How to Open a Dispensary

Gary Cohen: Hello, everyone. Welcome to our webinar about how to open a dispensary. I'm Gary Cohen, the CEO of Cova, and with me is Guillermo Bravo, the CEO of Foottraffik.

We're pretty excited to share this content with you and hope you get a lot out of it as you think about opening a cannabis dispensary.

Guillermo, do you want to talk about what we're going to do and how we're going to do it today?

Guillermo Bravo: Yeah. So what we'll do is we'll first cover how to open a dispensary on the technology side. And then we'll transition to, you know, as you're ready to open a dispensary, what you actually need to do to be successful.

Before we get started, I’d like to let everyone know that there is a Q&A portion of the webinar. If you have any questions throughout the webinar, we will be pausing to address those questions. Just please use the Q&A function within Zoom rather than the chat function. We do have moderators that will be moderating the different comments in the Q&A function.

Gary Cohen: That's great. Well, let's go ahead and get started.

I’d like to share a little bit about Cova. We were built specifically for the cannabis industry, and we operate in most of the legal markets in the US and all of Canada. We've grown pretty fast. And I think part of our growth has been due to a lot of educational sharing with potential dispensary owners. We do seminars around the continent and just try to deliver best practices and things for you to think about, which is what this is going to be about today.

A lot like Foottraffik, we've really captured a lot of the main brands across the US. So through all that experience, we've been able to learn from our clients, and that's all been put back into this presentation that you'll see today. What we'll cover are a lot of the top challenges that you have when opening a dispensary. And this presentation is primarily about retail cannabis operations. So we really won't look a lot into vertically integrated operations. We will really talk about the retail part of the business today. The depth will be pretty high level. I think each one of these areas that we’ll talk about could go hours and hours, but we don't have time for that, so we’ll give you things to think about and consider when opening your dispensary.

What's unique about our industry and opening a cannabis dispensary is that there are unique challenges that we have that other retailers don't have. To highlight a few of them, it's the cost and complexity of compliance. And you will hear about compliance in every single jurisdiction in North America. Unfortunately, every state and every province is unique. So even though it's federally legal across Canada, you still have to deal with each individual province’s set of rules and guidelines that they have for how you can operate a store and what the individual laws and restrictions are.

For most of you, you're probably familiar with taxation and the challenges we have in this industry with 280e and the limitation of what you can actually deduct as a business expense. If you're not familiar with it, I suggest you study 280e as you're going into business work with a real accountant that understands how that works and what you can and can't do as a cannabis operation in the US.

As we all know, there's a lack of banking services, and that affects both as your business operates and as well as how you conduct transactions in your store. And then lastly, in certain markets, you have black market or grey market competitors. So in a survey of about a year ago, these were the top challenges that you need to think about.

You need to get a license, and no matter where we are, there's a process for you to qualify to operate a dispensary. So unlike almost any other business, the background checks, the requirements on the location that you have, the set of partners you have, and where the capital comes from to start your business is all scrutinized at varying levels based on the state or the municipality.

I talked about compliance before. I really can't stress enough how important this is because, unlike any other business, if you make a mistake, you probably aren't going to lose your license or lose your business. In the cannabis industry, if you're not really adhering to all the things on the slide and understand them, there's a considerable amount of risk. So each one of these things kind of ties back to the point of sale because you need systems that kind of keep you between the lines; that do the things necessary to meet those guidelines.

I'm always asked, why can’t I just get convenience store, restaurant, or small retailer software to run my store? And all of these elements on this sheet are the reasons why. So it is kind of funky, and it's something that you need to consider as you're going into your business.

And as most of you know, you really do need a business plan because, throughout the process of opening a store, you're going to need to go to a local jurisdiction and explain what your plans are, who you are, how you're going to, in a lot of cases, benefit the community that you're in, why your location or facility meets the standards or codes that they have. And they're going to want to know how you are paying for this. Because it's the cannabis industry, there's an added layer of scrutiny on just about everything we do, which usually means more time and more cost. So having a good plan laid out definitely smooths the way to getting those licenses and permits that you need. Well, like with any business, there are several key elements that drive the business plan.

Financially, it's the business capital, and how are you going to have operating capital to buy inventory and pay your staff. And then what's your projected revenue. So we'll talk about these.

Going back to kind of what we know in the industry are the key needs that operators have, there are two different sets of lines on here. There are vertically integrated retailers. And where you see the bigger dark blue line, it's because they're growing cannabis and they're selling cannabis. There are certain places like Washington where you can't do both. But there are other markets like Colorado where you can, and then California has probably 15 different license types. And depending on where you are in the supply chain, you have a different set of costs.

In this example, what we're showing is a lot higher expenditure or cost on real estate and renovations, because if you have a grow and you have a retail store, that grow is going to take a lot more money to get up and running. You know, we did a survey across the US and tried to figure out what the capital required was to get into a dispensary. And these are kind of averaged across the US. Those costs can be anywhere from $55 to $200,000, and these are the big buckets that you need to consider.

A lot of times, people don't realize that in almost every jurisdiction, you need to invest in security and surveillance. There's a heightened worry that someone's going to break into your store and try to get the cash because we are a cash business or try to get the product. So, as you're submitting plans, you need to think about what am I going to invest in that type of element of my cost.

So we just looked at capital costs. That's the stuff that is your upfront investment. But then you have ongoing costs, and as you can see, your biggest costs in light blue, if you're a retailer, are your cost of goods or your inventory and your staffing. And a lot like any retail business, those are going to be your big ones. Then you've got rent, you've got advertising. You know, you can see that giant variance in utilities between a vertically integrated and a retail store. In a retail store, you don't use that much power, but in a grow or a manufacturing, you're using a lot of juice. So that's the difference there. And again, we looked at and kind of an average size dispensary.

You know, we found at Cova that almost 65% of our stores use three workstations, or they have three point of sale terminals is a good way to think about it. So we built this model and looked at the cost based on that average store. In places like Oklahoma, where you might have a tiny store in a tiny little part of town or even a crossroads, you don't need this much staffing, and you don't need this much expenditure. And then again, in a place like Illinois where they have a limited number of licenses, almost every dispensary needs anywhere from six to 13 point of sale terminals or workstations, where they're processing sales.

And to man that, it's a much, much bigger scale. So across the US, it varies greatly based on the market size, is it medical or rec or both, and the estimate of your traffic. In case you didn't know, you can't just go get a bank loan to start your dispensary. You could get a bank loan to start a toy store or a gas station.

But unfortunately, at this time, and without the SAFE Banking Act being passed, we just don't have the ability to just go to a bank and get a loan. Most dispensaries across the US are self-funded. So I've met people who've rolled over their retirement or an inheritance or life savings or whatever.

One of the things I tell almost everyone is the US is about 85% small business operators or mom and pop dispensaries and 15% enterprise. Canada is about 70% enterprise and 30% small business operator. So the funding view and the situation in Canada is different than the US, but what I'm kind of showing here is pretty much how the US dispensaries have been funded. So you can see families and friends. I think going into partnership with people who have industry knowledge is a pretty common way to go.

I'm here in Missouri right now, where we just did something in Kansas City two days ago, St. Louis last night. Meeting all these new operators, part of their application process involved pulling in someone who had industry knowledge. So a lot of local people here and applied for licenses, and part of their license was bringing in someone who knows the business. So that's pretty common. Someone has the money; someone has the know-how. Cannabis investment groups are pretty common, as well, where a group of—it could be high-net-worth people, but they could just be a bunch of people who want to go into the industry and pool their resources and invest in entrepreneurs who they feel are a good bet to go into business. And then lastly, are capital brokers who really are hooking up high net worth people to either someone who has a license, which gets them pretty far down the path in a place like Missouri or they're looking for entrepreneurs who are pretty clever.

This next slide, I thought a lot about it because you can do your financials on worst-case, realistic-case, best-case; and I thought I'd give you some advice here. Think about the type of market that you're looking to pitch your dispensary in. If it's a new market, what are the advantages you have compared to everyone else when you start building your revenue projections? Are you going to be the first one to market? Or do you come from another state, and in the place that you're now starting to open your business, do you have an edge because you do know the market in the industry and how it works?

The other thing is, are you all lined up with suppliers? So, that can be a huge competitive advantage and something to consider when you're building your business case. If you're in an existing market, what are those advantages you have there? If you have a prime location, is there something you're doing that's unique or better different than everyone else in the market? And if so, you should identify that. That is going to help you build your revenues faster. And again, how well of a relationship do you have with your supply chain?

When you do your financials, I know it's really hard to do to be objective because it's just like everyone who starts something, the thing you're starting you think is the prettiest baby, and it's your thing, and it's going to be the best of anybody's. But you do need to try to be realistic about all of the inputs that go into this growth of your new business. So try to be realistic; also be worst-case. So you need both of those. What happens if?

The number one thing that screws with our industry is timing. So remember how I said, this is a cannabis industry, there is extra scrutiny and it kind of slows things down everywhere you go. So permits, construction, licensing, all those steps to get open usually don't happen as the best case would suggest. Supply constraints—you know, we've had markets right now in Illinois, they have next to no supply. Canada had a supply shortage. You want to put that into your projection. What if you can't get product? And then, what if you've got six competitors going in within three miles of you? And can you do it faster or what if they're faster, more nimble, etc.

The last thing is, don't drink your own Kool-Aid. So don't make a best-case plan because then you're going to do all of your business planning based on that. You're going to hire too many people too fast. You are going to spend too much money on marketing too fast. So try to get back to that realistic—that's where you'll raise your money, and I think investors will appreciate that.

There are so many considerations about location. Usually in the US, you need to be 1000 feet from a school, a daycare, a park—stuff like that. You got to know what the rules are. Don't ever secure any real estate without knowing, in advance, what your local municipality is dictating. And also, find out if your municipality is even going to opt-in to having retail cannabis. Places like Michigan, city by city, you can opt-in or opt-out. And the worst thing is to secure some real estate and find that you can’t even open a retail store in that city. And you can see all that other stuff.

Depending on where you're at, you know, signage is huge. You're a retailer, you need to think about signage. The more, the better. If you're a destination versus a walk-up dispensary, what kind of parking can you get? So all those things go into your, your plan.

I put this stuff in about community outreach, the smartest operators we've met in the US and Canada, they go, and they meet the community way before they open. And a great Gary tip is the local police chief and the fire chief and the Minister down the road, they don't know all the laws and rules and regulations of being a cannabis retailer, and for you to go tell them I'm going to do all these things to make it safe, to not let kids come in, to vet my employees, to secure the premises, it reassures them, and it makes your entry into opening your store a lot smoother and better.

Well, my last few slides are going to talk about does your brand stand for, and Guillermo is going to go much deeper into this. But what is it that you're trying to do? You know, granted, it's a for-profit business, so I get that. But are you going to be a medical dispensary and the education and the selection of products to help people is your differentiator. That's what you're about. I think that it's really important to know what it is you stand for. And then, as you build your store, staff your store, you do all those things that relate to what you stand for and your brand. Who's your customer? So there's tons of research you can do on segmentation by zip code of who you're going to try to draw.

Again, in your business plan, you should know the neighborhood, who's there, and how what your brand stands for is going to pull that group in. I think from a customer journey—this is another giant exercise—but as people interact with your store, how do they find your store?

And I put POS next to all that stuff because your POS can feed your Online Visibility. It could feed Leafly and WeedMaps and how people can learn about your store. And as you keep moving down through that checklist, there's technology that will help make all of that better and smoother. I'm going to skip through store design and technology and all that, and just basically say, the estimate of time is usually about eight months from—Oklahoma is the exception, Oklahoma, you can usually get a license and a permit and all that stuff pretty quickly—but in most parts of the country, there's an arduous process to get it.

So it's not the kind of thing you can just open in a month. You have to jump through some hoops. This is just a rough timeline on kind of what we've seen as an average across the country, from start to finish, to go into business.

And with that, I think we're going to open it up for some questions and then Guillermo’s going to pick up how to do it the right way and market it.

Guillermo Bravo: Alright, if everyone can put their questions in the Q&A section, I will go ahead and start answering those now. I'll give it a few minutes here so we can have some time. Okay, here we go. Gary, can you see those questions?

Gary Cohen: Oh yeah, how are HR and accounting usually handled, especially for an Ontario, Canadian, type of company? Good question. So here's a weird fact. Probably 90% of our customers use QuickBooks. And we built Cova in a way that exports all of the POS data, all of your transactional data, and cost accounting data into the format of QuickBooks. And even if you want to modify the manner with which you label things or organize your accounting, that's kind of the norm. I think the other problem—I want to say 10%, but I'm making that up—for the enterprise customers, what we found in the last two years is that the move towards a real ERP system has kind of kicked in for stores that have anywhere from five to 10 or more locations. So as they get to that size and scope of needing more advanced reporting and analytics around inventory management and supply chain, we've seen that ERP necessity kick in. I think from an HR standpoint, usually, I think, we've got probably 40% of our clients integrate with some type of time card application that logs people in, keeps track of what they're doing, and then on the back end of Cova, we've looked at productivity tied to all of those employees. So we can actually do reports on productivity by the time they worked. You know, and realize this is retail, your budtenders are salespeople. So a lot of the HR and accounting winds up linking together from a reporting standpoint.

Jason was asking, what are Cova is POS costs in Ontario, or what is the breakdown of services? Well, I think for all POS companies, there are really three things to look for and ask. What's the monthly subscription fee, because most of them are SaaS-based, so it's a software as a service, and there's a monthly cost. There's hardware. And in that hardware is, you know, for us, it's tablet-based, so those can be fixed tablets or tablets where you walk around and help people browse and have an experience, and educate through the tablet. There are receipt printers, depending on your jurisdiction label printers, scanners— there's all kinds of hardware, cash drawers. And then lastly is installation and support. So, some companies charge for support, just to call in and get help. Other companies don’t. There are companies that will come on-site, like we do. Where we’ll come in and do the training and help set things up. And others don't. It's self-service, and you need to figure it out yourself. So it's hard for me to give you a single price. The last component is how big is your store, how many users are you going to have, and how do you want to configure the flow of customers through your store? Then you know you can compare quotes and what people can provide.

I'll answer a few more quick ones. Are all Colorado licenses sold? If so, how much does it cost to purchase one from an owner? And I'll let Foottraffik answer that question. So we'll come back to that.

You skipped over the design aspect. Could you share a tip to consider when designing the store? Well, my number one tip for design is it does not have to be an Apple store. But again, you don't want to have like the old video stores where you just have movie posters up, and it's just kind of skanky. I think that there's so much that can go into design when you know what your brand stands for, and you know what you want to convey in that retail experience. We've seen people build fantastic stores without very much money and do it in a way where people really enjoy going there. So, again, I think that your neighborhood and what you're trying to accomplish can lead to that design.

I think I better turn it back over to Guillermo now because he's going to show you the next part of the presentation.

Guillermo Bravo: Sounds good. Gary, thank you so much for all that information.

Now we're going to transition a little bit to the technology and marketing aspect of opening a dispensary. I’ll start with a little bit about Foottraffik. So we are a dispensary marketing agency based out of San Francisco. We've been in the business for going on four years now, working in cannabis for about seven myself. We're currently servicing 200 plus stores across 20 plus states.

At Foottraffik, our goal—it kind of says it in the name—our goal is to drive foot traffic to your store, visitors to your website, with the end goal of building your customer database and increasing revenue. But to do that, we need to have all the technology in place to actually capture these customers and get them into our database.

As far as the technology side, here’s a list of some of the core technology, hardware, and software to consider when opening your dispensary. So the first is the money—ATM and merchant accounts. So depending on which state you're in, you can potentially accept credit and debit cards, depending on the legality of that. A lot of dispensaries across the country deal in cash, so you want to have an ATM in place and have that highly visible and easily accessible for customers as they enter the store.

Next is the CRM and loyalty and rewards program. In order for you to actually capture these customers and get them into your database, you need to have a CRM in place, which is a customer relationship management program, and this is typically software. You want to have that in place before you open the store, so any customers that come into the store have the ability to join your dispensary and become a loyal customer.

Networking—having all the internet, Wi-Fi, and everything in place so that you can function as a business. Kiosks—I see this a lot in the Bay Area and in Seattle and Denver. The dispensaries have kiosks in the store, so customers have the ability to browse products before they go to a budtender. And in some dispensaries that want to convert those customers right away, they'll actually enable an online menu within the kiosk, so you can browse products, pricing, descriptions—all within the kiosk—order by placing your phone number in the kiosk, and then skip the line and check out, and you're out of the store. If you're a high volume store, that's something highly to consider.

Marketing software—if you're advertising and investing in marketing, you need a software platform to track the results, to look at your advertising spend, and what the ROI of that advertising spend is. Marketing software is crucial, and tracking how successful you are doing online.

Online menus—there are a lot of online menus available in the marketplace, and this is a core element of your online presence. What good is it to have a website if you don't have an online menu available for the customer to browse products? After all, that's all they're looking for. From our numbers and in looking at website traffic, they really only go to the homepage, and then they go to your menu page. They want to browse products. Then after that, they want to look for deals. So they want to get deals on different specials—buy one get one free, whatever it might be, depending on the laws and regulations of your state.

The point of sale system—as Gary mentioned, this is a core core core part of your business. This speaks to everything—to your online menu; this speaks to your CRM; this speaks to your QuickBooks, your accounting—everything, so it's crucial that you have this component before you open your store.

Security systems—part of the regulatory process and getting approved for a license is having a security system and a plan in place. Whether its technology or personnel, you need to have that in place to get approved. And not to mention, Gary mentioned the uniqueness of our industry and what we have to deal with, with the cash-only, and people trying to come in for products. Having a secure facility is crucial for the success of your business.

TV display menus—just like the kiosk, this is another way for you to display your products, specials, and really highlight what's available in the store.

So now we're going to go into the customer journey. It all starts with awareness. Billboards and print aren't going away. However, now they're being overtaken by digital companies like Leafly, WeedMaps, Instagram, Facebook, and the king—Google. You want to ensure that we have a presence across all these platforms so we can attract and generate interest from customers.

As you can see in these screenshots, there are a few examples of advertising when a customer is on their mobile phone and searching for a dispensary in their area. From our numbers, 72% of all customers that visit our clients’ websites are on mobile devices, so it's crucial that you focus on reaching people where they are—and that's in their pocket. You want to reach customers in their pockets because it's an extension of themselves. Everyone has their mobile phones on them; they use them—I don't know what the average is, but probably close to 500 times—they pick up their cell phone on a daily basis. So reach them where they are.

When customers are looking for—after they're aware of your business or they're looking for a cannabis store, they're going to go on Google. Google owns 93% of all search traffic in the United States. I consider that a monopoly. They own everything, so you need a presence there.

Right next to that is Siri. Having voice search and being present when people ask Siri, “Where can I buy weed near me? Where's the best pop shop? Where's the nearest dispensary?” There are different terms that people use, but you need to have a presence on Siri and all voice search platforms like Alexa. Google has its own, so you need to have a presence across all voice search platforms. T

he directory websites—WeedMaps and Leafly—they have their own presence, depending on which state you’re in. WeedMaps primarily has high saturation in California, not as much across the rest of the country, and Leafly as heavy saturation in Washington, and then it kind of spreads throughout the United States as well. But I want to re-emphasize that WeedMaps and Leafly are nothing compared to Google. Google is king, and they own everything online—as I said 93% of searches. People go to Google to search for a dispensary in San Francisco. If you're not in those top three results, you're not getting the business. Leafly and WeedMaps are getting their traffic from Google. As a result, below these local results here. So you want to really focus on Google in any way that you can influence those results.

Acquisition—so people are going to look and see if you're a legitimate dispensary. They're going to look at your blog; they're going to look at articles. They're going to type in Sunburst Pharm, and they're going to look at what's in the results, what are people saying about you, is there any news.

They're going to look at your reviews. Everyone online lives by reviews. I don't know about you, but I don't go to a restaurant that doesn't have a 4.5 star or higher. So this is crucial in the success of your business online. And to touch on reviews specifically, you want to focus on Google reviews. That's just crucial in the success of your business, as well as Yelp. Those two are the mainstream websites that supply a lot of voice search platforms.

People are also going to go on your Instagram and your Facebook. And they're going to look and see if what you're all about. What's your brand about? What's your message? Are you authentic? Are you real? Are you safe? There are all these different things that people are looking at before they visit a store. Word of mouth—this is still a big part of marketing, and it's the best type of marketing—it's free.

Word of mouth marketing—it speaks for itself. But for you to actually have someone refer you to their friends, you have to provide a great customer experience; you need to provide the right product catalog, the price points—they need to feel the need to leave the dispensary with a smile on their face.

Next, we're going to transition to purchase. So after they’ve found you, they've done their research, they're ready to buy. You want to ensure that your online menu is on your website, and it's easy to checkout. So, the first thing is to make that experience as easy as possible. When someone searches for you—Clear Choice Cannabis Tacoma—they go to your website, I should be able to make a purchase within a few clicks. This needs to be really, really, really easy, and seamless. Not to mention, on the fulfillment side, the technology needs to be in place to quickly fulfill those pre-orders so that you can get people in and out of the doors quickly as possible, especially during peak times—4pm on Thursdays, all the way through Sunday.

You want to drive people to take action. So that's going to either be in the form of a phone call to get more information on products, a website visit, or request for directions. You should have that available in your Google My Business profile, you should have it available on your website, and just make it as easy as possible for someone to make a purchase. And when they make that purchase, depending on which software you're using, you have the ability to join the loyalty program. I know that if I have my favorite dispensary here in San Francisco, and when I visit that store, I want those reward points. I want to be connected to the dispensary, and I want to get my discounts. After I spend $200, I expect something in return. And that's where we transition to loyalty.

As I said before, the customer service, the product catalog, the product price pricing, all influence the loyalty of that customer. The way that the budtenders speak, the way that they dress, their education level—all those have an influence on having customers come back to your store. If they're happy with their experience, what are they gonna do? They're going to leave you a positive review on Google; they're going to send a text message to their friend; they're going to post this on social media; they're going to tell their friends.

So if you go through this whole customer journey the right way and really deliver on the promise that you make to your customers, then you'll see exponential growth. So here's a look at all of the levels of the customer journey.

All right, now let's look at traditional marketing. Traditional marketing is not going away—billboards, direct mailers, events, guerrilla marketing with flyers, print ads, radio, word of mouth—these are all traditional marketing tactics. Depending on which state or country you're in, these options are available to you in different forms. So in a lot of states, billboards are restricted. Same thing with radio and print. So some of the traditional advertising is not available to you. You know, a lot of the regulations and laws—I know for California, I believe it's 72% of the customers that see your advertising have to be 21 and up. So you want to ensure that you're within the laws and regulations for traditional marketing. It still is valuable; it drives awareness; you get a lot of eyeballs; it's something you want to consider but in a strategic manner.

Digital Marketing—what’s everybody using on a daily basis? They're using their phones. Advertising, content marketing, email marketing, mobile, search engine, social media, SMS, voice search—they're all crucial parts of driving foot traffic and customers to your business.

What's the difference between the two—old fashioned versus new fashion?

Well, for traditional marketing, on the left side here, we have any of that local advantage. So if you are launching an event, billboards may do well for you. This does resonate more with the older demographic, as well. So if you're in, say, Florida, and you're trying to reach medical customers, if it's compliant, traditional marketing can be a successful marketing strategy for you. I know direct mailers are pretty common in Florida. This has worked in the past. It has a proven success rate. It reaches a lot of people. It gets people aware of your business.

As far as digital marketing, we see a much better ROI because everything is measurable. Data is all the talk nowadays, and numbers don't lie. So we know for every dollar that we put into any marketing channel digitally, we know the exact ROI of that effort. Not to mention, you can do advanced targeting. I can target people—if you're 40, female, live in the zip code, you like different types of product categories or certain books, I can target you based on that, so it's highly relevant.

So what do you need to really get started? Once you open the store, you need a website. You need to build that trust with your customers. And you need to build that for mobile devices and search engines so that you can convert those customers into sales. This is an example of a dispensary website that we've designed, and you can see the clear call to actions right there above the fold— order online, order online, latest specials. Get customers to take action.

For a limited time, through 2/29, we’ll be offering a $1,000 discount on our website designs. And what we've done is, we've created a website theme with the dispensary in mind. So we have all the items already built into the theme, and it's highly, highly customizable so that you are successful in driving conversions from desktop users from mobile users and through the online menu. So feel free to reach out to us after the webinar to get more information on that.

SEO—we're going to dive in a little bit into the top three channels you should leverage to drive foot traffic pre- and during launch. So the first is going to be SEO. When customers want to find a dispensary near them, they turn to search. As I mentioned before, Google serves up close to 93% of all US Internet searches, and if you want to show up in those search results, then it's crucial that you have a robust SEO strategy and a team to implement it. You want to build that brand trust and authority. You want to leverage that organic traffic, and you want to reduce the cost of acquiring a customer. Not to mention on the compliance side, you cannot limit advertising on SEO—it's organic, it’s natural.

We're going to showcase a case study here of one of our dispensary clients out of Washington. So in 2018, from organic traffic, we generated over $200,000 in revenue in one year from organic traffic and SEO. 20,000 new users earned, and we had 2200 keywords ranking for Origins out of West Seattle, Washington.

Now let's transition to Google Ads. Google Ads is a powerful tool for obtaining new customers because it provides a predictable customer acquisition costs, unlike traditional advertising. You can see immediate and trackable results with Google ads. And if you work with Foottraffik, we have the ability to get those ads approved in a compliant fashion.

Here's a case study from our friends and partners out of New York, Vireo Health. In 2008, from our Google Ads campaigns, we generated $56 per dollar-spend on the campaign. So we generated over $400,000 in 2018 from 10,000 visitors. And this was in a highly competitive market in Manhattan. So we targeted public transportation hubs—Central Station, subways, parks—to really capture these audiences.

And the last is SMS marketing. So if you invest all this money in advertising and driving foot traffic and building your customer database, if you get them in one time, you're only getting one purchase, and that's probably only 5% of the actual value of that customer. With SMS marketing, you'll be able to retain the remaining 95% of that customer value. So if a customer comes in, one time and spends $50, and you create events, deals, experiences, add value, for that customer and get them into your dispensary and get them loyal, then you'll keep them for a lifetime. So you can reach people instantly, increase the customer value through your loyalty programs and rewards, and even better, you can automate a lot of this process.

Here's a case study from our friends at Clear Choice in Tacoma, Washington. They hit a plateau in their sales and new customer acquisition because we pretty much got every customer in that region. So, how are we going to make more money? We're going to leverage SMS marketing, we're going to create segmented campaigns, and we're going to increase the value of those customers. We don't need to spend more money on advertising; we can engage and interact and nurture the relationships with your existing customers. In 2018, we sent 3.6 million text messages out, and we generated $8.2 million in revenue in one year. Clear Choice Tacoma, I believe, is the second-highest volume store in the state of Washington.

As a gift for attending, we're going to actually offer you a free strategy session, which is $1,000 value, with our VP of Sales Eduardo Silva, who will walk you through the different strategies to make sure that your dispensary is a success. In addition, we've put together a dispensary launch package so that when you're ready to open your store—and if you have a license— then we want to ensure that you are successful. So we've knocked off $1,000 on this product as well. And this will provide everything you need to launch a store and be successful and take care of everything to get foot traffic in the door.

And that's pretty much it. I'm going to leave the event open for questions now. If you want to go ahead and go to the Q&A section, I'm going to go ahead and start answering these questions.

See, so there was one that was asked before about the price of a license. Now all licenses are not created equal, so depending on competition, market size, opportunity, competitors—what's the market saturation as far as other dispensaries within your radius— the laws—do you only have a retail store, or can you do delivery like you can in California—all of these are factors in the valuation of your dispensary license. So yes, you can purchase them, the cost of those dispensary licenses is wide-ranging. Gary, do you have any questions that you see on your side? I'm having trouble seeing the Q&A on my side.

Gary Cohen: Yes, I can. Darwin's asking, I'm getting the expenses together to ensure capital spent correctly and timely to eliminate unnecessary non-revenue charges. I'm gathering documents. Is there somewhere I can go to get the details of your marketing packages?

Guillermo Bravo: Yes, so you can go to foottraffik.co and just reach out to us and schedule a strategy session. It's no cost to you, and we will work with you, and we'll share our marketing spreadsheets with you so you can account for not only digital marketing but traditional marketing and what the cost of all these channels are and from our experience what the ROI is so. I really want to, to thank you and you know in, just feel free to reach out to us after the webinar to schedule a strategy session, no cost to you. Are there any additional questions?

Gary Cohen: OK, Sharon was saying that it looks like they acquired a dispensary and used Cova inventory to figure out what the cost of goods sold was for everything in that store. And they found $100,000 of savings in one month.

I think that what this goes to is—if you remember, I talked about those compliance issues that kind of trip people up. And one of the biggest ones is inventory management. And this is a really a thing I can talk for a week about because it's a very high up, you know, cannabis is a high-value item. And your employees, there there's a high theft rate. You know, it's usually kind of hard for people to steal the cannabis that don't work there, but for people who work there, their consumers of the product. I think that the techniques to manage what's been ordered, who counts it when it comes in, how you keep track of spoilage your returns—the whole thing needs to be under a microscope by the state or the province. When you really take things from a pencil and paper or spreadsheet to a legitimate cannabis POS, you start finding money because you’re accounting for a very difficult set of products.

I think there was one other question from Art. How much time and training is necessary to get your staff up and running with Cova?

Well, I hate to give you a vague answer, but it can be pretty quick, meaning maybe two or three sessions over the phone for us to understand the mechanics of how your store is built and operates, and then a few sessions of training on the processes of cash management, inventory management, and transactions. We're not a self-serve kind of POS company; we do a lot of hands-on coaching and training. But I think the basis of it all, is trying to help new retailers understand everything that's involved in running a dispensary and especially doing it in their specific jurisdiction. There's no one that we just set up and give them the keys and usually not in a week. It's usually about a three-week time frame between contracting, setting up the launch and discovery, ordering the hardware, starting the training, importing or building the inventory, then doing the onsite coaching and training to open the store. So my answer is three weeks is the norm.

Guillermo Bravo: Wonderful, thank you, Gary. Once again, I want to thank everyone for their time and for joining us today. Thank you for your questions, and after the webinar, if you'd like to reach out, you can go to Covasoftware.com and then Foottraffik.co.

We have one event coming up on March 19 together, and that's going to be at the same time. That's going to be on the 10 Actual Marketing Tips to Boost Your Dispensary Bottom Line. So if you'd like to learn more about increasing your revenue, then join the next webinar. And once again, we want to thank you for your time, and we'll see you next time.