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Interested in selling weed to make a profit? As a licensed cannabis producer, manufacturer, or retailer, making a profit and standing out from both legal and illicit competitors can be an uphill battle, especially with banking restrictions and federal marijuana prohibition.
In this highly competitive space, any increase in profit margins can make all the difference. It all starts with a strong business plan and choosing the right location. Entrepreneurs hoping to stay afloat in this bustling market can focus on the following key business considerations to improve their revenue in the long run.
10 Tips For Successfully Selling Weed
In today's cannabis market, there are so many weed products available including flower, concentrates, topicals, edibles, and so much more. Companies can expand their customer base and make a profit by providing them with a wider range of products. Selling weed can entail so many different products.
For example, a cannabis processor can create odorless and a flavorless distillate for edibles and tinctures as well as flavorful live resin for connoisseurs who want the original terpene aroma of a strain. Covering as many of the product niches within the market can attract more customers and gain more shelf space at dispensaries.
2. Optimize Facility Space
A cannabis facility costs money to maintain, including rent and electricity. Optimizing the facility space’s design and workflow can improve profit margins for any type of cannabis business. Using vertical space is an effective way to maximize facility profitability.
For example, growers can invest in vertical cultivation systems to improve their use of space, especially in markets that have limits on canopy square footage. In some cases, growers can even double their yield using vertical cultivation.
3. Hire a Sales and Marketing Team
An experienced sales and marketing team is crucial to moving forward operations and marketing a brand appropriately online and in-person. A sales team represents the company and pitches products and services to other cannabis businesses, helping expand brand awareness and presence in one or multiple markets.
Marketers can create effective social media campaigns, SEO optimized copy, and email newsletters to provide customers with promotional and educational content. An online presence is an important way of connecting with a target market, attracting new customers, and keeping old ones.
4. Price Products Competitively
Pricing cannabis products competitively is easier said than done. Businesses must balance high cannabis taxes with all the costs necessary in creating the product. In addition, businesses must consider how competitors are pricing the same products. Finally, businesses must consider the purchasing habits of consumers including the average transaction value and customers median income to determine the appropriate price point.
5. Provide High Value
Creating a product with a high perceived value can be a determining factor in increasing profits. Consider what makes each product special and distinct from other similar options. Is it sun-grown in living soil? Is it extracted in a small-batch and solventless process? Does it contain a higher-than-average concentration of terpenes?
Effectively communicating the value of the product to the consumer can increase sales.
6. Upsell, Cross Sell, and Bundle
Cannabis growers, manufacturers, and retailers can employ upselling, cross-selling, and bundling techniques to improve their profit margins. Selling weed brings many options to expand your profits.
For example, dispensaries can bundle best-selling strains with single-use products like rolling papers allowing customers to try a new item. Budtenders should be trained to upsell and have distinct product recommendations at various price points. In addition, POS analytics can determine which items are frequently bought together for better upselling and bundling.
7. Invest in Customer Relationship Management Software
A good way to improve sales growth and retention is to invest in customer relationship management (CRM) software. With a CRM software, sales teams can keep track of orders, samples, and deliveries. More to the point, a CRM software can keep track of sales opportunities and improve relationships with clients by keeping all the relevant client data readily available.
8. Invest in Automation
Automation is a key driver of profit margins and reduced operational costs for cannabis companies. With the use of automated systems, companies can save on labor such as manually operating an extraction machine, watering plants, and other manual operations that add up in time and money.
9. Monitor Energy Use
One easy way to lower energy use is to ensure that the equipment in the facility is properly sized. Equipment that is over or under-sized can negatively affect the energy efficiency of equipment and the facility’s operational costs.
For many cannabis businesses, knowing the peak energy demand times and using less energy during those time periods can help reduce energy costs. During the off-peak hours, businesses can store energy for later use during periods of high energy demand.
10. Consider Private Investors
Scaling and optimizing a cannabis business of selling weed requires a steady cash flow. Self-funding an enterprise can slow down company growth compared to working with investing partners. When looking for cannabis investors, businesses must have clear and organized financial data that indicates sustained growth.
Enroll in Cannabis Training University
These are just a few important considerations to keep in mind when building out and scaling a cannabis company. For a complete primer on how to start a marijuana business, enroll in Cannabis Training University’s online cannabis college.
Entrepreneurs can learn how to get licensed, get funding, create a business plan, create a pitch deck, and scale their business.