Most cannabis aficionados probably have never heard of the data company Headset. But its recent arrival at a a handful of Southern California cannabis businesses shows how the federally illegal industry is beginning to function more like conventional retail.
The company, which already has a significant presence in Washington and Colorado, collects data on products, sales and a wealth of other metrics that can help companies better understand the market and cater to it more efficiently.
An edibles maker might use a service called Headset Bridge to track how well its products are selling at its client dispensaries. Using the software, a company can determine, for example, which of its products are selling where, and help ensure that dispensaries have stocked shelves but are not sitting on excess inventory.
Headset CEO Cy Scott says the service is inspired by Walmart’s “vendor managed inventory.” It also enables customers to identify opportunities for new business. It can help a company with “opportunity identification.” For example, if a company wanted to start selling prerolled joints, it could study Headset data to determine whether to sell individual joints or multipacks, whether they should be premium or standard tier products and the optimal price to charge.
Scott says manufacturers pay between $250 and $1,500 monthly for the software depending on how many dispensaries it is tracking.
Packaged differently, this kind of data can help a shop determine which brands and products are attracting the most and least interest. In this new industry, where states are still figuring out what they need to track, data collected by Headset and its competitors may be the most reliable information available about consumer trends and other aspects of cannabis use.
Headset is best suited for fully regulated states, which is why until now it has largely focused on Washington and Colorado. Now that California is trying to regulate cannabis by 2018, Headset is moving in. California will be “what Colorado is, what Washington is, on an enormous scale,” Scott says.
By the standards of cannabis information businesses, Scott is a grizzled veteran. In 2010, while living in Southern California, he co-founded the strain guide Leafly. It later was acquired by Seattle-based cannabis investment firm Privateer Holdings and moved to Washington, where it has grown into one of the most prominent online cannabis brands.
But the change in methods from Leafly to Headset suggests that the industry is evolving, and that companies are targeting consumers more precisely. Leafly relies heavily on strain reviews and ratings submitted by consumers. But since strains vary from shop to shop, the information is largely subjective.
By contrast, product movements and sales are easier to track objectively.
In 2010, Scott says, Southern California customers might buy a brownie wrapped in plastic with a home-printed label. Headset is just beginning to collect data on the 2017 L.A. market, but he says it suggests that consumers are seeking out companies with more elaborate and expensive branding and packaging. He attributed the change to the arrival of more deep-pocketed investors, many of whom consider branding essential to a company’s success.
For example, customers seem to be opting more for prepackaged bud instead of “deli-style bulk flower” that budtenders pull out of glass jars with chopsticks or tongs. While he wasn’t willing to go into specifics yet, Scott says the movement toward what he considers a more sophisticated market is “just starting.”