There’s never a dull moment in the New York cannabis industry, but recent developments have been especially exciting. A proposed rule change to pave the way for discounts, sales, and rewards programs has the potential to change the way cannabis dispensaries in the state interact with their customers.
As cannabis marketers, this potential change is integral to what we do. As a result, we’re vocally supporting the rule change. CannaContent founder and content strategist Stella Morrison submitted her support for the proposed amendments to the New York State Office of Cannabis Management (OCM) as part of their public comment period, ongoing through October 28th, 2024.
Here’s what you need to know about this rule change, and how you can express your support for the rule change if you wish to join the chorus of voices submitting testimony in support of the proposed amendments.
What’s the deal with customer loyalty programs at New York dispensaries?
If you haven’t already seen the news, the OCM proposed an amendment to Part 129.2 of the Cannabis Law that would permit dispensaries to offer discounts, coupons, points-based reward systems, and customer loyalty programs to customers. Previously, cannabis dispensaries were unable to extend these sorts of benefits and programs in a bid to attract customers, ostensibly to address health and safety concerns. If you ever walked into a dispensary and wondered why nothing’s ever on sale, it’s because dispensaries are not allowed to run sales.
While there may have been good intent behind such a restriction, in practicality, it hampered New York dispensaries’ ability to compete with the many unlicensed (and illegal) cannabis shops throughout the city. Additionally, some customers drive for hours to shop at cannabis businesses in nearby states, where sales are one factor that affects the overall price of cannabis. Allowing dispensaries to implement loyalty programs could be a boon for licensed dispensaries, recapturing shoppers looking for a deal that previously sought them out elsewhere.
Our position on New York cannabis customer loyalty programs
At CannaContent, we wholeheartedly support the proposal to allow dispensaries to offer coupons and discounts, as well as operate customer loyalty programs and points-based reward systems.
The excerpt below comes from Stella’s letter to the OCM.
Just like grocers, airlines, and coffee shops, dispensaries are dependent on customer retention and repeat shoppers for success. Around 80% of revenue is driven by 20% of customers, according to a deeply-held and long-followed tenet called the “Pareto Principle.” In fact, an increase in customer retention of just 5% can significantly boost profits, by at least 25% by some estimates. For dispensaries, that means building a committed customer community may mean the difference between success and failure.
This is where a loyalty program comes into play. Seven out of 10 shoppers prefer to spend their dollars with retailers that offer loyalty programs. In the eyes of consumers, dispensaries are no different than any other retailer that offers points or member perks in exchange for their business. Customers expect sales, coupons, and loyalty programs, and many of them do not understand why these incentives are not offered by dispensaries in New York State. This not only creates confusion, but may inadvertently drive business outside the regulated market.
Loyalty programs and points-based reward systems are very successful in other adult-use markets. On average, loyalty program participants in other states spend $45 more (“ticket size”) than those who do not participate in a loyalty program. Dispensaries with reward programs in leading states like Colorado and Washington realize increased basket size, or how much customers purchase per shopping trip, by about 35% on average. That increase is excellent for licensed retailers, New York brands, and the communities that benefit from the generated tax revenue. New York State dispensaries can easily realize the same success as retailers in Colorado and Washington if the proposed changes to 129.2 are adopted.
Share your thoughts: Public comments are open through October
The proposed changes to Part 129.2 represent an important step forward for New York’s cannabis industry. But even more important than strengthening dispensaries’ ability to compete with illicit shops and businesses in neighboring states is the move toward normalizing the cannabis industry.
Cannabis retailers should be treated like any other retail business with the same latitude to serve their customers and provide value that keeps them coming back. If you agree, we encourage you to write a letter to the OCM expressing your support for their proposed changes to 129.2.
How to submit your comments to the Office of Cannabis Management
The proposed amendments to 129.2 are not a done deal. If you approve of the OCM’s proposed changes, use your voice to share with regulators that you are in favor of their suggestions.
1. Review the proposed changes.
View the changes on the OCM’s website, and form your opinion on what the OCM is proposing to do.
2. Write your letter.
The OCM recommends that your letter clearly states which section of the law you’re commenting on and justifying your comment through data, personal experience, sound reasoning, or similar reasoning. Don’t just write “yes, I agree,” and move on. Read the OCM’s recommendations in full.
3. Send your letter.
Comments on the proposed regulations can be submitted by email to: regulations@ocm.ny.gov or mailed to New York State Office of Cannabis Management, P.O. Box 2071, Albany, N.Y. 12220.
Comments on the proposed amendments to 129.2 are being accepted through October 28th, 2024.
Support New York’s licensed and legal industry. Support sales and loyalty programs.
As cannabis marketers, we know how important discounts and loyalty programs can be to a brand’s success. Considering the challenges of acquiring and retaining customers realized by all businesses — and the more limited resources dispensaries can leverage overall due to state regulations and federal Prohibition — dispensary marketers should be able to use as many strategies as they can to compliantly grow their customer base. We’re hoping for a New York cannabis industry that has these tools at its disposal.
If you agree with us, don’t just nod along while reading this blog. We encourage you to reach out to the OCM to express your support of the proposed changes to 129.2.
