We’ve previously touched on the impact the Pandemic has had on retail, specifically the cannabis industry, and we’ve since had a brief time to observe and reflect. Based on first-hand observation and a lot of reading, the industry in general, has pivoted well. Having said that, the benefit of being on the outside is being able to see what’s missing — the real-life user experience.
One thing we’ve learned is that the industry can provide a pretty safe environment for business transactions with customers. Many of the practices that have stemmed from the pandemic were considered virtually impossible only a few months ago — curb-side pickup, drive-thru, and [almost] e-commerce stand out. We’ve known that these are sustainable delivery channels, but as with anything new and fast-moving, there is plenty of room for improvement.
We’ve also learned that with so many responsibilities, sources of information, and day-to-day distractions to get through, it is virtually impossible to think of all the potential outcomes of decisions. It is a rare individual that can see the forest beyond the trees because we all see the world through the bias of our immediate circumstance. Unintentionally this narrows the potential outcomes we are able to see, both good and bad — a circular condition that can be solved.
People & Business Safety
Operating an on-premise, consumer-facing business in today’s pandemic-modified world brings with it another layer of safety, risk, and responsibility that hasn’t been experienced before; so much so, the normal regulatory whipsaw attained light-speed and is thankfully settling down. Now the question remains, can the cannabis industry lead regulatory standards or will it continue to be led by differing regs and standards at the state, county, and municipal levels?
Now that we have a good portion of the safety protocols in place; face coverings, 6 ft spacing, increased sanitizing, clear transaction barriers, and gloves (to name a few), we can start to identify the holes in processes and procedures so they can be addressed. For example, there is general consensus that minimizing the number of points of contact during a retail transaction is better. This begs the question, why then do so many touchpoints remain? The answers will vary from person to person but can be generally summed up in one word — a habit. And that applies to the entire ecosystem.
Get off the Treadmill – Break the Cycle
The author of ‘The Power of Habit’, Charles Duhigg, sets the stage well with the quote “The golden rule of habit change: You can’t extinguish a bad habit, You can only change it”. That is not to say that all habits are bad or good, but they are more like scripts that over time may require modification — and it’s tougher to do in practice than we realize. The good news is that we’ve now learned it can be done, on a broad scale, and with a relatively short-lived disruption cycle.
So, how do we break the current habit cycles and get off the treadmill of reactive decision making? One approach includes the blank-page method or building something new from the ground up, so there are no ‘habits’ to change. This is a challenging approach to apply to an existing operation. A more effective tact involves introducing a favorable replacement option while removing or making the unfavorable one less appealing over a period of time.
We see examples of the latter approach every day from the grocery store, banking, to retail in general changing business processes that modify how we go about our daily lives. So much so that my young-adult kids think a cashier line to be cute and novel. In order to effectively shift processes in a regulated environment requires regulated businesses to lead in establishing standards and demonstrate their efficacy. This will lead to improving the wellbeing of employees, your business and customers, and increase regulatory confidence and trust as in the alcohol sector.
Set the standard (hint – exceed the regs)
We’ve seen how well the cannabis industry can adapt to changing conditions. That they can address the added risks businesses and staff are facing. That there are areas that can be refined and how habits can impact viewpoints and decision making. While there is a lot to unpack, let’s get to the key point — establishing a uniform standard and how that benefits the entire stakeholder chain.
The blunt truth is the pandemic will pass, behaviors will drift back toward ‘normal’ until the next pull of the ‘reactive-cycle slot machine’ arm kicks us onto a new ‘crisis’. I hear a lot of “yeah, we all know that, but I don’t even know where to start” — that old blank page lock-up. So let’s take that off the table.
It is tremendously helpful to look at mature regulated industries to understand the importance and value of establishing standards that protect and benefit all of the stakeholders in the ecosystem. ‘Co-opetition’ is the tough first step on the journey. Yes, this business-speak ultimately means competing organizations that cooperate in order to achieve a mutually beneficial outcome for a broader industry.
Let’s take a real-world example and sprinkle in some industry-related references to help tie it together. In the money movement world, debit and credit card transactions have a series of processing fees throughout the processing supply chain (sort of like sales tax, excise tax, local sales tax, etc). In order to promote the use of the cards and commerce, and avoid anti-competition risk, a percentage of the processing fee revenue is shared with the originating entity. This can apply to the case of cannabis delivery. A dispensary located in one jurisdiction can deliver to a customer in another jurisdiction by sharing a percentage of the revenue. Or, the order taker can use the closest dispensary to save time and money. This way no consumer is told that they must call another dispensary to get a product delivered. This can be accomplished using a state-level unified standard vs an inter-governmental agreement built on a case-by-case basis which is what is being done now. Regardless, the key takeaway here is that the banking industry established the standard that the regulators adopted and subsequently enforce; which sets the stage to:
- Normalize and standardize safety, process, and oversight requirements (intra-state and multi-state),
- Simplify business management and administration complexities,
- Assure level and equal operating requirements and enforcement,
- Leveraging known and trusted solutions to establish trust and confidence, and
- Establishes the framework for adoption at a federal level.
Build for Tomorrow Today
Here is the secret to success — it’s a process. It’s not that random events don’t have a significant impact on shifting thinking or practices. What we are saying is in order to develop uniform, effective, durable, and flexible practices you have to apply a consistent and measured process. As W. Edwards Deming said, “If you can’t describe what you are doing as a process, you don’t know what you’re doing”.
Spend less time in reaction, instead of investing in broad process standardization. This is similar to placing a $100 on the roulette table vs investing that amount in an appreciating asset — one can be a quick, instant gratification but mostly failed, while the other takes time to reliably bear fruit. One behavior is unhealthy over time and the other improves general health (I can’t think of any “investors anonymous” groups 🙂 ).
As the cannabis industry continues to grapple with various issues de-jour, it becomes increasingly difficult to get above the fray, sinking further into lower margins as companies lose their viability. Seeking help from those that have already traveled the ‘standardization’ path and are able to remain removed from the daily fire-drills is an investment that will offer huge dividends, assure sustainability, improve safety, and reduce complexity.