Cannabis Retail Deli Style is Dead

Deli Style cannabis is dead. Well, maybe not yet but it's dying.

Deli Style?

Back in the day folk bought loose cannabis in baggies. There were these medical dispensaries, which had large containers of cannabis which would build-a-bag on demand. They would sell mostly standard amounts (3.5 g, 7 g, etc) -- but would pick and pack the product on demand.

Imagine, the cannabis store, with two dozen glass containers, each with 500g of product. You'd be able to scope out the buds. You could purchase anywhere from 1g to 28g of product! It was pretty wonderful.

Some Problems

Deli Style was not without it issues. One problem, for the retailer, was the waste. That is, what happens to the the left-overs in the bottom of the jar?

Another issue, again for the retailer, is that some clients will purchase a variety of small amounts. It's a little tedious to weigh out one gram of cannabis from eight different jars. And then print out eight little labels (if required).

The Phase Out

This deli style of sales has been on the decline since at least 2015. It's suffered from two significant changes in the cannabis industry since then. First the introduction of regulated cannabis changed packaging and manufacturing requirements. Second the explosion in the market changed what the average cannabis consumer was looking for. A further consequence from these two things is how the (now required) technology affects choices a retailer makes.

Regulated Cannabis

The regulated cannabis market came about when Colorado and Washington each launched their respective "track-and-trace" systems. These early (c2014) legislative changes had a some packaging requirements (and even in 2023, some stil do!). In some cases, pre-packaged material was a strict requirement of the legislation.

Also, with the regulations came the track-and-trace burden. Each gram of material needed to be accounted for. Each retailer would need to have a scale (likely per POS-terminal); each transaction is weighed out; then entered into the system; then packaged and labeled. This is extra hardware to purchase; it's extra diligence and it's extra time per transaction.

At the end of the cycle for a deli-style bulk-inventory item there will be waste and spillage (regardless of product type). In regulated cannabis however, everything must be tracked. The moisture loss and spillage and the small-waste from the deli-style is extra data-entry. During the early phases of the regulated cannabis industry, the regulators weren't always aware of these processes. This could trigger inspections or other regulatory events for your business -- as the business owner tries to explain the natural order of things to a regulator who's confused by these seemingly simple concepts.

The Regulations made the deli-style process signifigantly more effort (cost, time, work) that it had previously been.

Market Explosion

Since 2014, the cannabis industry has grown exponentioally. After Colorado and Washington then came Alaska, Oregon, Nevada and a host of other states (and eventually California). With this growth came investors, and now lots of CPG type players enter the game.

"CPG" is Consumer Packaged Goods -- like cereal and cheese. Once the industry matured, these business models became more and more common. These business models require standardization of packaging to create a "repeatable consumer experience".

Additionally, with this market-explosion is that supply-side brands wanted to define themselves. That's not really possible with deli-style -- where the consumer would remember the retailer more than the grower. With packaged goods, the consumer is able to carry the farmers brand home with them -- and show their friends.

Consistent product quality and brand differentiation drove suppliers to prefer pre-packaged.

Technology Requirements

In the early launch there was tight software-based controls on these cannabis businesses. Metrc controlled Colorado and BioTrack controlled Washington.

These two systems, that all cannabis licensed businesses had to use, created tighter restrictions on how different products could be sold. These software systems were tightly coupled to the regulations -- and because of the new-ness of the process the implementations had some flaws. In turn, the feedback loop, these hiccups caused a change in behaviour for the cannabis businesses. When a needed feature is not available today in the technology and a retailer has to check with their regulator and then wait for the technology fix it (sometimes weeks) -- well, they'll just change behaviour. It was the case that deli-style was harder to handle in the early regulated days -- since then (and for sure in 2023) these processes are all working smoothly.

Along with the heavy-hand of technology-in-regulation came also the requirement for improved systems at the retailer. This means purchasing (or re-purchasing) proper NTEP legal-for-trade scale. Then also, this scale should be tightly integrated into your point-of-sale solution. It's just a few hundred dollars -- and maybe fiddling with the hardware/software configuration.

These troubles with the early regulatory systems; and the additional technology requirements inside the retailer also led many away from deli-style sales.

The Zombie State

Now, it's 2023. And loads of states have regulated cannanbis. And there are a dozen or so large-scale multi-state operators ("MSO"). And all of these things combine themselves to create a homogenized environment. That is, cannabis is now main-stream.

It's rare to see the deli-style sale any more; and the retailers who do that are working against the system. It feels like the only places that will provide this service in the future will be the high-end shops or consumer-louges (if they ever let us).

And if the deli-style is going away -- can we also get rid of imperial measures? Why eights and quarters? Why not 1g, 5g and 10g packages ? Embrace the Metric system -- you're already using it just back-porting to silly imperial amounts (1/8 oz = 3.5g).