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How the Cannabis Industry Handles Product Returns

Industry News Alpie Atabay

Cannabis is a highly regulated (and often contentious) market. But even then, cannabis is still a product-based business. And since cannabis businesses sell products, that means they have to deal with returns. 

However, because of cannabis industry regulations and differing state requirements, it’s tricky to navigate the world of returns. What’s safe to return? What’s reasonable? How can you refund customers, and under what circumstances? Are you even required to accept returns? 

The goal is to watch your margins, keep customers happy, and stay well within state guidelines. Here’s how returns are working so far at the producer and retail levels. 

Returns at the Producer Level

Believe it or not, most cannabis product returns aren’t coming from retail shoppers—the retailers themselves are returning product to their producers or manufacturers. 

This is where businesses stand to lose millions in returned products. In fact, Canada’s Canopy Growth has had to process $27 million in product returns. That’s a lot of inventory going down the drain that also strains your supply chain. 

As cannabis producers are finding their way forward in a fledgling industry, they’re still determining how to package products, which shipment options work best, and which products customers prefer. That translates into a learning curve that leads to more returned products. 

For example, retailers will send back products damaged in transit. On the producer side, retailers will usually return products based on recalls or safety issues, damaged products, or low customer demand. 

Returns at the Retail Level

Consumers don’t usually ask for returns from retail stores, although it does happen. Depending on the product, your location, and your business, you have several options as a retail location for processing cannabis returns. 

Some retailers only allow returns on non-consumable products, like vape pens, in their original package with a receipt. Others allow returns on consumables in the event of contamination, like mold. Whatever you choose to do, make sure you spell out your return policy clearly, both online and in-store. 

Obviously, if there’s a safety recall, you’re obligated to accept a return and refund the customer’s money. Most retail shops refund the customer in cash. 

Always follow your state’s guidelines for returned products. If the state requires storing or destroying the product after a return, be sure to follow these regulations. You could face hefty fines otherwise. 

Returns aren’t fun, but they’re part of product sales. Always follow the letter of the law for returns, but remember to prioritize customer experience, too. When in doubt, it’s often better to accept a customer return than to fight it.

Author Alpie Atabay

 

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