Traditional consumer packaged goods companies have relied on “secret shopper” programs since the 1970s to collect valuable feedback on brands and services in real retail settings. According to the U.S. Bureau of Labor Statistics, thousands of people are employed across the country as mystery shoppers in what’s grown into a multibillion-dollar industry. But in the highly regulated cannabis industry, there’s a lot more at stake than customer satisfaction.
Cannabis regulators in multiple states are utilizing the practice in 2024 to regulate retail compliance issues like packaging and labeling. In March, Acting Massachusetts Cannabis Control Commission (MCCC) Chair/Commissioner Ava Callendar Concepcion spoke about her team’s effort in “ramping up” the state’s secret shopper program to make sure businesses are keeping up with compliance measures implemented to protect consumers.
“It’s making sure that that labeling is accurate, that potency levels are being described accurately, to make sure that what is being displayed for consumers and the information being relied on is accurate,” Concepcion said.
In Massachusetts, regulators can authorize an employee or other agent to pose as a customer and purchase cannabis products from a dispensary for any investigative purposes consistent with state laws, including “testing for compliance with laboratory testing standards and identification check requirements.”
Oklahoma lawmakers passed a similar program in 2022 with House Bill 3971, allowing the Oklahoma Medical Marijuana Authority to employ secret shoppers for the purpose of conducting compliance testing at licensed medical marijuana dispensaries. Under the program, the Oklahoma Medical Marijuana Authority (OMMA) sends secret shoppers to at least 50 dispensaries each year to purchase products for lab testing.
Colorado’s Marijuana Enforcement Division rolled out its secret shopping program in 2014. Its program primarily sends underage individuals to licensed recreational and medical dispensaries to ensure businesses are following age verification laws. Data for 2022 showed underage secret shoppers failed to purchase retail cannabis products in Colorado 99 percent of the time, an increase of 5 percent since 2016.
The benefits of secret shopping
Secret shopping may not be universally required, but it’s an easy way to avoid costly compliance mistakes while getting a customer’s true experience when they engage with a product, brand, or service in person.
“Secret shopping is a method all brands should be utilizing,” said Muhammad “Muha” Garawi, co-founder and chief revenue & marketing officer at multistate operator Muha Meds. “You’ll learn so much about how your products are doing firsthand. You’ll also get to see which trends are performing well in the market so you can understand what adjustments you need to make to assist sell-through, budtender education, and brand-image maintenance.”
The practice also helps brands understand how their dispensary partners are pushing their products when brand reps aren’t around to assist on the sales floor.
“When we refer to ‘secret shoppers,’ we’re usually sending our own employees out to dispensaries versus hiring external shoppers,” said Timeless Chief Operating Officer Shawn Williams. “Since we’re a third-party brand, it’s unlikely the budtenders selling our products would know we work for Timeless. One of the benefits of that is, we can covertly do a quality assessment to see how cartridges look and taste, and also check out how the packaging looks to ensure it meets our standards and consistency across states.”
For Williams, secret shopping is a unique way to understand whether the brand’s budtender education is working. Timeless also receives real feedback about its products directly from budtenders, instead of the overly diplomatic responses typically collected from direct surveying.
Garawi takes a similar approach to uncovering the truth at Muha Meds.
“I like to play dumb and ask questions like, ‘Does this help you sleep?’ or ‘What’s the difference between diamonds and live resin?’” he said. “This helps gauge the knowledge of the budtenders selling your product. I’m looking to see how accurately they answer these questions, how heavily they recommend our brand, and what their feedback sounds like for our brand and/or similar brands.”
From there, Garawi likes to get more specific, asking sales-focused questions like “Which vape brand is performing best for you right now?” or, “Do you sell more flower or vapes?” This helps him understand what sell-through looks like, seek out potential gaps his brand might be able to fill, and understand the marketing tactics leading to success or failure.
“There isn’t an unsuccessful example of secret shopping because the knowledge you gain from each experience is worth it, whether you hear exactly what you were hoping to hear about your brand or product, or the budtender isn’t too familiar with you,” Williams said. “And if it’s the latter, take that time to educate them and potentially improve things on your end.”
Secret shopping for compliance
The most obvious risk of a compliance infraction is a significant financial penalty. In California, compliance fines run up to $5,000 per violation for licensed individuals or $30,000 per violation for an unlicensed person. However, penalties vary widely across states with other statutes and ordinances to consider in different cities and counties. According to the MCCC’s website, only four enforcement actions are listed for 2024, all of which entailed multi-year investigations.
Beyond the best guess, brands that fail to prepare for a secret shopper risk reputational damage among consumers and partners, loss of business, added training requirements, loss of licenses, loss of employment, or—in extreme cases—a criminal conviction.
While a dispensary sales floor rarely has a secret shopper actively looking for costly compliance errors, employees should always assume someone important is watching. At the end of the day, every customer’s experience is consequential.
