Brandon Wiegand, regional general manager, The Source, Las Vegas and Henderson, Nevada
It’s not easy to raise a cavalry in a weekend, but that’s essentially what The Source did, thanks to prudent thinking, agility and responsive regulators.
When Nevada Gov. Steven Sisolak asked nonessential businesses to voluntarily close March 17, a surge of customers descended on The Source’s two outlets—one recreational-medical store in Las Vegas and a medical-only dispensary in Henderson—on March 18.
At the time, state marijuana businesses had not been declared essential.
Rather than keeping the Las Vegas store open to recreational customers in anticipation of another surge—and another quick windfall—regional general manager Brandon Wiegand pared back services March 19 to exclusively serve medical patients.
His reasoning? The move was a good way to reduce crowds and lower the safety risk to staff and patrons. It also gave him and his team an opportunity to slow down, assess the fast-moving situation and prepare for different scenarios they believed could unfold.
“It gave our team time to catch a breather, get their feet under themselves, think through what are the policies, procedures and protocols that we need to adhere to. How do we bring those to market and implement them? How do we make sure our customers are adhering to those guidelines? So we took the day Thursday (March 19) to think through that and then redeployed Friday to open back up for recreational customers.”
One scenario they prepared for—having seen it in other states—was closing retail store floors to customers and shifting to an all-delivery model.
So, when the governor announced March 20 that marijuana stores would be able to service customers only through delivery, Wiegand was ready. The Source had already contracted Blackbird for delivery services before the pandemic, but Wiegand knew the Reno-based company alone wouldn’t be able to handle the anticipated number of delivery orders. Instead, he would have to raise his own delivery squadron.
On the morning of March 20, a Friday, Wiegand solicited his staff for delivery-driver applications and got about 10 before the end of the day. He processed those and forwarded them to the Nevada Marijuana Enforcement Division, expecting to hear back the following Monday.
But regulators got back to him that Sunday with seven or eight delivery drivers approved.
Officials also had updated regulations specifying that drivers could use their own cars and personal insurance until further coverage details could be worked out, Wiegand said. Nearly 10 Source drivers were on the road Monday, and the team has since expanded.
“I’d applaud our governor and the Marijuana Enforcement Division. They’re reacting to a very serious public threat,” Wiegand said on March 23. “They didn’t just shut it down. They were thoughtful and gave us an opportunity to continue to serve the public with the serious constraints—and understandably so, given the situation.”
Pause, Assess and Plan: In emergencies and other fast-moving situations, avoid knee-jerk reactions. Rather, take a moment to evaluate the situation and prepare for possible scenarios.
Demonstrate Corporate Responsibility: It can be easy to profit in a crisis—but by putting people before profit, businesses can show social concern and solidify their position as a responsible community player. Earning that reputation has long-term benefits.
Transparency and Communication: By being open with employees, Wiegand was able to get staff to step up as delivery drivers when he needed them.
Regulatory Relationships: It’s important to be able to count on regulators in a crisis, which is why it’s essential to cultivate good relationships with them before an emergency strikes.
Ellen Rosenfeld, President and co-owner, Commonwealth Cannabis Co., Millis, Massachusetts
In the days between U.S. President Donald Trump declaring a national emergency March 13 and Massachusetts Gov. Charles Baker ordering nonessential businesses to close March 24, The Commonwealth Cannabis Co., a vertically integrated operation with two stores about 25 miles outside Boston, experienced a surge of customers.
The company responded with social-distancing measures that would protect employees and consumers while keeping business moving. Both stores—one medical-only and another serving medical and recreational customers—closed half their cash registers to increase distance between points of sale, reduced employee hours and closed breakrooms so staffers took breaks outside, while the combined medical-recreational store in Millis taped blue X’s on the floor to show people where to stand to ensure they were 6 feet apart, among other measures.
To reduce crowds inside the Millis store, CommCan texted customers to let them know it was safe to enter, but some missed their notifications because of a poor cell signal. In response, CommCan’s head of IT, Mark Abbate, bought an FM transmitter for a few hundred dollars and set up an FM transmitter notification system.
Now, customers take a numbered ticket, wait in their cars and tune their radios to 90.1 FM, where the low-frequency transmitter broadcasts music interrupted only by a store clerk calling customer numbers.
CommCan President Ellen Rosenfeld also anticipated that Baker might shutter recreational stores but keep medical stores open, so she encouraged recreational customers to get their medical marijuana cards.
“Those days were beyond crazy. I was personally out on the floor. I handed out thousands of pieces of paper to explain to people how to get the medical card, and a lot of people have,” she said.
Despite Rosenfeld’s efforts, the governor’s decision to deny the “essential” designation to recreational stores was a financial hit; recreational sales accounted for 90% of CommCan’s revenue, she estimated. But CommCan persisted, encouraging medical sign-ups and rolling out bigger-than-usual sales. For example, in early April, the company offered progressive discounts: 10% off for every $100 spent, 20% off for every $200 spent and 30% off for every $300 or more spent.
“I need the income. I need to pay my bills. I have not laid off one employee, and I don’t intend to,” Rosenfeld told Marijuana Business Magazine on April 1.
“I thought this industry was hard when I got into it. There were a lot of rules and regs (and) not a lot of advice on how to implement and interpret them,” Rosenfeld said. “But this, where we are now, not only are the rules and regs being passed fast and furious, they don’t even know how to interpret them … and they don’t make sense.”
Rosenfeld pointed to rules allowing curbside pickup but prohibiting cash from being exchanged outside, which means bringing a debit-card reader outside and either leaving a door open for the power cord or buying a generator so the cord doesn’t interfere with the door.
“For everything (regulators) do, we need to figure it out,” Rosenfeld said.
Meanwhile, local governments have been helpful, Rosenfeld said. When she emailed the town administrator for Medway, the location of CommCan’s grow, seeking more time to make the company’s Host Community Agreement payment due April 1, an extension to June 15 was quickly granted.
“I don’t know how many places are going to come back from this. I’m going to be one of them, there’s no question. But it gets harder and harder with every week,” Rosenfeld said.
“I’m trying to keep my employees employed, so my payroll has not really dipped that much. I can’t close my cultivation facility right now, just because I’m stockpiling. I have to be ready. My expenses are the same, (and) my income has been cut by 90%. So what do I do all day? I try to figure out how to come up with 90 more percent.”
Technology Talent: It’s easy to forget about the importance of IT teams operating behind the scenes, but their unique skills keep store systems running. So make sure your tech team is top-notch.
Find New Revenue Streams: When CommCan’s recreational MJ revenue was taken away, the company quickly channeled efforts to convert rec customers into medical card holders.
The Power of Sales: Try to sustain revenue by offering deeper-than-usual discounts to encourage medical customers to make bigger purchases and convert rec shoppers into medical card holders.
Flexible Hours: A desire to keep employees can conflict with a need to cut costs. That conflict can be reconciled with flexible staffing that tailors schedules to employee circumstances, such as reducing hours for those who want or can afford to work reduced hours while maintaining hours for those who need to sustain their work schedules.
Ready for a Return to Normalcy: Maintain production and stockpile products to be ready when recreational MJ sales resume.
Calling in Reinforcements
Jeff Yapp, CEO, Chalice Farms, Portland, Oregon
Chalice Farms, a vertically integrated cannabis company with six dispensaries in the Portland metro area, had been building its delivery effort for several months with the intention to roll it out in April to commemorate the unofficial marijuana holiday 4/20. The arrival of the coronavirus accelerated those efforts.
“The plans were in place, and we knew what we were going to do and how we were going to do it,” CEO Jeff Yapp said regarding Chalice’s plans to roll out cannabis delivery in April. “When this (virus) hit, it got moved up.”
Already having plans in place made it easier for Chalice to launch its delivery services in response to the coronavirus crisis, but the company was nevertheless caught off guard by the surge in delivery orders.
Chalice already had strong sales in early March, Yapp said, but the spike in demand broke sales records when cannabis consumers feared marijuana retailers would have to close because of the epidemic. Those strong sales continued after the surge in purchases, Yapp said.
The original Chalice delivery plan called for an average of two or three drivers per store who would rotate among the locations in shifts. Yapp said that turned out to be too few. He’s hired a few more drivers since but is watching delivery demand to see how many drivers he’ll ultimately need.
“We didn’t expect the volume of delivery out of the box. We felt that it was going to take longer for the word to spread,” Yapp said. “It just picked up faster than we expected because of the increased demand.”
Meanwhile, Chalice began reinforcing existing policy that employees who felt sick should stay home, while those who expressed concern about being exposed to the coronavirus at work could take time off.
“My first priority was to keep all our employees and customers safe—and after that, it was to keep everyone employed,” Yapp said. “So we did everything we could to stay in business for them.”
To keep the business running amid a surge in demand and deliveries as well as a dip in the number of available employees, Chalice hired temporary workers who had been laid off because of the COVID-19 outbreak.
“We’ve got people basically on call willing to come in and help with packaging, working in our stores, handling inventory. We’ve got people now who can cover for people,” Yapp said.
Many of the new workers came from the food-service industry—including cooks with food-handling permits, so it was easy to transition them to work in Chalice’s infused product facilities.
Chalice has been able to afford the new hires because of the increase in business, Yapp said.
The company also launched online ordering. The Oregon Liquor Control Commission approved doing transactions at vehicles, allowing customers to wait in cars until employees armed with “mobile point-of-sale systems” came outside to ring up orders.
This required Chalice to upgrade its standard operating procedures, share the changes with employees and train them on details such as how to conduct transactions at cars and how to reduce touchpoints between themselves and customers.
All store workers wear gloves, change them after each sale and wipe down registers after every transaction, Yapp said.
“There’s a whole SOP that goes with it,” Yapp said. “Because of COVID, we’ve got procedures that have changes for all of our stores.”
Planning: Major initiatives such as creating a delivery team require planning and an ability to pivot when circumstances undermine the original plan.
People Management: To accommodate a sudden shortfall in staff because of sickness or crisis, consider bringing in temp workers until the situation stabilizes. Hiring workers laid off from other local businesses will boost your company’s stature in the community.
SOPs and Training: The best plans won’t have maximum effectiveness if employees aren’t comfortable with them. That’s why it’s important to codify and update changes in your SOPs and make sure employees are trained in those changes.
Paranoid in Pennsylvania
Gregory Rochlin, CEO, Ilera Healthcare, Newtown Square, Pennsylvania
Gregory Rochlin doesn’t like to take chances.
“I’m pretty paranoid,” admitted Rochlin, the CEO of Ilera Healthcare, a vertically integrated cannabis company.
So when news of the COVID-19 outbreak started making headlines in January, Rochlin and his team of former pharmaceutical executives who had experienced global economic disruptions in the past didn’t dismiss the threat to either their supply chain or employees’ health.
They had recently completed a 70,000-square-foot expansion to their cultivation facility, roughly doubling its size, so they would have plenty of cannabis flower. Securing packaging, however, was of greater concern.
“We saw this way back in early January and increased our orders pretty dramatically at that time to make sure there were no supply-chain interruptions, so we’re in good shape,” Rochlin said. “I would not want to be trying to mobilize that today.”
And when the contagious illness arrived in the United States, Ilera mandated that workers wear gloves, masks and perform frequent sanitizing like other companies had. But in a move that was less common, Ilera instituted a policy requiring employees to have their temperatures checked before their shifts. To do that, an employee with a hand-held thermometer checked temperatures of other staffers in a vestibule as they entered one at a time to practice physical distancing.
“We’re taking this very seriously,” Rochlin said.
The company also has limited the number of customers who can be in the store at any one time, cleared out the waiting room and put signs throughout the store reminding everyone to stay at least 6 feet away from others.
Ilera Healthcare instituted a liberal leave policy that included adding an extra week of paid time off.
When Pennsylvania regulators decided to allow dispensaries in the state to offer curbside pickup, Ilera took advantage. The company set up a two-stop approach: Drivers come to a stop at one checkpoint manned by an employee who checks identification and then calls to alert staff inside that a customer is ready to pick up a purchase. Then, customers drive around the building to pick up their purchases through a window that separates them from employees.
“We’re trying very hard to move the majority of our customers to both drive-thru and CanPay,” Rochlin said. CanPay is a debit payment app that links to a bank account, facilitating cashless payments. He estimated that about 40% of Ilera’s customers used the drive-thru pickup system and paid with CanPay during the first week of availability.
Secure Your Supply Chain: Know where your materials come from and keep an eye on events or trends that could affect your vendors. If you foresee the possibility of interruption, secure additional vendors and materials.
Check Employee Temperatures: Gloves and masks are good, but executives who want to be more rigorous in protecting employees, customers and the company should consider preshift employee temperature checks. It might be part of the new normal.
Give Employees More Paid Time Off: In a crisis situation, this option keeps workers safe and gives them peace of mind about taking time off when needed. It also fosters an appreciation for the company that will manifest itself in higher-quality work.
Adjust Your Curbside Strategy to Your Building: Curbside pickup is a welcome allowance but one that’s been hard to master. Consider a two-stop process to your curbside efforts.
Leaning on Your Team
Oliver Summers, CEO, Chai, Santa Cruz and Castroville, California
Regulatory differences between municipalities resulted in a patchwork response to the coronavirus health crisis in California. That disparity forced cannabis operators such as Oliver Summers, director of retail strategies for Captor Capital Corp, a Toronto-based company that owns one cannabis store in Santa Cruz, California, and another about 40 minutes away in Castroville, to create new procedures not once but twice. Both stores operate under the brand name Chai.
In Santa Cruz, marijuana stores had to close their sales floors but did allow curbside pickup and delivery—services Chai already offered through the third-party service I Heart Jane. In Castroville, Chai was allowed to keep the store open and add a curbside pickup option, but delivery was prohibited.
With the in-store option no longer available in Santa Cruz, Summers deployed personnel to the delivery and curbside pickup efforts. Deliveries had not been a big part of Chai’s business, and Summers joked that they “tripled” from about three to nine per day during the coronavirus epidemic.
Curbside pickup proved much more popular. Summers likened the pickup model to a McDonald’s drive-thru, where you place an order or provide your order number at one window and then pay for and pick up your order at the next window. There is one small difference, however: Chai has doors.
“We have these extra doors that usually always remain locked and gated and never used. But in this particular situation … it worked out for us to open up one of those doors for my employees to make sure that they kept their distance (from consumers).”
Both cash and cashless option were available, Summers added.
The Castroville location posed a different challenge, requiring Summers to prepare the store for physical distancing. Chai capped the number of people allowed on the sales floor to six—three budtenders and three customers—and also closed off the waiting room, so customers waited outside while practicing physical distancing.
“I make the joke that we’re in the process of a remodel,” Summers quipped. “We have deals with our neighbors, so there’s no interference with them and everything seems to be operating. Everybody in Santa Cruz has been great. I have to say, the other day we started to get our first complaints in Castroville. But it’s not because of not taking it far enough, it’s because we were taking too many precautions.”
As a rugby player, Summers attributed the smooth transitions to teamwork.
“I learned a long time ago that it’s 100% all about the team. And my team of managers that I have right now—my purchasing manager, my four general managers—I call them Voltron,” Summers said, referring to the animated television series. “They run the shops so well for me right now that it’s not even a concern of mine when a little thing happens because they’re so on top of it and rely on each other so well. The two general managers in the Castroville shop and my two general managers in Santa Cruz, they’re constantly talking with my purchasing manager, who is constantly in touch with me.”
Teamwork: Hiring and maintaining a team with players who are experienced, customer-centric, cooperative and check their egos at the door is critical to successful adjustments in business operations.
Communication: Chai’s two stores were able to implement different pivots while maintaining business activity because managers and executives communicated extensively.
Good Relations: By proactively informing neighboring businesses about changes you have to make—such as closing the waiting room so customers have to wait outside—you can avert friction.