Cannabis & Tech Today reached out to dispensary owners to ask how they adapted their business during the pandemic.
Humbleroot, a dispensary based in Sacramento, California, shared the following editorial discussing some of the critical factors that played a role in their ability to quickly respond to evolving regulations and consumer demand.
Three years after starting our mobile dispensary in the Sacramento area, our business was growing and we had succeeded in creating a strong brand in the region.
Known for our customer service and a wide array of products, we were breaking even with tight margins.
We felt we had really come a long way, but we lacked financial leadership and knowledge.
Bootstrapping our way through the company’s beginning stages, we started out like most entrepreneurs.
But instead of launching out of a garage like those famous guys in Silicon Valley, we had a spare bedroom, $1,200 in cash, and 12 pounds of medicinal cannabis consigned from Thao House.
From these humble origins, we’ve grown to be recognized throughout our region as a top delivery dispensary. We source local products whenever possible and promote their brands and they, in turn, have reciprocated.
We also offer customers a point system for rewards and a referral program, which has created a strong sense of customer loyalty.
Asking For Help
We first understood how much we didn’t know about our financial situation when we took a rapid assessment with a financial consulting firm.
We met with Tracey Hashiguchi and Dave Roberson of Kukuza Associates to work through a series of questions that helped them to understand our financial situation and where we wanted to take the business.
In the first six months of working with financial consultants, we got a lot accomplished. The financial reset they did cleaned up all our accounting as well as other aspects of the business.
Their consultants touched inventory, cash holdings, and scrubbed our QuickBooks. They also validated our balance sheets and helped us make changes to our IT and HR.
This allowed us to have reliable information on a consistent basis. We created new objectives, key metrics, and a roadmap for growth.
Armed with accurate insight into our profitability, we then took a look at our prices and made a modest increase in January.
Thanks to the systems in place within our operations, we could see in real-time that the increase didn’t negatively affect customer demand.
The Impact Of COVID-19
In March, the pandemic set in and that’s when things really took off. Our mobile delivery system was ideally set up to help people coping at home, and business jumped 20-25% in volume.
The pricing increase had been well received by then — with the increase in sales, our gross margins dramatically rose.
Within six months, revenues grew from $3 million to $9 million a year. It was beyond what we had thought possible.
Now, we’re eying expansion into other regional areas, leveraging our model. We’re hiring a bookkeeper and closely tracking the five key metrics that are in place to measure performance.
Though the pandemic has been a frightening time for us, watching our community struggle and dealing with the emotional weight of a world in crisis, our business hasn’t suffered.
Without creating a foundation for growth and resilience, the past six months may have looked very different.