By Matt Walstatter

Last week, Oregon Gov. Kate Brown signed SB 460, the law that allows Oregon medical marijuana dispensaries to serve non-cardholders on a limited basis.

Beginning Oct. 1, any adult over the age of 21 will be able to buy up to a quarter ounce of flower, four clone,s and a limited amount of seeds.

This gives us two months to fortify our inventory, bolster our staff, and update our operations. To make matters more complicated, we await rules governing this new system from the Oregon Health Authority, which runs Oregon’s medical marijuana program.

As we begin Pure Green’s ramp up for recreational sales, we took time to reflect on some of the most important lessons that we have learned operating our dispensary over the last year and a half. Over the coming weeks, I thought I would share some of the more useful lessons as we contemplate and implement this massive transition.

Getting the right inventory

Making certain that our shop has just the right inventory is probably the most important aspect of my job. I suggest having one person ultimately responsible for inventory. That person may have help, but the buck stops there.

I look for two qualities in an inventory manager. ]

First, they should be a total weed geek. Your inventory manager should be able, for example, to recognize strains, to know if flower has been cured properly, and to spot a subpar trim job. This can only come from years of experience; there is no other way to acquire this skill set.

The inventory manager must also have a finger on the pulse of the market. They should know what strains are hot, what won’t sell, what new products are up and coming.

I worked the sales floor every day for the first four months we were open. This allowed me to learn the dynamics of our market and to talk to patients about what they like, what they don’t like and why. Now that I’m rarely on the floor, I rely much more on my managers and sales associates to help me stay in touch.

The optimal inventory varies from shop to shop, and from medical to recretional, yet all shops strive for essentially the same thing — you need the right mix of flower, concentrates, and edibles for your shop. With flower, aim for the perfect balance of indica, sativa and hybrid.

Make sure you hit the gamut of price points in a way that is appropriate for your shop. Have some budget, standard, and premium products so that you have something for anyone who makes their way in. But you must know your store and your customers. If you are a high end, boutique shop, don’t stock too much budget flower. Conversely, don’t fill your store with premium products if your customers are looking for cheap ounces.

Margins and gross margins

I could discuss gross margins as part of inventory, but this is an incredibly important number and merits a separate discussion. You calculate your gross profit by subtracting inventory costs from sales. If you sell $100,000 worth of products and those products cost you $65,000, then your gross profit is $35,000. This makes your gross profit margin 35 percent.

When you buy products for your store, you need to think carefully about not only what those products will cost, but also about gross margins. You should know approximately what margins you need to make based on your sales and expenses. And, you should purchase accordingly.

This doesn’t mean that you set a hard and fast rule for gross margins. Balancing your inventory with the right combination of higher and lower margin products gives you some flexibility.

Sometimes a lower margin product will bring prestige to your store. In Portland, we have a strain called Dogwalker OG. This highly valued and sought after strain is hard to come by, so people that grow it typically charge more for pounds.

We can sell it for a little more, but not enough to make the gross margin equal out. When I buy a pound of Dogwalker, I know that I also need to make sure to buy some less expensive, higher margin flower to offset the lower margin Dogwalker.

You may even choose a product with lower margins because it will sell faster. The increased volume will offset the lower margins.

Banking challenges

In our industry, banking is a huge challenge. Start off by determining whether you can bank openly or whether you will need to go incognito.

Very few banks or credit unions openly accept cannabis businesses. If you can find one in your state, jump on it. If not, start small. Smaller, state-chartered banks and credit unions are most likely to accept cannabis customers.

Finding a bank account is most often a matter of who you know. If you have an existing relationship with a bank, this will be your best bet. Ask around — colleagues may be able to share friendly banks or bankers. Otherwise, you may have to take a less straightforward path.

If you must open a bank account with an institution that doesn’t know the true nature of your business, you can take some steps to give yourself the best chance of success. Again, start small. These smaller banks typically have less comprehensive due diligence screening.

When you go to open an account, send a woman if possible. The accounts that my wife has opened have stayed open longer than those I have initiated. Make sure to dress in a professional manner. I wear a suit when I open a bank account. If you are not going to be completely forthcoming with the bank, make sure you have a good story, that you know it backward and forward, and that you are comfortable telling it.

These are just a few of the lessons that we have learned, some the hard way, some a little easier. Hopefully this will spare you a headache or two.

Next time I’ll talk about compliance, permits, staffing, and marketing.