How a Cannabis kiosk is helping retailers comply with California regs

As cannabis dispensaries expand at a fast pace, entrepreneurs are recognizing self-service equipment plays an important role in helping customers make their selections and complete their purchases.

As with any technology, there is a learning curve, and progressive dispensary pioneers are quickly making headway.

High on Melrose, a dispensary owned by Los Angeles based AmericannMade, has a head start, having worked closely with a regulated substance vending technology company in designing a machine that not only allows customers to complete their purchases quickly, but also meets California's cannabis regulations through software developed to address the industry's unique needs.

"They (the customers) want to come in, get their product, and then leave," Casey Reinholtz, executive operations manager at High on Melrose, told this website in a phone interview. "That is where a (smart) kiosk like this come in very handy."

Finding the right solution to address this need, however, wasn't easy.

The journey begins

"We needed somebody who would build a machine for the California market," said Reinholtz, who assisted in the development of the NatuEra Smart Vending Kiosk for Cannabis Dispensaries, an integrated hardware and software solution to help automate sales with dispensaries and reduce operating costs, all while staying in compliance with state cannabis regulations.

Reinholtz and his team had explored self-service machines over the last few years, he said, "but nobody (prior to NatuEra) was willing to allow us input on how to build it out."

Reinholtz approached NatuEra after seeing the company's CBD Smart Kiosk in operation at Schnuck Markets Inc.'s Eatwell grocery stores in Missouri. NatuEra's CBD Smart Kiosks are designed to mitigate the regulatory risk and liability of mass market retailers such as grocery and convenience stores in carrying hemp-derived products such as CBD by providing a turnkey product category management solution.

NatuEra operates and stocks its CBD Smart Kiosks and is responsible for the sale of products, making it an easy solution for retailers seeking to carry the category without the hassle.

NatuEra, a joint venture between an affiliate of Agroidea, a Colombian agricultural service and R&D provider, and The Cronos Group (NASDAQ, TSX: CRON), a global, publicly listed cannabinoid company with distribution across five continents, listened to High's concerns.

Software integration

Reinholtz worked with NatuEra on integrating the kiosk's custom-developed software with the dispensary's POS system.

"It (the NatuEra Smart Vending Solution) is going to 'API' into Treez (High's POS software), and Treez is already approved by Metrc," Reinholtz said. Metrc is a "seed-to-sale" tracking compliance system designed for government agencies regulating cannabis.

For a vending solution to add value to a cannabis dispensary, it needs to work in harmony with the dispensary's POS system and state reporting requirements, something that NatuEra's solution provides.

"It will upload that information from Treez into Metrc," Reinholtz said. "This will automatically update the POS system with its end-of-day balances and its end-of-day information push to Metrc."

In addition, NatuEra's proprietary 50-state regulatory database continually updates legally verified cannabis-, hemp- and CBD-related information.

On the operations side, the machine monitors inventory, helping to reduce stockouts and inventory related retailer overhead.

Cash payment critical for some cannabis products

The NatuEra cannabis kiosk also has a built-in cash payment terminal that allows customers to pay for products containing more than 0.3% THC (the psychoactive chemical in cannabis) using cash, which is important for dispensaries since they aren't able to accept credit cards under most financial institutions' current policies.

There will also be a built-in ATM terminal that will allow the customer to pay using an ATM debit card. The customer uses the ATM terminal to credit a certain amount of money to cover their purchase. Once the purchase is complete, the customer receives any balance due from a cashier.

"Since our solution is going to be integrated with a dispensary's POS system, that's going to be reported," Juan Fajardo, chief commercial officer at NatuEra, said in a phone interview. "We are going to be able to integrate with any POS system that has an API."

For High on Melrose, NatuEra's Smart Vending Solution set a bar in meeting the dispensary's needs.

"If it's just a standard vending machine that has a few extra bells and whistles (in) it to sell cannabis, it doesn't do much for us," Reinholtz said. "Most of these machines (on the market) are just taking money and putting out receipts. We want to eliminate as much human error as possible."

The purchase process

Once customers are checked in to the dispensary's POS upon entrance, they can go straight to the cannabis vending kiosks to begin shopping. The customer then browses the more than 40 product options per machine while being presented with promotions and information on the interactive touchscreen.

Upon making their selection, the kiosk will validate the customer's identification via an ID scanner connected to the dispensary POS. After a successful ID validation, the customer pays, and the machine dispenses containers of cannabis edibles, flowers, pre-rolls, concentrates and beverages. Receipts are emailed or texted to the customer.

The cannabis flower is packed in mylar bags, while the edible products are packed in food-grade pouches and the pre-rolled cigarettes are in glass or plastic tubes. Beverages are sold in glass and plastic bottles while concentrates come in glass jars and bags.

Customers can choose up to five items per transaction, thanks to a proprietary development in NatuEra's software.

The machine that will be installed at High contains an elevator mechanism to dispense all products. For delicate packages such as glass, this is ideal because the product does not fall into the pickup area; instead, it is delivered gently.

High selected a NatuEra model with a 42-inch high resolution touchscreen that allows the dispensary to promote paid advertising content and company videos. NatuEra also offers a wall-mount or slim version kiosk with a 32-inch touchscreen.

The machines will mostly be used by those customers who are familiar with the merchandise and know what they want, Reinholtz said. He expects to have one machine for each of the two 1,400-square-foot High dispensaries.

Customers will also be able to order online and pick up at the machine. The order will generate a ticket ID or a QR code that the customer will use to retrieve their products at the machine.

Retail benefits

Purchases at cannabis vending machines take one to five minutes compared to an average 20 minutes with a budtender, according to Fajardo

"One of these machines can easily sell as much as a budtender, with the added benefit that it can also drive additional grab-and-go sales to regular customers that know what they want," he said, adding that the machine can deliver labor savings worth as much as $41,500 annually based on budtender costs.

"Another benefit is customer engagement because our screens can be used to market and sell products for brands they want to promote," Fajardo said.

Quality control per user

Another feature, quantity control per user, is important in states like California that limit the amount of cannabis a customer can buy at one time or within a time period.

"When the machine detects that (a given) user has reached the amount of cannabis permitted per day, it's going to block (further sales) to that user," Fajardo said. "That is a critical component for dispensaries."

Software features also include a cloud management console, Wi-Fi capability, automatic tax calculation and a screensaver (a video plays when the machine is not in use.)

Reinholtz doesn't see any change in store labor count; there are three or four sales associates at a time, along with one manager and one inventory clerk.

Outlook positive

Reinholtz wasn't the only retail veteran NatuEra tapped for R&D insight.

"From the start, we set out to design this solution to cater to retailers' needs around this category," Brian Schnuck, a retail veteran who also collaborated on the NatuEra machine, said in an email interview. "Age verification, controlling shrink and product traceability are important to store managers from a safety standpoint. Also, providing interactive educational content is key for new categories like hemp/CBD."

"The NatuEra CBD Smart Kiosk is ideal for those retailers who are new to the CBD-wellness category," said Norm Neike, director of consumer services and professional services for UNFI (United Natural Foods Inc.), a wholesale product distributor that recently signed a distribution agreement to carry the NatuEra Smart Kiosk. "Retailers are not required to handle, buy, stock or directly sell the CBD products — all of those tasks are handled by NatuEra."

"Since the production of hemp-derived products was legalized under the 2018 farm bill, consumer interest has grown and attitudes toward CBD have been evolving," Neike said. "Consumers today use CBD products for a variety of reasons, including pain management, stress, anxiety and sleep quality."

Initially, NatuEra developed the Smart Vending Solution as a category management tool to sell its own hemp-derived products in mass market retail settings such as grocery and convenience stores following the passage of the 2018 Farm Bill, which de-scheduled hemp federally.

NatuEra, for its part, got orders for more than 100 Cannabis Smart Kiosks from dispensaries at the recent Marijuana Business Conference and Cannabis Expo in Las Vegas, in addition to numerous inquiries, Fajardo said.

"In summary, NatuEra provides cannabis dispensaries an automated vending solution that helps dispensaries generate more sales, reduce costs, engage customers, improve customer experience and integrate into their existing POS system with regulatory compliance and theft avoidance. For grocery and c-stores, NatuEra offers a solution for retailers that want to enter into the CBD category without worrying about the hassle of category and inventory management, while reducing shrink in this new and evolving category," Fajardo added.

_______________________________________________________________________________________________________

We hope you enjoyed this article. If you want to share your opinion on this subject, leave a comment below, and we will be happy to check it. 

For more Cannabis News like this, circle back to 420intel.com!

420 Intel News.