Top 5 Barriers of Marijuana E-commerce and Possible Solutions

The expansion of the legal marijuana industry has been on a sustained upward trajectory for many years, with average annual growth at more than 30%. The industry has begun embracing eCommerce and all of the advantages and opportunities it creates. Barriers to full industry eCommerce implementation indeed remain, but they are by no means insurmountable.

Let’s take a look at 5 barriers of marijuana eCommerce and some possible solutions for the industry.

Access to banking services

Ongoing tension in the United States between federal and state law has trapped banks between their desire to serve an industry experiencing explosive growth and their fear of federal enforcement action. While marijuana is still illegal under federal law, eleven states and Washington D.C. have legalized it recreationally, and thirty-three states have legalized cannabis for medical purposes.

The banking system is regulated by federal law, however, so banks risk charges of aiding and abetting a federal crime/money laundering by choosing to do business with a marijuana-related venture.

This issue has forced an entire industry to rely largely on physical cash in an era when credit cards and digital payment platforms have become the new standard.

Simply put, this is the single-largest barrier to eCommerce within the marijuana industry, but there is a light at the end of this tunnel. With broad support in the U.S. Congress, as well as continued pressure from the Attorneys General of multiple states with some form of marijuana legalization, the momentum exists to pass legislation to “deschedule” marijuana federally as well clear up the antiquated banking laws.

Decriminalization of marijuana, and the resultant allowance of businesses of all types to engage fully with the banking system, will be a remarkable step toward the development of complete eCommerce for the industry.

Delivery options

Anyone who makes a purchase online generally does so using a credit card, and so too have they come to expect rapid delivery of the item(s) purchased – easy payment and delivery are bedrock elements of the entire eCommerce system.

Many jurisdictions that have legalized the sale of marijuana (medical or recreational) simply have not legalized delivery.

This seems to be a barrier that will fall, on a state-by-state basis, like proverbial dominoes. At 3.2T, the 5th largest economy globally, California, has fully legalized the delivery of marijuana products, and these services provide substantial revenues to an already booming industry. As it has led the way on marijuana for decades, it seems reasonable that California’s successful delivery model will be a catalyst for other states, thus spurring the development of the most important element for further eCommerce growth.

While banking and delivery are eCommerce macro-barriers for the marijuana industry, some significant barriers also exist at the merchant and consumer level. Here are 3 that stand out.

Communication breakdowns

These issues can occur in many places within an omnichannel eCommerce experience, from social media engagement to answering important questions a customer might have while they’re loading up a shopping cart on your website.

Any problems, if not addressed correctly, can send a potential customer away, never to return.

Before any sale, it is necessary to make sure that your communication is effective, consistent, and builds confidence in the mind of the customer. If someone asks a question on an Instagram post, they, and everyone else, will see if it goes unanswered.

Website errors, as simple as incorrect/missing photographs, misidentified strains, or grammatical errors, can diminish your reputation with an experienced (or novice) marijuana consumer.

Post-sale, it’s all about service. The customer may have more questions or even want to leave a glowing review. Considering the expenses of any eCommerce venture, you need to develop a loyal following, and there is no better way to accomplish that than with superior service after the sale.

As for communication tools, a plethora of choices abound, and it is important to understand that not everyone prefers the same method. Live Chat, Email, and old-fashioned Phone Support can all combine to help you cover your communication bases.

Checkout funnel friction

Customers are always looking for easy, “frictionless” experiences in an eCommerce experience, and this is particularly true when the shopping is taking place on a mobile device.

A majority of eCommerce visitors now come from mobile, and yet mobile accounts for less than 30% of eCommerce sales.

Why is this the case? This significant spread exists because of friction in the mobile checkout funnel, so it is necessary to identify issues and address them accordingly.

Consistent A/B testing in order to measure customer behavior is necessary to streamline processes within your eCommerce site. One of the most critical elements of eCommerce is the data it provides the merchant, and consistent and proper analysis of that data allows for key metrics to be measured and changes to be made as needed.

Limiting the number of steps in the checkout process is crucial in eliminating friction. As simple a feature as auto-filling the city and state after entry of a zip code can have an impact on your bottom line.

Most importantly, the site must be optimized for mobile. This has been a fundamental eCommerce issue for many years and is critical for the shopping and checkout experience.

Cybersecurity

This is a critical issue for any business engaged in eCommerce, and the marijuana industry is no different. The damage a cyberattack can inflict on even the smallest dispensary could result in catastrophe, so it is vital to take steps for protection and, in the event of a problem, a rapid resolution.

While the options for cybersecurity are vast and ever-changing, here are a handful of best practices to help in the event of a breach.

• Keep Hardware and Software Up to Date, and Implement Network Security Hardware.
• Encrypt Your Data Whenever Possible.
• Implement a BYOD (Bring Your Own Device) Policy.
• Maintain Cloud Backups for Everything.

If you need a consultation to spruce up your Cannabis eCommerce, Ziffity can help. Reach us at contactus@ziffity.com or tell us your requirements at our Contact Us page. We would be happy to help.