Examining the impact of packaging regulations on deli-style dispensary operations
The Missouri Division of Cannabis Regulation (DCR) has implemented stringent packaging and item approval processes for cannabis products. On September 1, these restrictions take full effect. The new rules pose significant challenges for dispensaries offering traditional deli-style service, where cannabis is weighed and packaged at the point of sale.
Deli-style has become a cornerstone of many dispensaries’ offerings since the inception of legal marijuana in Missouri.
As the deadline looms, industry stakeholders are urging DCR to reconsider its approach, warning that these rules could disrupt operations, increase costs, and ultimately undermine the consumer-friendly business model.
Industry concerns over new regulations
At the heart of the issue is the requirement for dispensaries to obtain item approvals for each specific cultivar and package size before any sales can occur. According to operators, this process, designed with pre-packaged products in mind, does not account for the operational realities of deli-style sales, where cannabis flower is weighed and packaged at the point of sale.
Licensees have pointed out that once the necessary item approvals are obtained, deli-style sales will never actually utilize the approved strain-specific item within Metrc, the state’s track-and-trace system.
Instead, when a customer purchases flower in custom amounts, the sale is made from a bulk package tag in Metrc. However, there is currently no automated mechanism in Metrc to transfer the custom amount of flower from the bulk package tag to a separate tag associated with the approved strain-specific packaging. This disconnect creates a significant challenge for dispensaries trying to comply with the regulations set to take effect.
Nicc Higbee, Vice President of Operations at Verts, explained the practical difficulties posed by these regulations, “The package that we receive in Metrc comes into the bulk package. When we sell deli, we just pull out of that bulk package. We don’t reassign it to that approved tag. The current system cannot do that.”
Logistical challenges and operational impact
The operational impact following the implementation of these regulations is significant. Licensees state that managing inventory under these rules will present an increased administrative burden. To comply with the new regulations, dispensaries must create and manage multiple package tags for each different cultivar and package size. This means that for every different weight of flower a customer might purchase, a new package tag must be created, assigned, and tracked within Metrc.
This process not only complicates inventory management but also imposes a significant administrative burden on dispensaries. Without an automated system to handle these transactions, dispensary operators are faced with a multitude of issues.
Multiple operators disclosed to Greenway that they have received conflicting information from DCR regarding how to compliantly process these transactions.
That means for many operators, this weekend could mean the end of deli-style sales.
Higbee noted, “We’re going to be sitting on over $160,000 of lost revenue that I’m going to have to sit on the shelf because I can’t do a damn thing with it.”
Higbee’s comments reflect broader industry concerns that without adjustments or variances, deli-style sales could become unsustainable.
One dispensary chain that doesn’t anticipate any issues with deli-style sales is Blue Sage. The company has spent months going through the packaging approval process and is confident that they have addressed the issues to be able to complete deli-style sales without interruption. “We have Kate Wise (Director of Compliance) and Mallori Briscoe (Compliance Assistant) to thank for the more than 8,000 packaging submissions that yielded over 6,000 approvals. Show-Me Organics understands the importance of allowing consumers to shop with their senses, and Blue Sage is committed to providing the best deli-style shopping experience in Missouri,” Tony Billmeyer, Chief Marketing Officer for Show-Me Organics, told Greenway.
Industry actions and potential solutions
In response to the challenges posed by the pending implementation of these regulations, many industry operators have taken steps to seek relief from the stringent requirements. Many have formally requested variances and suggested that DCR consider granting exceptions or making adjustments to the item approval process, particularly for deli-style dispensaries. They argue that the implementation of regulation as currently written is overly burdensome and not aligned with the practicalities of their operations.
Kyle Lenzen, Founder and Chief Executive Officer of High Fidelity, emphasized the importance of deli-style service in enhancing customer experience: “We believe that deli-style service is a fundamental component in providing the educational and interactive customer experience upon which our Kind Goods dispensaries were built. This approach offers both new and experienced consumers unparalleled transparency, ensuring that their hard-earned dollars are spent on products that meet their expectations from the moment of purchase. Selecting cannabis flower should be no different than choosing fresh produce at a grocery store; customers deserve the opportunity to assess products based on appearance, aroma, density, and trichome quality. Our goal is to empower consumers to make informed and personalized choices about the products they consume. We strongly urge the DCR to consider the positive impact of maintaining this interactive consultation process, especially for patients seeking tailored solutions to meet their specific needs.”
Operators have emphasized that without some concession or compromise, the deli-style model could be at risk.
As a practical solution, they have proposed that DCR allow dispensaries to conduct sales directly from the bulk package tag, provided that the packaging complies with a template-based approval. This approach, they suggest, would streamline operations and reduce the need for multiple approvals tied to specific cultivars and package sizes, thereby easing the burden on both dispensaries and consumers.
Higbee explained, “We submitted a variance this morning asking to allow us to work out of the templates as opposed to getting individual strain defined. Otherwise, what we will have to continue to do is to reach out to any possible cultivation that we could purchase from in the next 6 months, and say, ‘Can you tell me any product that I could be able to buy between now and the end of the year?”
By implementing these adjustments, operators believe that DCR can support the continued operation of deli-style sales without imposing undue burdens that could otherwise disrupt the market and limit consumer choice.
The future of this consumer-friendly sales model hangs in the balance, and without prompt action, Missouri’s cannabis market could see a significant shift away from the flexibility and convenience that deli-style sales provide.
Brandon Dunn contributed to this article.
