The Internet of Things rules the world. And while integrated ecosystems are indeed convenient, a failure can create chaos. That is especially true for cannabis retailers.
Point-of-sale systems are often the backbone of dispensaries and act as the command center for the suite of tech throughout the business. They do not just process transactions; the software may also provide accounting, inventory management, marketing, and track-and-trace reporting — all crucial components of a business’s success.
Issues with this technology could spell disaster for a licensed operator, especially when it comes to compliance. Internet outages, system crashes, and back-end failures can be catastrophic for many retailers if they do not have strong tech solutions in place.
Gary Cohen, CEO of Cova Software, understands this better than most. As one of the largest cannabis retail technology platforms in the country, his company is tasked with setting the industry up for success. When it comes to the myriad complications operators deal with, Cohen has battled them all.
Cohen spoke with Cannabis & Tech Today about the technology issues facing dispensary owners, the risks they pose, and how to prevent them before they happen.
Cannabis & Tech Today: What are some of the main tech problems cannabis retailers deal with?
Gary Cohen: There are so many technologies that interact with the operation of a dispensary. E-commerce, point-of-sale or payments, loyalty programs, menu boards, and kiosks — to name a few. In running and operating a dispensary, some of these are so critical. If your menu boards go down, it’s not going to stop your store from running.
But if the POS reporting goes down, or the inventory that’s displayed online is inaccurate? Well, that will cause big problems for your business in terms of customer costs and compliance.
C&T Today: Why do so many cannabis point-of-sale systems fail?
GC: The industry is growing faster and faster. And typically, POS companies aren’t designed for future growth. If you’re building a POS platform and have no customers, you may build it to accommodate your first couple hundred customers. Ultimately, when you get over that 200 mark, you need to re-engineer both the application for the platform, as well as the infrastructure that can carry all the cloud traffic. The tech gets past the tipping point, where stores are trying to handle too many transactions across too many geographies. And that’s where everything slows down and crashes.
C&T Today: How do these issues affect the customer?
GC: How easily and quickly a transaction is handled determines the customer experience. In an industry where you want to build the loyalty you want, the visit should be seamless, it should all be transparent. If I visit a dispensary and it’s slow or clunky, I may never go back.
Another big technical problem that the dispensaries have is that the online menu says something is in stock, but when the person comes into the store, it’s gone. That leads to disappointment for the customer and headaches for the retail staff.
C&T Today: One of the biggest risks retailers face with POS failures is compliance-based. Why is that?
GC: Everything about the technology, whether it meets the state’s compliance requirements for selling as well as reporting, affects the store’s efficiency and profitability.
POS systems can fail for a variety of reasons: connection issues, power outages, or system overloads to name a few. When it doesn’t work, there’s a risk of misreporting or no reporting. And as a dispensary owner, that’ll create an error. The error creates a notice. And the state says, you know, we’ve got a problem, we’re either not getting your information, or we got the wrong information, or we can’t read the information. If you can’t fix it, it’s a violation that can jeopardize the license.
C&T Today: What other crucial data may be missing from these tech solutions?
GC: As time goes on, and markets mature, you need to offer the things that your customers want. Without accurate product and sell-through data, you’re not going to know how fast something sells, how frequently that sells, and you might not know how to price it. The data that comes out of the POS is gold.
If you don’t have systems that can give you the reporting to help you understand what’s going on with your business, you’re going to miss out on profits through informed marketing strategies.
C&T Today: How do retailers choose a POS system? How can they vet them properly?
GC: You can’t do anything about your state system. But you can see how your potential vendor does with the state system. This is so crucial. Doing some research, you’ll see the problems. “This company goes down all the time and has outages, this company can’t work if the power goes out.”
Consider the future. How is the company prepared for the growth of the cannabis industry? How long have they been in business? Asking those kinds of questions is probably the best way to gain confidence that you’re going to have fewer technical problems.
C&T Today: What are some questions retailers may not think to ask?
GC: What’s sad is most dispensary operators are not technical people, so they’re not inherently prepared to ask really technical questions. I think the most important thing is to look for companies that are going to help you — companies that are built to help you understand how the software works, and how it connects to the systems that you need to support your retail.
How do you feel they will help you address all of the technical questions you may have? Do they have training and education and how do they deliver that so that you can understand? How do they help set you up to minimize potential problems or issues? You need to have some confidence and comfort that the company you’re going to work with is going to be a technical adviser to help you succeed.
This issue first appeared in Volume 4 Issue 3 of Cannabis & Tech Today.