christmas song above and imagine the implications to premium product. Even if the staff a a dispensary are taking all proper precautions (few do): properly cleaning jars between batches…wearing single use gloves or using tongs… providing a sample jar for test smelling/viewing separately from the storage jar… and then storing those jars in a temperature and light controlled environment… the jar still has to be opened each time the flower is sold, exposing it to dust, humidity, pathogens, etc., and the buds have to be broken up by hand to create sellable weights. This means that there is no way to avoid ‘pound fatigue,’ as I to call it.
Pound Fatigue occurs over time in retail environments, as the repetitive cherrypicking (unintended or intended) opening, handling, weight breakdowns, environmental changes, and light degradation causes each portion sold off a pound, to be off lesser quality that the portion sold before it. When this happens the customer buying the first 1/8th gets a wildly different experience than the customer buying the last, until the end of the jar is only dusty broken buds with exposed stems and loose shake.
4. Unsanitary Handling of Product
More now than ever, dispensaries need to be on the top of their game when it comes to sanitation. Generally, the same person handling money, is handling the bud, without washing hands in between customers. Further opening of jars to smell buds, repetitive handling of the jars themselves, and using a shared scale/tongs to select the buds, all creates an extremely high risk environment for the spread of pathogens.
Delivery in tamper evident, sealed containers prevents all of the above from occurring, and allows for the use of barcode systems to sort and manage inventory.
Retail ready packaging allows for highly informative labelling, as well as barcode and QR capabilities.
5. Drawbacks This wouldn’t be an honest article if I didn’t mention the drawbacks to retail ready packaging. Obviously, the cost is first and foremost, but I hope the discussion regarding ROI for loyalty and word-of-mouth marketing will put that side of the issue to rest.
Additional space is likely the secondary drawback. A packaged pound will take up 3–5X as much space as one in a turkey bag, and before the product is packaged, it will take up just as much space, empty. This is definitely something to consider, especially for large scale operations.
For newer cannabis markets, especially those with the majority of dispensaries selling deli-style, switching to retail-ready packaging will require cooperation with your retail outlets. In other words, dispensaries have to be ready to sell your product this way. Will you provide them with a ‘test jar’ for customers to see and smell your product? Will they be okay with the added space your product takes up? Are they even set up to properly display pre packaged flower the way you have packaged it? These may sound like problems, but they are actually opportunities to distinguish and elevate your brand. I said above that growers often neglect the retail side of the sales process, and stop working once the wholesale purchase is made. Use your new packaging as a way to build a special relationship with your network of distributors and dispensaries. Maybe they will allow you to set up a permanent, custom display to house your product along side the deli line. Maybe your product will end up in the premium space right next to the register. Maybe together, you can build a packaging/display solution that actually adds value to the operational side of the dispensary, either by being easier to track, organize, or market.
In almost any case, the financial benefits of retail-ready packaging far outweigh the costs. Add in the ancillary brand and marketing exposure, and it’s a no-brainer. Package your product. Period.
If you are building a new product line, or want to make the jump to retail-ready packaging, don’t hesitate to reach out at firstname.lastname@example.org or on Instagram @natesaysdoless.