Cannabis Analysts recently visited a dozen Denver dispensaries to better understand the shifting competitive dynamics. We witnessed several dynamics at work: wait times, branding, service, discounts and quality. Many facilities offered roughly 10-15 strains on the recreational side and far more on the medical side. The most impressive facilities offered both.
It was highly surprising to us that closer partnerships between doctors and dispensaries did not exist. We believe the industry needs to invite doctors to legitimate “lunch-and-learn” sessions to help improve awareness and perhaps offer some incentives for sending patients along. The big dispensaries may have contacts with doctors but a more structured and targeted approach is needed. The business aspect of the industry is for the most part healthy.
Pricing is fairly consistent, about $40-$50 per eighth for the flower. On the recreational side, a dispensary can see several hundred people per day who buy anywhere from a joint to an ounce, repeat visits also widely range from once a week to once in several weeks. Some of the dispensaries said about 150-200 people visit on the recreational side per day. Most places offer the same recreational strains. On the medical side, a dispensary with 35-50 patients equates to doing well. These patients buy more and on a more consistent basis, and it’s no surprise the selection is better (sometimes 2-3x more strains to choose from compared to rec).
There remains a general secrecy among some marijuana users. One dispensary employee noted that most of her customers didn’t want it to be known that they visit dispensaries. As a result they don’t mention other stores they may have visited.
Cannabis Analysts was impressed by a number of very clean, well lit stores with young, hip and clear spoken employees. Coupons in papers can drive visits, but they might be used to drive traffic (for cheap varieties). There may be a stronger movement towards closer partnerships with doctors – several of the medical-only dispensaries lacked a clear marketing target towards prescribing physicians or had informal at best relationships with less than a handful. We see this as a major hurdle in states trying to implement medical dispensaries. Doctors are largely ignorant to the benefits of marijuana (and some may be vehemently opposed) and which strains are best prescribed for what ailments. There is a clear need to get the word out.
Several Denver dispensaries really wowed us with their quality and inviting atmosphere, that puts the visitor at ease immediately upon entering. These stores are not targeted towards generating the highest volumes but ensuring quality NEVER drops. Quality is first and foremost. Most people know which dispensaries these are.
Most of the competitive dynamics center around cannabis quality, service, location, discounts and to some extent branding. Most are thinly staffed with total of 1-2 employees including a receptionist. Opening times also vary, while closing time (7 PM mandated) is largely consistent. Some stores open at 8 AM and others are 10 AM.
Overall it is a simple business with a complex backdrop of legal and regulatory work, preparation, service understanding, and inventory management.