The Industry

Top 5 questions dispensary owners should ask potential vendors

Team Headset
June 10, 2019

Retailers and vendors have a symbiotic relationship, responsible for one another’s growth and success. Sure, consumers are your lifeblood, but vendors stock your shelves. Your business is only as good as their products. Because of the vital role vendors and suppliers play in your business, it’s important to vet each one before you commit. Afterall, you want to make sure that this is a healthy long-term relationship - not one that can turn toxic. 

What questions should you ask your potential vendor? Below are the top five that will help you know whether to take things to the next level.


1. What are your credentials?

It should be obvious that because cannabis is not federally legal, that selling cannabis products from vendors that do not follow any sort of regulations and cannot offer any safety certifications is a potential cause for trouble. Transparency is key, so vendors and suppliers should be able to provide certification for their packing components, excipients, and active ingredients, and in general be as transparent as possible regarding their products. Asking for credentials not only reassures the safety of the product, but also that the dispensary is following any marijuana regulations it may have to comply with.

One of the best ways to find out the performance of any product is to see what other dispensaries may have to say about it. Furthermore, patient and consumer feedback regarding a product can be very telling of how that product can potentially perform. Other retailer’s references can not only attest to the quality of the product, but also to other aspects of a vendor’s business, such as their reliability, promptness in communication and product delivery, and an overall testament to the relationship they had with the supplier. 


2. What quality management systems do you have in place?

Besides a vendor’s credentials, it may also be a good idea to inquire about the manufacturing of the cannabis products to ensure that the dispensary will consistently be receiving quality goods. In having a more in depth understanding of a vendor’s quality management, retailers may feel more comfortable trusting the products they receive. Again, this stresses the importance of a vendor’s transparency, and quality assurance also allows the dispensary’s associates and budtenders to feel truly confident about the cannabis that they are selling to their clientele. 


3. What are the best purchasing deals and price points?

There are a lot of ways to go about deciding which products a retailer should buy. What would work best with their budget and inquiring what sort of deals or ways that the cost of the product can be decreased is good measure. For example, vendors may offer a larger discount if a product is bought in larger packages (though that may vary given different state’s marijuana regulations). It is best to explore all possible offers that the vendor has, as it may make it easier to negotiate other price points with them. 


4. Can you respond quickly to changing market conditions?

Given that the cannabis market is growing so rapidly, it’s important to consider how quickly a vendor or supplier can adapt, whether it be to new laws regarding cannabis’ legal status or any changes made to current regulations, like packaging requirements for example. 

However, it is not only reacting to changes in regulation but also staying ahead of market trends. A vendor that is on top of what’s happening in the market may be able to offer more successful and popular products ahead of the hype, so retailers and dispensaries maximize their sales. Not only that, but changes in the market can also mean market shortages, so it is important to make sure that a vendor would be able to quickly provide retailers with the high demand products with short notice. 


5. What is my expected gross margin?

It’s important for retailers to inquire how much revenue they should expect to be making from their vendor’s products. The vendor’s gross margin is generally indicative of how their company is doing, and the best gross margin may vary from product to product. That being said, the expectation that the vendor provides may be a sign of whether or not the dispensary should be working with that supplier. 


Other Considerations

While the questions above will frame the business conversation with a potential vendor, there’s always room to get to know your supplier better. Do their practices align with your own mission statement or ideology? There are dispensaries that prefer buying from vendors that focus on sustainability, eco-friendly practices. Others prefer to find out about the diversity within the company or feel better about buying from companies that are women- or minority-owned. Weighing broader issues could help decide whether a supplier is partner material. 

Of course, the key to good relationships with your suppliers and vendors is not only the right questions upfront, but consistent communication throughout. Having a happy vendor-retailer relationship breeds the mutual success you both want.

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