The untapped potential of online retail in the cannabis market.

Living in the heart of Los Angeles, I’ve witnessed hundreds of entrepreneurs open brick-and-mortar cannabis dispensaries to serve the booming medical and recreational marijuana market. With all the demand, money, and now the stock market bubble in cannabis, it seems that everyone wants to get in.

The problem as an entrepreneur, however, is how to open a brick-and-mortar store, compete against hundreds of dispensaries in your area, and have your license approved by the Bureau of Cannabis Control when there is a long list of other entrepreneurs who have yet to hear any feedback on their own applications.

In order to apply for a license, you must first secure a location for your dispensary. Then after paying the application fee, you wait to hear back. Many dispensary owners who secured locations in Q4 of 2017 in preparation for the January 2018 recreational roll out, are still waiting. They either continue to pay rent without any sales and follow the law, or as you may have guessed, operate illegally as the state slowly fumbles through the approval process.

It makes sense that despite the current regulatory landscape, many entrepreneurs are getting in the game. We are seeing a tsunami of revenue being commercialized and the birth of an industry that has been eradicated throughout the globe for over 70 years.

It seems that selling marijuana is an ideal product. It gives entrepreneurs a residual revenue stream because it is consumable. You can grow it yourself and vertically integrate your operations. The price point for customers is reasonable and the product is in high demand. And ever since Harry J. Anslinger successfully demonized the plant in the 1930s, the cannabis market has been underground and underserved.

But if the cannabis industry has exponential growth, and the internet is the future of commerce, why aren’t entrepreneurs building ecommerce platforms to advertise and sell their weed online?

Like most traditional brick-and-mortar models, technology appears to be an afterthought. Many cannabis entrepreneurs do not have a website. And if they do, it is a simple Wordpress site with only a handful of pages.

When these entrepreneurs start researching ecommerce, the task appears overwhelming, and for good reason. To build and host your own ecommerce platform that works within the cannabis industry is a large undertaking.

There are a few main challenges that have hindered the adoption rate: 1) Getting a merchant account to accept credit cards for marijuana sales is extremely difficult; 2) Software engineering resources are expensive for small businesses; and 3) Due to federal regulations, marijuana cannot be shipped across state lines.