Illinois Lawsuit Lashes Out at ‘Politically Connected’ Licensing Process

Let’s face it: Running a profitable cannabis dispensary is not as easy as you thought it would be. Whether you were once running a plumbing business or a Wall Street hedge fund, the visions of easy money in the cannabis business have, for most people, not come true. The cannabis industry is complex, heavy on regulations, taxed near to death, and at the end of an 80-hour workweek, you are lucky if you eke out a slim profit. Fun times, indeed.

This challenging environment is now even further complicated by the current pandemic, disruptions to supply chains, shrinking capital, and a dwindling customer base. The fact is, there are many dispensaries across the nation that are facing really tough times. Some may end up in costly and drawn out legal battles as stakeholders fight to get back scraps of their investments. Other dispensaries may be encountering partnership disagreements – because nothing can separate once harmonious owners faster than a stack of bills and no money to pay them.

Fortunately, there are some warning signs that indicate if a dispensary is in trouble, or heading for difficulties. Almost every troubled dispensary I’ve worked with has these traits in common, so take these to heart, and take steps to remedy these issues before it’s too late.

1. Have a weak manager and/or absentee owner

Sorry to break the news, but running a cannabis dispensary is not something you can do from afar. If you are not on site each day, you must, at the very least, have a very strong, reliable, and trustworthy manager in place that can serve as a Chief Operating Officer, to make sure that every aspect of the business is running smoothly. From security protocols, to evaluating and paying for incoming inventory, to ordering, to customer relations, to pilferage, there are so many ways a dispensary manager can make seemingly small mistakes that can add up to big dollar loses. Accordingly, as an owner, make sure that you are a hands-on leader, or have someone with superb skill sets and impeccable integrity to handle the tasks for you.

2. Do not have SOPs in place

Every business needs a written set of Standard Operating Procedures, but it is especially critical in a cannabis dispensary. Not only will this guide you and your employees step-by-step through virtually every aspect of your operation, but it also contains a “what if” section that helps instruct staff on how to handle a wide variety of potential pitfalls and perils.

3. Do not keep good books and records

Again, every business needs to keep their books and records in order, but in as tightly a regulated and heavily taxed industry as cannabis, it is absolutely essential. Not only will these records be critical to your bookkeeper and tax accountant, but they will also keep owners in the know, so at any given moment, you are able to gauge the financial health of the business. Good financial information is like a light that shines on a business, and it especially illuminates those pesky problems lurking in the corners. What you don’t know can kill a business, so stay in the know.

4. Budtenders are there for fun and not to work

Nothing against budtenders and nothing against enjoying your work, but every job inside a dispensary is serious and requires a professional. While most budtenders are hardworking, intelligent and a great resource for customers, some people approach employment in a dispensary as an opportunity to stay stoned all day. Don’t hire someone simply because they like to get high. Hire them because they are the right person for the job.

5. Lack of upselling or having specials

You are running a retail operation, and it takes time and money to attract a customer. So, once you have a customer’s interest, why not give them reasons to purchase additional items? Upselling can turn a $50 sale into a $75 sale. That makes a big impact on your bottom line at the end of the year. Also, having a low-price leader increases customer counts and gets more people into your store, so utilize specials and coupons whenever possible. But make certain that your staff is trained on upselling so that your efforts to attract these price-sensitive customers doesn’t simply thin out your profit margins.

6. Branding is not uniform

You can improve your branding by borrowing from mainstream businesses. Pick a very successful company, like Apple. Notice how all of their messaging is uniform? From the font choices, to the colors, to the imagery, everything is consistent. That’s how you build a brand. And with the ever-increasing competition and market saturation, building a powerful brand is essential to business survival. Having a strong brand will also pay big dividends if you decide to sell. Seriously. After a potential buyer adds up the inventory, real estate, and other assets, your branding can add a few more zeros to the end of the check you’ll receive.

7. No marketing expertise

Marketing is more important than many people realize. I had one client tell me that he didn’t need to market because he had the only dispensary within a few miles and his customers didn’t want to drive very far. Wrong. Customers do not always shop at the nearest store. This has been proven time and time again. In fact, it is the companies that consistently, creatively and effectively market their products and services that far out-perform their competition. If you don’t have marketing experts on staff (which you probably don’t), then hire an outside firm with expertise in the cannabis industry to handle this vital business-building mission for you.

    8. Store design looks like your college dorm room

    There are some stores that look like an upscale boutique – clean, crisp and everything is in order. Unfortunately, there are other stores that look like a college dorm room – with poor lighting, haphazard posters taped to the walls, and unflattering product displays. While this folksy appearance may appeal to some, trust me when I tell you that it is a turnoff to a large section of your potential customer base. If you want to ever attract new consumers from different demographic groups, make sure your store is clean, well lit, easy to navigate, and with the products displayed in a manner that makes the customer feel comfortable. You don’t want your dispensary to be the one where you can overhear a customer say upon exiting, “I couldn’t wait to get out of there.”

    About the author:

    Scott Yahraus is a leading business builder and conflict resolution specialist, with significant expertise in the cannabis industry. With experience in state and federal court receiverships, and provisional director assignments, he specializes in helping companies improve operations, solve partnerships disputes, and restore profitability. He brings vast knowledge and experience in the areas of real estate, business management, construction, retailing, and conflict resolution to help cannabis companies avoid or repair complex issues. With an unparalleled track record in navigating businesses to positive outcomes, Scott can help put companies on a pathway to success. You can visit him at

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