The Complete Guide to Cannabis POS

Treez Team
Two hands and a point of sale system are shown as a customer purchases some cannabis products at a dispensary

The cannabis industry has been growing steadily over the years. Data Bridge Market Research shows that the cannabis market is expected to reach USD 66.35 billion by 2030, growing at a CAGR of 22.1% from 2023 to 2030.  

While cannabis has become fully legal in several US states and for medical use in almost every state, there are still several regulations and compliances that businesses need to follow. That’s why irrespective of how big or small your cannabis dispensary is, the tech you choose to run your business can make or break your success - specifically, cannabis POS. 

Without a potent cannabis POS system, your dispensary could lose customer data, sales, and other critical functionalities, leading to non-compliance issues. 

This guide here is to help you understand what a cannabis POS is, why it is essential for your dispensary, and how you can get it in place. 

What is a cannabis POS system?

A point of sale is where a customer completes the purchase of a product or service in exchange for money. The point of sale system refers to the technology that a business (or merchant) uses to process the transaction and accept payments for purchases. In cannabis retail, this transaction can happen with cash, ACH transactions, debit cards, gift cards, or even mobile wallets.

A cannabis POS system (also called dispensary POS or cannabis POS) refers to the hardware and software that a dispensary uses to facilitate in-store sales like a traditional POS but comes with an added layer of compliance regulations the business needs to adhere to in order to sell cannabis.  

Cannabis POS statistics

As per our own surveys and industry research, here are some dispensary industry and cannabis POS statistics you should know about: 

  • The global cannabis market is expected to reach almost $97.35 billion by 2026, with a compound annual growth rate (CAGR) of 32.92%. 
  • The cannabis sales tax revenue across states has increased by 34% from 2020, totaling more than $3.7 billion.
  • The cannabis POS software market is projected to reach $1.92 billion by 2026, with a CAGR of 18.2% from 2020 to 2026.
  • In a survey of cannabis retailers, 75% of them reported using a POS system to manage operations.
  • 78% of dispensary owners say POS systems have helped them increase sales.
  • 69% of dispensary owners say POS systems have helped them manage inventory more effectively.
  • The average cost of a cannabis POS system ranges from $500-$1500 per month.
  • 57% of cannabis retailers said they would recommend using POS systems. 
  • The average cannabis dispensary processes 50-100 transactions per day.
  • The cannabis POS sector grew to 79 vendors in 2021, up 16% from the previous year and 75% from 2018 when Cannabiz Media, a Connecticut-based cannabis license database and marketing platform, started tracking the category.
  • The top five companies serve 61% of retailers, despite the record number of POS vendors in the market. 

Cannabis dispensary POS system facts 

Derived from the research and surveys done so far in the industry, the following facts about cannabis POS have been highlighted: 

  • Cannabis dispensary businesses face challenges in managing their operations, including complying with regulations, monitoring cash-only transactions, and optimizing product inventory. 
  • A cannabis POS system combines hardware and software, allowing dispensaries to manage sales, inventory, and customer data in real-time. 
  • Cannabis POS systems have proven to help dispensaries automate tasks, streamline and categorize customer data and ensure compliance with state and federal regulations. 
  • Cannabis dispensary POS systems can integrate with other software, including seed-to-sale tracking and accounting systems, to manage business operations. 
  • The most popular features of cannabis POS systems are inventory management, sale reporting and analytics, customer analytics, and compliance tracking. 

Why is a cannabis POS system important for dispensaries? 

A cannabis POS acts as a central operating system for your business, helping dispensaries look into the following: 

1. Stay legally compliant

Each state has different regulations for cannabis dispensary retailers. This may include regularly reporting your inventory and sales to the authorities with precise information gathered from receipts, which can be time-consuming and prone to errors when done manually. And the slightest errors in this industry can lead to your business losing the license to sell cannabis or even getting blacklisted. 

A good cannabis POS system automates the process of seed-to-sale tracking and reporting of inventory and sales and reduces the paperwork. This helps cannabis retailers and dispensaries keep up with the changing industry compliances in an automated manner as the POS system makes the changes to data collection and filling. 

2. Manage inventory better

As the cannabis industry grows and consumer demand increases, retailers and dispensaries must manage their inventory better. 

A good cannabis POS system lets you streamline and optimize inventory management in real-time without manually recording sales. This helps you not just track the sales made but also promptly place orders for new products when required to meet consumer demand and adapt to changing market needs. 

Some of the benefits of better inventory management at your cannabis dispensary include the following: 

  • Accuracy of inventory data updates 
  • Minimized risk of overstocking and understocking 
  • Minimized risk of overselling and underselling 
  • Improved business terms between suppliers and vendors
  • Ability to identify consumer needs and preferences for business decisions 

3. Gain strategic insights

The ability to closely track sales and consumer demand enables cannabis dispensary retailers and businesses to identify critical business insights. This includes noting which products and promotions are performing well, which areas are underperforming, and possible staffing issues that can cause operational breaks in the business. 

Simply put, a cannabis POS system equips cannabis dispensary owners with the data and information they need to make business-critical decisions that impact their growth. 

4. Easily manage multiple locations 

If you have a dispensary with multiple locations, managing your inventory and sales data and maintaining accurate customer records becomes even more critical. This is where a cannabis POS comes into play, helping you monitor the performance of all the retail locations, the best-selling products, preferred payment methods, customer preferences, and the inventory levels available. 

Solutions like Treez can also help you create a single source of truth for multi-store management. This enables you to define the accesses you want to share with departments, delegate responsibilities, stay apprised of actions taken, and improve security. 

5. Gather customer insights 

Similar to product insights, a cannabis POS also helps dispensaries and retailers gather customer data in an organized manner. This helps identify purchase intent, preferences, and motivations, helping identify patterns and predict future needs. 

With the help of this data, cannabis retailers can segment their customers, which further enables them to identify profitable markets and how they can optimize marketing strategies to sell to each. 

6. Personalize omnichannel customer experiences

Most cannabis POS systems help retailers and dispensaries implement omnichannel selling and ensure seamless transactions across all touchpoints - online, offline, marketplaces, etc. This enables you to offer additional functionalities like subscriptions, curbside pickup or delivery, and queue management for a positive customer experience. 

Leveraging previous purchase data and customer insights can also help dispensaries and cannabis retailers provide personalized product recommendations, provide relevant data like composition, pricing, usage, etc., to consumers that help build a positive rapport with them. 

7. Manage budtender performance

If you have multiple dispensaries or have budtenders working in shifts at your retail outlets, you will require monitoring their performance. A cannabis POS system enables budtenders also to record the sales they ring up, which can then be used to attribute the sales made at the dispensary. 

8. Collect cashless payments

Cannabis POS allows dispensaries to collect cashless payments through popular payment modes. This includes debit cards, ACH transactions, and payment wallets. They also allow you to record cash payments for orders. 

9. Run loyalty programs to boost retention 

With access to budtender performance, sales made through different dispensary locations, and customer insights through the cannabis POS, you can set up loyalty programs. This includes offering discounts, benefits, store credits, and other offers to repeat customers to boost retention rates. 

10. Monitor and manage discounts 

As the competition in the cannabis industry increases, dispensaries can be seen running multiple offers and discounts to consumers. But this can impact the bottom line revenue for dispensaries and hence needs to be managed more effectively. 

A cannabis POS can help manage the discounts offered at different retail outlets and online stores, identify the most used code, and accurately attribute sales to it. This can help identify and streamline the number of offers being run by the business. 

What are the different parts of cannabis POS?

A cannabis POS system typically includes two key parts: 

Two hands and a point of sale system are shown as a customer purchases some cannabis products at a dispensary

1. Cannabis POS software 

Cannabis POS software is a program or an application that helps dispensaries perform various point-of-sale functions. This includes ringing in the products a consumer intends to purchase, calculating transaction amounts, recording preferred payment modes, tracking sales, monitor and managing inventory. 

Cannabis POS solutions like Treez come with integrated payment processing and advanced features that make managing and reporting sales more accurate for dispensaries.  

2. Cannabis POS hardware

Cannabis POS hardware refers to the physical components of a point-of-sale system that both you and the consumer can touch, feel and use. This includes the POS terminal, cannabis payment terminal, barcode scanner, receipt printer, and cash drawer.   

How does a cannabis POS work? 

A budtender smiles as their cannabis point of sale system's screen displays products for a customer. A visualization to the left shows strains, brands, and orders cannabis POS system records the items being purchased and the quantity of each.

The cannabis POS system at a dispensary serves two purposes - one which is customer-facing, enabling easy purchases at the outlet, and the other is to drive business operations. Here’s how cannabis POS works: 

1. At the point of sale

At this point, the cannabis POS system records the items being purchased and the quantity of each, displaying all the information on a screen visible to the budtender and the consumer. 

Once the items have been added to the sale, the budtender presents the total and initiates the payment process to collect and process the order. The consumer is given the choice of payment methods available at the dispensary. 

As soon as the payment is made, the cannabis POS generates an online and physical receipt to share with the customer. The dispensary can also offer loyalty points, rewards, or store credits at this stage to encourage better customer engagement and repeat sales. 

2. At the backend of the business 

Once a sale is made, the cannabis POS system automatically updates inventory levels and records revenue and customer information. This data gets recorded at all the dispensary outlets to keep business operations running smoothly. 

A cannabis POS system also records the discounts, returns, and refunds the business makes to accurately calculate cash flow and profits.   

Simply put, a cannabis POS impacts both business operations and the experience a dispensary offers customers as they make a purchase. 

How to choose a cannabis POS for your dispensary? 

While we will be covering the details of choosing the right cannabis POS in detail on our blog later, here are some aspects you should be looking into: 

  • Product use and experience - The cannabis POS system should be easy to set up and use at the dispensary. This includes usage by the business owner and the budtenders that may handle the point of sale. 
  • Traceability and compliance - A good cannabis POS system should empower owners to stay compliant across all business functions. Most states require sales and inventory tracking through state-mandated traceability systems; the POS system should be able to send automated reports to the same at defined intervals. 
  • Reliability and data security - The governments also have defined regulations around how a cannabis dispensary should store customer data. A cannabis POS system should be able to offer added security measures to keep business-critical information secure. 
  • Inventory control and reporting - Apart from automatically updating inventory levels across all the available products, a good cannabis POS also helps in accurate reporting. This includes identifying purchase trends, inventory valuation, costing methods, and predicting demand. 
  • Integration with other business systems - To create a connected workflow across various functions of your business, it’s vital to evaluate a cannabis POS based on its integrations. This includes eCommerce platforms, accounting software, HR tools, customer loyalty program platforms, delivery service providers, and security softwares. 
  • Product development and support - Leading cannabis POS solutions like Treez continually develop their product to offer competitive features that help dispensaries remain compliant with industry changes or further streamline business functions. The cannabis POS company should also provide continual support from the time of subscription/ purchase to setup and after.   
  • Scalability - As your cannabis dispensary grows, you must scale its functions across multiple retail locations or set up more customizations. Solutions like Treez help dispensaries scale quickly with complete visibility across all functions, maintaining accurate reporting at each stage.  

Do you really need a cannabis POS system at the dispensary? 

As the cannabis industry evolves, dispensaries will be required to not just keep up with industry regulations and compliances. It will also require them to keep up with how consumers choose to make purchases - online and offline. 

A cannabis POS system like Treez equips dispensaries with the technology, insights, and support you need to streamline operations, increase revenue and drive profitability in a highly competitive and sensitive market. 

If your cannabis dispensary has been struggling to keep up with compliance, retail sales (online and offline), and ensure traceability, book a demo of Treez today

Cannabis POS Frequently Asked Questions

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