The East Coast needs a data solution because the market is still so young. Whether it be a large MSO or a smaller shop part of the local community, cannabis businesses need data solutions for a leg up on competitors. With so many businesses popping up in my region, there is strong competition and data can help you run a leaner operation.
Instead of employing a short staff to track data in Excel - which, by the way, is extremely time consuming and cumbersome - data solutions like Headset help you track efficiently and make strategic decisions without throwing away time. Our solutions provide internal data as well as competitor data that allows businesses to compare and benchmark their progress and competitive edge, an advantage not accessible when you are only tracking your internal data.
First, market shifts can happen very quickly out east - or extremely slowly. For example, Michigan allowed licensing in November of 2019 and cannabis shops opened the next month in December. It was an extremely quick turn around. They also allowed medical marijuana to prequalify for co-located operations, meaning established medical operators can quickly offer recreational sales as well. Comparatively, the Massachusetts ballot initiative legalizing marijuana and setting up a system of regulated cannabis sales was approved in late 2016, with the goal of January 1, 2018 being the first day of recreational cannabis sales. That initiative was pushed back 6 months, yet the first two recreational stores were not opened until November of 2018, a full two years after legalization. With each state moving at its own pace in recreational marijuana, it can be challenging keeping up with the speed of legalization in each state and what is happening in the market all at once.
Secondly, point-of-sale systems, state regulatory tracking software and data laws differ in each state. Some allow API integrations, some states own data themselves, while others allow companies to own and use their stores’ data however they wish. Pennsylvania, for example, uses MJ Platform which has stricter integration barriers, so it can be more difficult to partner with operators in that market. Since Headset integrates directly with POS systems, this can become a hindrance to working in a state with more data barriers.
Finally, license growth in the East Coast can be slow because states are still learning. Each state has unique laws and regulations around licensing. In one state, large players are only allowed three retail shops, while in others they are allowed 35 shops or more. Illinois was going to give out 65 licenses and then delayed those indefinitely. It can be difficult keeping up with each state’s progress.
The first underserved opportunity in Eastern markets is branding. Mature markets have enough saturation in retail stores so the real competition becomes product differentiation. Vertically integrated cannabis companies operate top-down, supplying their own stores with their own products. Since these markets have shifted from medical-only operators to more specialized operators, we are starting to see organizations segment their internal brands. Given the fast-paced growth we are seeing out East, West Coast brands are beginning to strategically expand within these markets. We also see some operators that are beginning to specialize in doing just retail or just boutique flower and they are beginning to gain consumers’ mindshare in markets that have largely purchased whatever was available in their local dispensaries.
Second is delivery, which hasn’t grown as quickly as expected in the East Coast, but has so much potential. The West Coast has seen massive success with cannabis delivery services, it is an essential facet in the California cannabis market. Each market in the East Coast is approaching delivery differently, but in many cases the pandemic forcefully expedited the process. I believe this is a largely untapped opportunity that we will see grow as these markets mature.
Last up is white-labeling, which is when a product or service removes their brand and logo from the end product and instead uses the branding requested by the purchaser. Some actors in the industry do not want to be involved in retail and the competitive aspect of owning a storefront - they just want to grow and manufacture quality cannabis products at scale. These operators serve the needs of many of the brands that are seeking to expand their footprint in large Eastern markets, and they go hand-in-hand.
It’s interesting to see High Times move into the East Coast markets with a three-market licensing deal including Michigan, Illinois and Florida. They have partnered with Red, White and Bloom brands to allow for their well-known brand to hit the shelves soon. Of course, they are known for their High Times magazine and High Times Cup, so it will be interesting to see what they do with cannabis as a product itself as they move into more plant-touching roles.
Cookies is another cannabis brand that is very popular with the younger demographic. Berner and his team have built a loyal following of East Coast consumers who are known to seek out the Cookies genetics once they take a trip out West. The Cookies team started off this year by announcing their strategic partnership with Gage in Michigan, and I would not be surprised to see their operations expand with a portfolio of partners in each key market. Seeing their products pop up on the East Coast is going to be very exciting for East Coast customers - the demand is there.
Lastly, Chicago-based MSO Cresco Labs closed their acquisition of Origin House at the top of this year. Through this acquisition, Cresco Labs just leaped into the conversation of becoming a leader in the California market. Cresco Labs already has a strong track record of building brands and executing a successful supply chain so bringing in the operations and expertise from Origin House will only increase their ability to capitalize on their enormous reach. Another exciting thing Cresco Labs has done is launch their first value-brand flower into the market, similar to what you would see with Old Pal’s products in CA or NV. Having the ability to cut the price of a segment of their flower opens the doors to a much larger portion of consumers. We can expect to see more of these value brands showing up out east.
I have always considered data a passion and hobby of mine. I would delve into the possible applications with data, whether it be with music, exercising or market research. I even planned to study Computer Science and Data Analytics in college, but ultimately decided to go another, broader route with Business Administration.
My college internships were at the intersection of cannabis and data, starting at Casa Humboldt as a Property Management and Cultivation Intern, then a Data Analyst Intern for XPLAIN the following year. These experiences helped me integrate and meet people in the industry and brought me to the realization that I wanted to make a career out of the combination of the two. I learned about cannabis’ complex supply chain, what the process for producing high-quality cannabis entails, as well as the importance of compliance and data management.
I began my post-college career at Columbia Care, a large multi-state operator on the East Coast. During my time there I learned that data management is absolutely essential for cannabis businesses to consistently measure and ensure customer happiness. It was through Columbia Care that I found Headset and even recommended that they use Headset’s software to help solve some of the obstacles we were facing. Knowing the pain points from the MSO’s perspective, I’m very grateful to be working with Headset and helping other operators through the inefficiencies and roadblocks I saw within past employers.
Each day is truly unique, but most days I will speak with operators of all sizes in the East Coast market as well as with partners and associations working to help operators do it right in the region. I speak with a variety of people from companies as varied as testing facilities to manufacturers to branding agencies. No matter what sector they’re in, they’re simply trying to make their way in the industry. I seek to learn about their goals, how they are currently leveraging data to measure where they are and discover which of our platforms and solutions would help to take their operation to the next level.
I exist as Headset’s eyes and ears into what is emerging in the East Coast markets, which includes every legal state east of Colorado. Before COVID-19, I travelled on a weekly basis to each region, attending events and meeting new people to build trust and relationships all over within the industry. Compared to the West Coast, there seem to be fewer homegrown operations with efforts of the smaller community to grow out the cannabis industry. I work to integrate the Headset data ecosystem in my region by establishing relationships with those laying the foundations in each market.
The markets in my region start as medical-only, oftentimes resulting in a few operators gaining an advantage due to high barriers to entry - i.e. expensive licensing fees, large amounts of financial liquidity and so on. The large players with hefty financial backings are typically the ones able to establish themselves first, so my region sees a lot of bigger corporations with expansive supply chains versus the mom-and-pop shops out on the West Coast. However, I am seeing many of these large East Coast operators expanding into the Western markets while they wait for recreational legalization in the East.
With the East Coast moving quickly to catch up with the West Coast markets, my region is never dull. They are constantly learning lessons from the West’s errors after legalization and building upon lessons learned from their predecessors. No market is identical and they are constantly changing, which keeps you on your toes.
At first we saw a lot of panic buying - food, toilet paper and cannabis. Sales spiked rapidly then slowed and stabilized, but each month has been different as markets continue to re-open. It largely depends on how the state and local governments have reacted to the outbreak. With Michigan and Illinois classifying cannabis as essential, they were able to sustain business through curbside pickup, with some months even increasing in sales. Massachusetts, however, had completely closed their recreational cannabis stores from the end of March to mid May, so the operators took a really big hit in sales.
COVID-19 has also forced Eastern markets to mature much faster and allow for new avenues of retail sales. New stores that were just putting products on shelves needed to quickly pivot into other solutions like Click-and-Collect, curbside pick-up and delivery. The rapid change has allowed for many technology solutions in cannabis to respond and support the industry. We consider Headset to be one of these solutions.