The cannabis industry is growing as fast as any. As of the beginning of 2020, 11 states and the District of Columbia have fully legalized marijuana products for medicinal and recreational use. More states are sure to follow.
Despite being a relatively new industry, U.S. sales totaled over $10 billion in 2019. This is likely to double or even triple in the next few years. Predictably, this has led to a surge of entrepreneurs entering the market.
But like any business, dispensaries need the right operational tools in order to be successful. Being such a unique new retail niche, cannabis shops have some specific requirements. The industry has also attracted new entrepreneurs who have limited experience running a new business, so understanding some of the basics of what you need to operate is critical.
So what is a dispensary POS system, how does it impact business, and why do you need to find the right fit for your store? We’ll answer these questions and more in the blog below.
A dispensary POS system is built to be the center of your business operations. This, of course, means that there are a LOT of different functions that your POS system can handle.
At the most basic level, a POS consists of hardware and software. For dispensaries, you’re likely to have either a tablet or desktop POS terminal. These are the machines that cashiers use to enter items into a sale and then accept payment. Modern hardware usually features a touchscreen with additional customer facing screens. These show the shopper exactly what’s being rung up at the point of sale and and make the checkout process more transparent and interactive. There are a few additional hardware peripherals to consider, as well:
Handheld or stationary scanners
Credit card machines (we’ll talk more about credit card machines later)
Software, on the other hand, includes everything that powers the features the you’ll use with your point of sale. At KORONA, we develop the software and integrate with other software features to provide a complete point of sale for dispensaries. We can provide hardware, but our software runs on various hardware options so businesses can often keep their existing hardware if they’d like.
A Cloud-Based Dispensary Point of Sale
Any retail store, including dispensaries, should be using a cloud-based POS system. There are still many legacy point of sale solutions on the market but more and more are switching to a cloud system. But what is a cloud system and why is it a better solution?
A cloud-based point of sale means that all sales, inventory, transactional, and any other store data is stored in remote servers hosted by your POS provider. In the past, legacy systems had all data stored on-site in a server kept in the back office area. Cloud servers, though provide a number of important benefits.
First, they add convenience and flexibility to your dispensary operation. With the cloud, you can access all data remotely. Simply log in to your account and see sales reports, make pricing changes, update inventory, or conduct any other business operation that you could do on-site. This is critical for businesses that have multiple locations or for owners that are away from the physical location often.
Cloud storage also adds security. Since the data is stored on remote servers, it’s more inaccessible to thieves or curious employees. The data requires proper login credentials and can’t be taken from a physical server in your store.
Finally, a cloud POS comes as a subscription service. As long as you’re a subscriber you’ll receive all software updates automatically and at no extra charge. Plus, with a great solution, you’ll get free customer support to help you troubleshoot issues or learn more about the software.
Essential Features for Your Dispensary POS System
There are so many different features that KORONA has to offer, but let’s go over a handful of the most essential for all retail, including cannabis and CBD shops.
Keeping your inventory at an optimal level for each product is one of the most important ways to run a successful operation. Dispensaries often have a vast product selection, with hundreds of slight variations on hundreds of products, all of which have a limited shelf life. To ensure that you’re minimizing waste and maximizing sales, a powerful inventory management tool is invaluable.
2. Stock Updates
When you do have an item that isn’t selling well or running low, it’s important to be aware of it before it’s too late. Overstocks lead to wasted product and limited warehouse space, while understocks mean lost sales and frustrated shoppers. Stock updates warn you ahead of time.
3. Automated Ordering
Even better, automated ordering takes care of the low stock for you. Set up vendor relations through your POS and the software can automatically place an order for you.
4. Sales Reporting
Dispensaries have a lot of products. Even the most hands-on store managers can never be able to truly assess the productivity and performance of every single product. With point of sale reports, you can easily see how popular products are and how much they contribute to your revenue and profitability. This helps you best determine what stays on your shelves, your pricing, and any future promotions.
5. Cannabis Promotions and Discounts
Speaking of promotions, you can set up, organize and monitor promotions through your point of sale. Margins are sometimes slim, so a poorly planned promotion can really hurt your bottom line. But with promotion tracking through your POS software, you’ll always have a clear picture of its performance and its overall return or loss.
6. Employee Permissions
Set custom permission levels in the POS system for each employee. This prevents pricing changes, sales mistakes, and any theft. You can control drawer access, set up cash drops for each transaction, and block certain features (like comps, voids, no sale tenders, and more).
7. 21+ Age Verification
Cannabis shops, of course, must be extremely cautious about age verification. Each person that steps in yours must provide valid ID proving that they’re 21 or over. You should be able to scan an ID and immediately be able to either grant or deny entry. Plus, it can store that shopper’s information in your point of sale to be used for marketing purposes down the road.
8. CRM System
Speaking of marketing, a CRM or loyalty program at your dispensary will help get shoppers in your doors more frequently and also attract new shoppers. With your CRM program, dispensaries can engage with shoppers through SMS texts, email marketing, promotional information, customized discounts or complementary items, and point redemption. This helps thank your best shoppers, while also giving you valuable insight into customer behavior.
9. eCommerce Integration
Most dispensaries are now selling across multiple channels, most importantly through online pre-orders. Dispensaries are popular and lines can be long, so more and more shoppers are ordering ahead of time to pick up the product quickly at the store. This requires an eCommerce integration with your point of sale. This way, all inventory is tracked in one system and purchases or orders are reflected in real-time.
10. Time-Based Discounts
Many dispensaries host a happy hour, of sorts. Like most businesses, there are slower times of the day, so it’s good to incentivize shoppers to drop by at these more unusual times of the day. Time-based discounts help encourage it and can be easily updated into your POS so that prices and reporting automatically reflect the change.
11. Full Traceability
Cannabis shops have some of the strictest regulations behind production and sale of any retail industry. Each shop is required to track every single seed through its growth and up to its final sale.
12. Multi-Store Scalability
In such a fast-growing industry, it’s important to get a point of sale that can scale with your business. KORONA makes opening a new dispensary easy. With just a few clicks, you can transfer product data to a new location and upload all inventory automatically. Plus, your product reports and inventory can be viewed by location or as a business as a whole, offering you different perspectives on your business’s performance.
13. Fast Transactions
Speedy checkout times are crucial for ensuring that lines are manageable and moving. KORONA scans items quickly.
Key Integrations for Dispensaries
KORONA is built specifically for dispensaries. That means that we’ve developed our software to fit every operational need for cannabis shops. Dispensary point of sale systems need a combination of native POS software and integrations with third-parties. With Dauntless software integrations, KORONA offers several options for each of the critical categories listed below.
Every state that has medical and/or recreational cannabis has a complex set of compliance and traceability regulations. Retail stores and dispensaries are required to provide inventory, sales, and tax revenue to a government software system. KORONA connects to each state system used in the United States. Necessary information is pulled from the POS and sent to the state system when required. KORONA clients don’t need to manually submit reports, making it much easier to stay in compliance. When we say that the software tracks cannabis from seed to sale, we’re not exaggerating! Every single seed is accounted for and tracking in your point of sale software.
2. Online Cannabis Store Menu
eCommerce purchases are not available for legal cannabis yet. However, online menus that list a store’s current inventory is invaluable to retail shops. Customers can browse products from home and place an online pre-order if they wish. Then they can pick up their order at the store, paying at the register. Online menus are connected to the live inventory through KORONA, so customers will only see what is truly available. This adds convenience to the shopping experience and informs customers of exactly what products are in stock at any given moment.
3. Customer Loyalty Programs
Advertising is highly restricted in the legal cannabis market. Customer loyalty programs are crucial for stores to get valuable customer information and interact with their customers. They can use SMS messages to promote vendor days or store specials. Customers can collect and redeem points for discounts on their purchases so that dispensaries can reward their top shoppers.
4. Dispensary Payment Processing
Cannabis is a cash-only industry at the moment. Nearly every store has at least one onsite ATM for customers to get cash before they make a purchase. And these ATMs must either be owned and operated by a third party or technically off the premises of the dispensary. Because cannabis isn’t yet legal in all states, major card networks don’t process payments for any cannabis shops. But its legality continues to expand and the card networks will eventually allow payment processing for dispensaries. Because KORONA already integrates with every major payment processor on the market, we’ll make sure you store is ready as soon as possible.
5. In-Store Digital Displays
Retail shops often have digital displays throughout the store that contain featured brands, product listings, and sales promotions. KORONA can connect these digital displays so that the message on the customer-facing screen of the POS matches the advertising on the digital displays around the store.
6. ID Scan
Legal cannabis is 21+. Every customer has their ID checked at least twice during a visit: once when they first enter the store, and again when they are checking out. KORONA integrates with ID scanning software that can detect fraudulent ID cards. The software can also match the ID with the customer loyalty ID and send the information to the POS terminal so it is readily available when completing the transaction.
7. Electronic Shelf Labels
Retail shops spend a lot of time updating price tags on their products. Chalkboards, whiteboards, and paper price tags often get changed multiple times a day. KORONA connects with various electronic shelf labels (ESL) to easily update pricing in real-time without having to make any adjustments on the shop floor. Change a price or activate a promotion in KORONA and the pricing is automatically updated on the shelf. Cashiers and inventory managers no longer have to waste time printing out new labels.
Among other things, Michael writes about trends and tips in retail for KORONA POS. His focus is on bringing small business owners a more holistic approach to growth. In his spare time, you'll find him hiking somewhere in the southwest. Connect with him on LinkedIn: https://www.linkedin.com/in/michael-chal/