Starting a cannabis retail business is difficult. Meeting both state and local compliance rules, securing a space, navigating the treacherous marketing waters, deciding on your store’s look and feel. Expanding your business presents a new set of challenges, like determining the best market and reconciling local state differences in consumer market, the rules you need to follow and the business protections you need to secure.
Before you make the leap into a new market, here are five things to consider and how marketEQ can help you ensure a higher chance of success:
Competition in your new market (density and loyalty): Before Starbucks decides to open a new store, they look at the competitive landscape. How many coffee shops already exist in the area? How many of them are direct competitors with Starbucks? And what is the shop loyalty like among coffee consumers in that area? Do people shop around? Or are there local favorites that attract the same customers again and again? With marketEQ, you can view all the dispensaries in a certain area and see the average number of dispensaries consumers in a particular area have visited in the past 30 days. This data will help you determine if there is a need for a new retail location in a particular area, and the level of customer loyalty to the current dispensaries.
Differences in consumer characteristics and preferences: Does your dispensary specialize in edibles? Do you have a focus on women’s health? Do you cater to medical patients? Understanding the consumer preferences in a new market and whether your current model is a good fit is an important part of expanding successfully. There may be universal consumer trends, but the make up of consumers and their product preferences can vary by location. marketEQ provides data not just on consumer demographics, but their use frequency, product preferences and archetypes, giving you the data you need to predict the fit in a new market.
TAM (consumption density, patient count): In addition to understanding the consumer characteristics and use preferences, just how many of them are there? The consumption rate can vary greatly from state to state and understanding the total addressable market in a new region is an important data point for creating financial models and costs for acquiring new customers. Additionally, understanding the medical cannabis patient count in a new market is important because these consumers rely on consistent access and high-quality products, making them loyal to retail shops who can provide this. marketEQ gives you the consumer density per 1000 people in each state, the consumption rate, and the medical cannabis patient count, helping you decide which market will give you biggest chance for success.
Revenue trends: Tax structures, consumer demand, costs of doing business, and license availability all impact the cannabis revenue generated by a state. Understanding the revenue trends in a market and how much money is being generated by the cannabis industry is another important factor to consider when looking to expand. marketEQ gives you the adult use and medical revenue being generated by each state so that you can track trends and make better decisions about the future of your business.
Insurance needs: Finally, cannabis businesses have an inherent amount of risk. Having insurance helps mitigate these risks and protect businesses. However, insurance needs and requirements can vary from state to state. Understanding the risks in a new market and the cost of coverage can help you make the best decision about where to expand. Frontier Risk specializes in insurance for the cannabis industry and create customized risk management strategies designed specifically for cannabis businesses like yours.
As cannabis retail businesses look towards expansion, understanding the markets, opportunities and consumers is key to choosing the right location and the right customer acquisition strategy. marketEQ is your Swiss Army Knife for unlocking the data needed to make the best expansion strategy.
