Cannabis continues to grow despite the 3rd year of the pandemic, and a rise in inflation. With more states coming onboard and the majority of Americans believing that marijuana should be legalized it’s hard to believe that some dispensaries fail. It may seem like some retailers know the secret of success. But the truth is, there are only a few critical areas that make the difference between success and failure, and they’re not esoteric. Harry Brelsford of the CannaTech Group sits down with Gary Cohen of Cova Software to discuss his book Why dispensaries fail.
Video Transcription
Harry Brelsford
Hey, welcome back to the Canna tech podcast. So we’re doing our quarterly analyst rotation. We’re just talking off camera, Gary. The summer quarter went so quick, it’s fall. What happened?
Gary Cohen
You know, it was a hot one. I think it just just kind of flew by on everybody as they were looking at our industry, the kind of the the news over the summer was retrenchment. You know, I think retrenchment kind of eclipsed consolidation. From the last time we talked. And and it’s, it’s kind of a weird summer. Yeah, you know, one of the things I found was, I’m actually updating this ebook I wrote over two years ago, called Why dispensaries fail. Oh, wow. And anyhow, I think we had something like 4000 downloads. So it was really good. I thought it was good. But, but in, in all honesty, the feedback I’ve gotten is, you wrote it more from the perspective of what to do so that you don’t fail. Versus Why do dispensaries fail and others succeed? And I guess I focused on the other succeed. So the rewrite of it is, is kind of fascinating, because I’m gonna write it to the title. Why do dispensaries fail? And two and a half years ago, we didn’t have a lot of data. Because we didn’t have a lot of dispensaries failing. Yeah, you know, when you look across mature markets, even in Colorado, Oregon, and Washington, we don’t, we didn’t have customers really failing. If they weren’t doing well, they sold, but nobody just closed up and gave back their license or canceled their license, it didn’t really happen. Now, if we look back over the last 12 to 18 months, unfortunately, I have a lot of data about who failed, where they failed. And because of our kind of onboarding process or, you know, exit process, we dig into what happened, you know, trying to understand it, and we’ve got enough sample size. Again, the word unfortunately, enough sample size to dig in, to find out is it oversaturation. Is it inventory? Buying and just basically, you’re screwed that up and, and it came back to bite you, you know, you had to dispose or, or, you know, do a fire sale. And you know, nobody ever says, I’m a bad manager. You know, I blew it. Nobody gives that as the reason. But you can, like, why did the guy across the street? Why is he open? And why are you closing? Especially when you say there’s too many dispensaries? Well, somebody is managing a little bit better than somebody else’s.
Harry Brelsford
Yeah, yeah, exactly. Is that book available? I’d like to see it either. You can email it to me, but more importantly, the listeners. Is there a public facing page to go grab that? But
Gary Cohen
yeah, if you go to if you go to COVID COVID software, there’s resources. And then under the resources, there’s white papers, this one is a book, you know, so instead of a white paper, it’s an ebook. Yeah. And then there’s blogs, and they’re, we’ve been very prolific about providing information. So it’s right there. But that’s the old one. The new one, which it’ll be out in probably another three or four weeks is going to be is going to be data driven. So we’re going to take all the data of market size, store size, and then relevance, you know, in their market, their their city. So we’re going to try to put a lot of context into what happened.
Harry Brelsford
Okay, yeah, no, I’m looking. I’ll do both. I had this very interesting topic. And it’s a coverage area for me with the the writing that I do, and so that’s pretty cool. Well, hey, quickly, what’s news internally? You said you had an integration or a versioning or an update or something with Cova?
Gary Cohen
No, what we did is we We finally added Cova pay, or an integrated payment solution in the US. So we’ve had integrated payments up in Canada since since the day they legalized. But in the US just because of Trinus stay on sides in the payment in the types of payments that are taking the method. And then trying to find partners, you know, like a payment processing partner. That’s got reliability. Stability. It’s been hard. And I could tell, you know, I could, I could tell stories like, you know, for three solid years, I got three calls a week that a payment companies got what we need. And for a POS company, or a POS company is the goldmine for a payments company, correct, you can get us to do your solution. So I just got hammered for year, year after year with, we figured it out. We’re using the Spanish treaty with the Azores in 1432. And we send the money down there, and it’s all legal, you know, and it’s like, Dude, that’s money laundering. I don’t care how you slice it, we’re not doing it. You know, we’re converting it to crypto and then back again. Again, that’s not really kosher. So it really, really, I think we’re the last big player to even bring it to market. But it’s for this reason, that it’s just really hard to see who’s staying on sides and in what the processes are behind the curtain.
Harry Brelsford
Yeah, that’s what is, I feel your phone ringing. You know, as an industry analyst, I get a lot of calls from the payment people in, you know, they get the next great thing. And then this is the kicker, Gary is they’ll say, Well, okay, you know, fair enough, let’s do one of our short little podcast. And, like, two thirds of the time, almost nine out of 10. They don’t even show up for the podcast, you know, and I don’t know if it’s a cultural thing. I don’t know, if they’re flaky. Maybe they’ve already been shut down.
Gary Cohen
I know, I don’t I don’t want to throw stones. But no, no, I’m
Harry Brelsford
not gonna I’m not naming names. Yeah, I’m
Gary Cohen
not naming names, either. But it’s a very, you know, it’s, it’s a, it’s a very sketchy piece of our industry. Just because, God, well, let me just, I’ll tell one quick story. So when we first started Cova we got our very first beta customer in Denver. And, you know, as friend of a friend who said, yeah, we’ll we’ll test COVID In our the medical side of our dispensary. And I went down there as we were implementing it, and they took Visa and MasterCard. And I said, that, how are you doing that? And it turns out, they were running a line from a gas, like there was a gas station on the corner. He made a deal with the gas station to put a terminal in his dispensary. And you know, the guy. Yeah, yeah, he’s paying the guy to let him do it. Yeah. And I thought, Oh, this is how this whole thing works. So then, you know, as we’re doing our beta, I think he got away with maybe five or six months of that scheme. Then the next page that gets shut down, the next payment processor came in and they said, Well, we’re not we’re going to call you a nutrition and supplement. Yeah, you know, we’ll do that si si code. And that lasted three or four months. And I learned that the way these things always get shut down is someone gets the bill, and they go, I didn’t buy $200 worth of supplements. I don’t know what this is and they call visa and dispute the charge. Visa calls the vendor. The vendor answers Gary’s dispensary.
Harry Brelsford
Yeah, speaking only for myself that that would have been who I affectionately call Baba bear, my former wife would have been that person to make that call, right if she said, unusual, unusual transaction but Hey, Gary, I gotta balance. Next time we talk to you. It’s gonna be live in the booth at mjbizcon. You said you’re literally booth number one. We
Gary Cohen
are it’s like a dream. and come true that, you know, when you’re when you’re registering and you look through the front entrance. There’s Cova right to the right of the entrance. And, and it’s very exciting. You know, when you’re when you’ve been running businesses like this your whole life. It’s a dream come true to be at the front door. Yeah. So this is finally happening. And then my anticipation is that we’re past COVID I think that this year is going to be a pretty pretty bang up year for
Harry Brelsford
this. Yeah, yeah, I’m committing a lot more time. I mean, terribly long story. I had two shows overlap. Last year, I cut the back end of mjbizcon. But I’m there for darn near a week. You know what I mean? I’m committing because I agree with you. It’s gonna be big. Gary, we’ll see in the booth and know where to find you. Sounds good, Harry.
Gary Cohen
Thanks a lot. All right.
Harry Brelsford
Take care. All right. Bye. Bye.
