How to choose a point-of-sale system for a hemp retail operation

Buying a point-of-sale system for a cannabis store is no small endeavor. Many factors come into play. But the decision-making process can be made easier by following some general guidelines.

A cannabis retailer should choose a POS system with features that support their business model, operations and brand, according to cannabis retail designers, consultants and POS experts.

“A POS is going to help us run our business, right? So what tools do you need to be able to run that business?” asked Krista Raymer, co-founder of Vetrina Group, a Toronto-based cannabis consulting firm.

“If you’re data-focused, you want a POS provider who is going to provide you the data to make decisions. If the majority of your business is going to be run through e-commerce, finding a POS provider that has a smooth integration with e-commerce is going to be really important.”

Christine Foss, Director of Product for POSaBIT Inc., a Washington state-based POS and payment company, said while there’s a lot to consider when choosing a POS system, ultimately a retailer’s business operations should drive the decision-making process.

Most cannabis retailers start by considering their workflow and how their POS will support that.

“Devices have limitations on the workflow. If you have a register that’s bolted to the counter, you can’t walk around the store with it if you want to have an Apple store model,” Foss said.

Mobile is also useful for retailers who plan to fulfill lots of online or curbside orders, or make deliveries.

But that brings up another point – internet access. What happens if your store’s Wi-Fi goes down or your employee is making a delivery and needs to complete a transaction in an area with bad connectivity? Check for systems that have an offline mode that can be updated once connectivity is re-established, Foss suggested.

Compliance, control and flexibility

Like every aspect of the cannabis industry, “compliance is king” when choosing a POS system, Foss said.

The POS provider should keep on top of changing laws—whether that’s purchase limits or tax laws—and, ideally, help you avoid problems, she said.

Another feature in POS systems is the program’s ability to control what budtenders can and cannot do at the point of purchase and provide visibility back to the owners based upon each purchase.

“Sometimes what happens is budtenders will give away too many discounts, or they’ll give away a discount that they shouldn’t,” Foss said. “We can set up discount stacking limitations, we can allow expectations, or we can have a whole discount limit within the store, so no one’s getting more than 50% off.”

Another factor for retailers to consider is whether they want to pull up a transaction by the product or by the customer, Foss said.

Systems that can pull up the customer first at the point of a transaction will allow a budtender to access that person’s profile, including their favorite products, any recent purchase history or other notes about the customer. That feature supports more personal engagement with the customer, which is helpful if personalized customer interaction is part of the retailer’s brand, Foss said.

Upgrading the ATM model

A POS system improves upon the traditional ATM model many dispensaries have, and it can increase profitability, Foss said.

POS systems allow cannabis retailers to make debit sales, resulting in higher average transactions than cash sales alone, Foss said.

For example, a POSaBIT case study of a Washington state cannabis retailer found that the store’s average debit ticket was nearly $20 more than the average cash ticket.

“It’s just the nature of the beast. People spend more money with a card,” Foss said. “A lot of owners will say, I make a lot of money from my ATM. And yes, they do. But the amount of money you’re going to make up from that average ticket being so much larger is a much bigger difference than making dollars off the ATM.”

A POS system aligned with all cannabis rules and regulations can also help retailers avoid potential legal problems associated with dispensary ATMs, like the recent warning from Visa.

The financial behemoth notified banks and other financial institutions that it was aware of a scheme under which cashless ATMs in dispensaries were being deliberately miscoded to disguise cannabis purchases—an apparent way to circumvent federal marijuana prohibition and banking rules.

POS systems aren’t perfect

The biggest complaints about POS systems from customers usually target hardware reliability as well as system breakdowns, slow speeds or reporting errors, Foss said.

Another logistical headache can be details like naming conventions for products. For example, does the POS system allow products to be shared across stores? Once the product is in the system at one location, is it auto-generated in the system? This avoids having a database with multiple entries of the same product, Foss said.

But at the end of the day, one of the biggest concerns with POS systems is customer service. So make sure any vendor you choose offers top-notch customer service and is highly responsive in the event of problems, Foss advised.

“Not being able to reach someone when something is really wrong is a problem,” Foss said.

“You know there’s a big difference between a donut shop versus a cannabis store where there are compliance issues and some really bad ramifications if you don’t get things resolved quickly.”

Download the MJBizDaily Cannabis Retail Buyers Guide for a checklist of what to consider in buying POS systems, plus more insights on designing an effective cannabis retail store.