As of January 2019, 10 states and the District of Columbia now have legalized recreational cannabis sales. Including legalized medical use, the total number of states jumps to 33. As cannabis legalization swept across the U.S. in 2018, the Farm Bill also legalized industrial hemp, moving several derivatives of the plant closer to federal legalization. The 2017 Cannabis Industry Annual Report produced by New Frontier Data predicts the market size will top $13 billion this year. An April 2018 report from Grand View Research projects compound annual growth of 24.9% from 2017 to 2025; making cannabis a $25 billion business.
Where legalization has occurred, the challenge all states face is how to control and monitor the dispensing of wide array of cannabis products. The solution most states are growers have turned to is METRC, system built for regulators’ use to track the growing process from seed to sale. Using an automated kiosk as a cannabis dispensing platform solves many of the legal and compliance issues related to dispensing products.
Cannabis kiosks are generally purpose-built variants of specialized automated pharmaceutical dispensing machines that have been gaining broad acceptance over the last decade, an automation market that is expected to reach almost $12 billion by 2025. The Commercial Automation team is helping develop, test, refine, and deploy kiosks for legally dispensing cannabis.
These kiosks are automated, interactive, vending, and dispensing platforms that exploit advanced robotics to secure, manage, control, and dispense highly regulated products. If you were the think “Redbox for cannabis” you would have the right understanding of the concept in terms of convenience, but for cannabis, a kiosk is far more sophisticated in terms of handling regulatory compliance, security and inventory management. While some dispensaries fear the competitive advantages of contemporary automated retail, only one state, Nevada, has regulations hindering their use.
Consumers Love Kiosks
Consumers have expressed a preference for a kiosk option in many retail settings because of the efficiency and convenience they offer when making a purchase. Lines at the counter can drive customers away, but a kiosk can cause them to stick around. Where cannabis is concerned, a self-service kiosk can remove the social friction from the transaction by providing the anonymity of using a virtual budtender.
While consumers like having a kiosk option for making retail purchases, there are plenty of reasons for retailers to like them too. Research published in the Harvard Business Review found in the food industry, the average purchase amount is higher when consumers make purchases using kiosks. There are many other reasons why an automated kiosk is an excellent cannabis dispensing solution, which the rest of this article will detail.
Inventory Security and Control
A cannabis kiosk provides a safer place to store inventory than inside a retail dispensary. Owing to their genesis in the pharmaceutical industry, these units are tempered; often wrapped in sheet steel and bolted to the floor making it virtually impossible to break into and too unwieldy to haul off.
Even during the restocking process, when dispensary employees have the unit open, they cannot access existing inventory inside the unit. They can only add new stock the kiosk inventory, and during that process, the existing inventory remains inaccessible. Once restocked, the unit uses its robotics to automatically manage and store the inventory. The way that a cannabis dispensary kiosk secures inventory provides greater control and greatly minimizes inventory shrink.
Real-Time Inventory and Performance Insights
Retailers place a high-value on managing inventory, as discussed in a January 2019 article in the Marijuana Retail Report. A cannabis kiosk provides real-time insights into stocking levels, product sales velocity, shelf-life and other key management and compliance metrics while enabling compliance reporting.
A cannabis kiosk is essentially an intelligent inventory shelf and advanced point of sale system. The system allows the operator to specify how to dispense inventory, such as through a first in, first out strategy. It can monitor inventory levels, shelf life and even expiration dates for products in inventory, dispensing product based on this information. A kiosk can also monitor and report on product sales velocity, providing insights into optimal product mix and restocking intervals.
Better Customer Access to Product
New dispensary customers may want to shop very deliberately, exploring the many product options. As customers become familiar with products, they will want a faster experience. A kiosk dispensary is an efficient solution that consumers will quickly identify with convenience and efficiency. When customers know what they want, a kiosk is the preferred dispensing option, allowing customers to bypass lines and go straight to purchase.
A popular Colorado dispensary shares that 70 to 80% of its customers are members of its loyalty/rewards program. This indicates just how many purchases are coming from repeat buyers. Offering a kiosk dispensing option allows dispensary staff to help new customers or those who are exploring different product options. Customers who know what they want and simply wish to make a quick purchase will usually opt for the quickest solution, which is a kiosk. In the future, should state regulatory bodies permit it, kiosks can serve as standalone, unattended points-of-sale to serve remote or rural markets.
Integration with Critical Systems
These highly intelligent cannabis kiosks don’t operate on an island, but can integrate fully with the cannabis industry’s advanced point-of-sale (POS) software, payment and compliance systems, such as METRC.
Kiosks have the ability integrate into internal and external systems, exploiting APIs and standards to connect and share information with state compliance systems, POS systems payment systems and much more. This integration capability enables kiosks to serve as an extension of bricks-and-mortar dispensaries in seamless fashion; enabling real-time reporting, perpetual inventory, and integrations to popular menu services like Leafly or Weedmaps. Modern kiosks also support multiple payment options: cash, credit, stored value and more.
Multi-Layer Customer Security
Current state laws that regulate cannabis dispensing require it to occur in a controlled environment. Where kiosks are installed today, customers who use them will have already passed through an identification check. However, a cannabis kiosk has rigorous security and verification protocols, including the latest biometric technologies built-in that would allow it to dispense outside of a traditional dispensary environment.
Cannabis kiosks use two layers of security to comply with regulations and validate customer identity. The first security layer involves identify verification by requiring the customer to swipe or scan a valid form of identification. The kiosk software then utilizes other technologies, including facial recognition and other biometrics, to ensure that the ID is valid. If there is no match, the transaction will not proceed.
Improved Overhead Efficiency
Having a kiosk option helps dispensaries generate better margins by adding selling capacity that increases sales per labor hour without incurring increased rent or other overhead costs.
A kiosk is an extension to the retail environment, one that is viable even in low staff environments such as convenience stores and gas stations. Just by staffing a security ID inspector, customers can access a kiosk without the need for staff content experts, opening up more retail channels and improving retail agility. A single kiosk, with daily restocking, can generate over $3 million in gross revenue annually while taking up less than 50 square feet.
Wide Inventory Variety
Kiosks require less square footage per SKU than conventional cannabis retail staging solutions. A single unit can store up to hundreds of individual items, providing the ability for the dispensary to offer customers the progressively broader range of products they demand.
Products can vary to include flower, pre-rolls, cartridges, and other product options. Current cannabis dispensing kiosks are capable of stocking and dispensing up to 800 different inventory items, accommodating the full range of products that even the largest dispensaries offer to their customers. What’s more, once inventory is loaded into the kiosk, the kiosk itself automatically puts the inventory in the proper place inside the unit, updating inventory systems and making product ready to sell.
Conclusion: Available Now and Future Ready
Under current laws, kiosks are excellent supplemental solutions for established dispensaries, enabling them to serve more customers and sell more product efficiently, and using little retail footprint.
Cannabis dispensary kiosk technology is already advanced enough to enable unattended dispensing. With multi-level customer security technology that exploits facial recognition, the kiosks can meet or exceed human standards for identity verification. Should regulations permit, a dispensary kiosk can function much like a remote tele-pharmacy system, operating standalone and continuously to provide service in remote or underserved locations.
A cannabis kiosk can provide benefits now to established dispensaries by providing greater access and convenience to customers in a form factor that offers an excellent return on the retail floor space while reducing other operating expenses. The technology, software, and robotics that go into these kiosks enable developers to quickly adapt them to new uses, opportunities, products, and even regulatory changes. Kiosks can certainly play a prominent role in how legal cannabis is dispensed, benefitting everyone in the cannabis value chain.