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Mo Dastagir, CIO, Cresco LabsMo Dastagir is currently working as a CIO in Cresco Labs, which is one of the top three cannabis companies in the U.S. He joined the company in 2019 when it was trying to expand its footprint across the U.S. Dastagir witnessed the journey of Cresco Labs of establishing more than 40 stores throughout the country and is part of the leadership team that grew the Business from a less than $100 million Top Line Revenue to approximately $1bn, in 2021. He is responsible for leveraging leading Enterprise technology and data platforms to meet Cresco Labs' growing demands to be the best in class in the cannabis industry. Previously, he worked with Sears as a VP and CTO and ran technology programs to drive growth into Sears Home Services business. Apart from this, he worked in Roche, Novartis, Amazon, and Deloitte in various roles. In his more than 20 years of career, Dastagir has gained significant experience across various facets of the retail sector, directly or indirectly, in online and physical stores.
Could you give us a glimpse of the cannabis industry and how it has evolved over time?
The industry continues to evolve at a rapid pace across the US, but the adoption of technology got a significant boost when COVID hit the US. The onset of COVID forced a lot of us to accelerate our deployment of new technology capabilities to our patients and customers, as we were seeing unprecedented adoption rates in using what we were giving themto transact shop for Cannabis products.
“We will continue to witness an increase in consumer adoption of technology to make purchasing decisions, consumers will be very selective about theloyalty programs they engage in, there will continued growth in consumer mindsets about the brands that they shop at from an ESG point of view, they will use subscription services for high frequency and low price items and they will continue to go into stores for in-frequent and high price items for the best priced deals. The retailers on the other hand will be hyper focused on knowing more and more about their consumers, creating and curating tailored made offers for them and making large investments on deep omni channel performance analytics to increase the stickiness of their relationships with the consumer”
About two and a half years ago, in January of 2020, when Illinois started to allow recreational cannabis consumption, we were still trying to figure out the right experience that we wanted to provide in our Sunnyside Retail stores. We had a high-level concept designed and we were in the journey to iterate and perfect our engagement with our consumers. The first few months of launch were high volume and record number of consumers turning up to buy Cannabis products. Over that period, we had crowded stores and hundreds of customers lined up outside our stores to purchase products.
Our initial in-store experience design before the COVID 19 lock downs was to push more of our Patients and Customers into our stores to engage with the store staff so that they get familiar with a product before they made a purchase. We wanted our Patients and Customers to develop personal relationships with their neighborhood store so that there is a potential to drive higher rate of recurring purchases,and we can continue to learn about our Consumers. However, when COVID 19 hit the US and our stores were mandated to work in a reduced capacity model, essential businesses like ours had to pivot from this In-store ‘experiential’ model to a more ‘Order On-line and pick up in store’ model.
To keep pace with this change, we engineered our E-Commerce store experience to allow us to provide our consumers a superior UX / UI designed and frictionless shopping experience while providing more educational content about our products that allowed consumers to make a purchase decision. Our ambition was to mirror a Quick Service Restaurant (QSR) drive through experience so that we can support our Patient and Customers faster than ever before.Our target processing time inside the store was reduced to three to five minutes where we wanted our customers to enter the store, have their ID validated at the front desk for age verification, stand in line for order checkout, pay for their purchase and walk out the door.
From that point in time in the early days of COVID 19 to now, we’ve seen an incredible adoption of technology by our Consumers. Our consumers have become more comfortable with buying Online and pick up in store (or curbside) and are able to adapt to any changes we deploy, very rapidly. Our consumers have also become accustomed to us providing an easy, frictionless and technology enabled shopping experience rather the old analogue way of shopping.
According to you, where is the industry headed from a technology perspective and as a whole?
Retail experiences have completely changed because of COVID 19 across all categories, in the Cannabis andnon-cannabis sector; every business that required a consumer to transact in a physical space has gone through some level of transformation.There are studies out there that show that COVID 19 accelerated the adoption of Technology within consumers by a decade. Some even say by two decades, if you factor in the rate of adoption and the pace of innovation in Technology.
If you think about the mindset of an average consumer, all of us in the technology space havedeployed dramatic changes in the way consumers transact with other businesses.We’veconditioned grandparents over the last 18 months to Shop online and pick up curbside or deliver it to your home. We’ve taught everyone with a cellphone on how to use QR codes in restaurants to look up the menu, we’ve taught millions of people on how to use Zoom, Teams, Google Hangouts and Facetime to increase collaboration. We’ve even made people comfortable on Telehealth and Telemedicine to have them interact with their doctors. The list of platforms that’ve been deployed and their rate of adoption is fascinating and makes your think about how much of this conditioning is irreversible and has changed consumer behavior, permanently. An example, the early polls from Black Friday 2021 showed a record reduction in consumers visiting physical stores when compared to previous years.
As more platforms become commonplace in our everyday lives you have wonder how much of ‘it’ will go back to pre-pandemic levels at some point and what exactly ‘it’ is. There is no answer yet.
From a retail perspective, don’t get me wrong, physical stores will still be around and are valuable in their own right but their formats will change. Consumers will dictate even more what they want to buy online and what they want to visit a store for. There seems to be a heightened awareness of effort and value in a consumers mind where they are more acclimated to spending time online to research non-essential or high-pricedcategory products and then visiting stores for final purchase. Repeat or non-substantial purchases seem to be driven through Online subscription models where there is predictability in shipping and delivery dates and consumers don’t have to think about them anymore. This trend was already on the rise, but COVID accelerated it further.
Finally, Consumers want to be in a much more intimate storefootprint with curated products rather than big box stores that want to sell everything to everyone (there will always be a place for the Big box store like Walmart for the price conscious / daily deal consumer). They don't want to rummage through products anymore to find what they want but when they are in the store and browsing for products, they want information and details at their fingertips. They want to be able to walk into a store, hover their phone over a QR code to get product information, reviews, product and get pricing information. There’s also a higher sensitivity from an ESG standpoint, consumers expect that the retailer and the products they carry make a positive impact on our Environment, Social equity imbalance and have a stellar corporate governance structure.
What would be a piece of advice that you would like to give to technology enthusiasts who are entering the cannabis industry right now?
The adoption of technology in the cannabis sector has some amount of runway to get to before they reach the same level of maturity as other industries like Retail, CPG, Agriculture and Pharma. Until about 12 months ago almost none of the large Enterprise software companies wanted to work with the Cannabis industry but that’s slowly changing. As the industry itself matures, cannabis operators arerealizing what scalable platforms they need to invest in.For example, no one the industry has done a full ERP implementation yet at an Enterprise level. There are many Cannabis Operators that are in the midst of their implementation journey but so far nothing is LIVE yet which means there are no software implementationvendors with experience in Cannabis and No software vendors who have an existing template for Cannabis. There are other areas such as CRM, OMS DAM and full suite of Cybersecurity products that are yet to implemented at many Cannabis Operators. Further, there is a long list of software companies who still want nothing to do with Cannabis because of lack of federal guidance and regulation.
The Cannabis sector is at an interesting moment in time where Demand for Cannabis products has been consistently outpacing Supply in many of the states where Cannabisislegal. This is essentially causing many Cannabis operators to pay less attention to the great amount of data they’re generating across their various E-Commerce and Store platforms. Unlike other non-cannabis verticals where Data is the new Black Gold and it is used to drive more people online or more people inside a store to make the relationship sticky, most Cannabis operators are hyper focused on meeting demand rather than strategically looking at their data to know what is selling, when and where to pairit with consumer level data where you know who is buying what, when and how frequently. The Cannabis vertical has not yet caught on data strategies that increases customer stickiness and focuses on personalized offers to consumers but at some point, when supply catches up with demand, and there are enough products on the shelf, the sector would pivot towards how non-cannabis retail works where competition is high, margins are thin and price compression is way of life. It is then we will see a high prioritization of loyalty programs, online campaign management, targeted marketing, personalized offers, and discounts, knowing your customer and other consumer analytics.
There is tremendous level of opportunity in the industry and if you are someone who likes to work in ambiguous and white spaced environments where you can write the story as you go, you can have a great time.
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