A Look Back on an Epic Year for the Cannabis Industry

A Look Back on an Epic Year for the Cannabis Industry

Cannabis Business, E-commerce, POS System, Specialty Retail

A Look Back on an Epic Year for the Cannabis Industry

… and a peek into 2019

By John Garvey

It’s never been easier to find cannabis-related topics to write about, but providing accurate information that improves the quality of the conversation is another thing altogether. The overall conversation surrounding medical cannabis, cannabis banking and the industry at large definitely moved in the right direction last year despite some obstacles.

In case you ate a giant weed brownie on New Year’s Eve 2017/18 and are just waking up, 2018 was an epic year for cannabis. Here are highlights: Auld lang syne!

Law enforcement

Police in riot gear lined upAnother year went by with no major Justice Department action against prudent legal cannabis industry operators. This in spite of a big scare when (now former) Attorney General Jeff Sessions repealed the Cole Memo in January. Either because Sessions was posturing all along or because he had other things competing for his attention, he never took action against the industry.

If that means you won a bet with one of your neurotic stoner friends, cash in your chips.

Pharmaceuticals

Epidiolex, an anti-epileptic drug developed by GW Pharmaceuticals (NASDAQ: GWPH), became the first cannabis plant-derived drug to receive full FDA approval last June. (Long-approved anti-nausea and appetite-stimulating drug MARINOL is made with synthetic THC.) We wrote an entire blog mainly in response to the fear that cannabidiol/CBD would become patented or trademarked by GW Pharma (the claim was malarkey).

Legislation

Stack of papersTwo pieces of major federal legislation were introduced last June: the STATES Act and the Marijuana Freedom and Opportunity Act. Either would be a huge boon to the cannabis industry. Although recent setbacks indicate that neither is likely to pass, the proposed reforms were bold and historic. The fact that these issues are being discussed seriously in a bipartisan manner is huge.

We covered this in-depth in our July blog. If you didn’t catch it, here’s a synopsis:

  • The STATES Act sought to extend federal trademark protections to the industry, improve access to banking services and shield compliant operators against seizures by the Department of Justice. “If passed,” we wrote, “the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, co-sponsored by Sen. Cory Gardner (R-CO) and Elizabeth Warren (D-MA), will be to the cannabis industry something like the SpaceX Falcon Heavy launch was to private space travel.”
  • Shortly after the STATES Act was introduced, the Marijuana Freedom and Opportunity Act was introduced in the Senate. We wrote, “Above all, passage of the MFOA would provide advocates something they’ve been salivating over the mere thought of since 1971: rescheduling ‘marihana’ to a less-restrictive place in the CSA’s inherently flawed controlled substances schedule.”

Canada

Canada legalized cannabis, making it the second country to do so (after Uruguay). The only problem is I think my wife has a thing for their Prime Minister so I still don’t fully trust them.

California

California Flag
Hope California’s cannabis industry veterans and incumbents are keeping up on their blood pressure meds. Because that sounds stressful.

Two decades and change after California passed the historic Compassionate Use Act (Proposition 215, which made CA the first state to legalize medical cannabis), legal recreational cannabis sales began. Implementation has been complicated due in part to the established grey market operators struggling to meet compliance guidelines or disregarding them altogether. Some licensed, compliant operators may feel that they’re competing against establishments whose main competitive advantage is avoiding taxes and compliance costs. True?

California’s MMJ industry has long been comprised largely of collectives and co-ops. Most municipalities still aren’t allowing licensed cannabis dispensaries to operate locally, the state isn’t issuing nearly enough licenses, and all the unlicensed operators were set to lose their remaining legal protections on January 9, 2019. Licensing, third-party testing, distribution, enforcement, clear rules and point-of-sale capabilities were all lacking to varying degrees through 2018.

It’s been a bear (pun intended).

Newbies

Vermont became the first state to legalize recreational cannabis by legislative action rather than ballot. Michigan also legalized the whacky weed, the first Midwestern state to do so. This brings the tally of fully-legal states to 10, plus the District of Colombia.

Medical marijuana was legalized by ballot in three red states including Utah, Oklahoma and Missouri—the latter two winning approval by huge margins.

Hemp

Hemp was removed from the Controlled Substances Act (i.e., legalized) thanks to a provision in the 2018 farm bill, signed into law on Dec 20, 2018. The FDA issued a surprisingly comprehensive and interesting press release.

Investing

Five Canadian cannabis firms were listed on major U.S. securities exchanges—three on the New York Stock Exchange and two on the Nasdaq. Meanwhile, dozens of U.S. cannabis companies were listed on the Canadian Stock Exchange.

We started an awesome cannabis industry blog

In the last year we’ve written about intellectual property law, licensing and compliance, strategy, industry consolidation, various issues pertaining to dispensary operations, and terpenes.

If you ever meet our parents, please don’t tell them how much we know about weed.

Things to watch in 2019

It might take two, three or four more attempts to achieve a substantial, legislative drug policy reform at the federal level, but it will happen and soon. What will that look like? We have our guesses. We’ll continue sharing strategic insights about opportunities in the cannabis industry, dispensary operations and new cannabis regulations.

Cannabis Enterprise Business Solutions

Talk to one of our reps to learn how our industry-leading PCI compliant point of sale and inventory management solutions can keep your dispensary running smoothly.

The G7 of Cannabis? We’re working on it…

The G7 of Cannabis? We’re working on it…

Cannabis Business, E-commerce, Events, POS System

 Recap and discussion of the Cannabis Technology Workshop

by John Garvey
Some of the most experienced operations managers, IT professionals and service providers in the cannabis industry came together at Anthea’s Cannabis Technology Workshop, held July 19 in Denver. The purpose of the workshop was to exchange ideas and insights in a young industry with higher than average risks as well as returns. Participants included competitors as well as business partners and friends.

Three overarching themes emerged during the course of 11 presentations by industry leaders:

  1. Business Partnerships: “Find the right partner.“ A healthy business partnership is about having a team that understands your operation, that can adapt to changing strategies or regulations, and provides personalized, on-going support and training. It’s all about trust.
  2. Data Availability and Integrity: Using data to guide decisions about inventory forecasting, manufacturing and marketing isn’t a competitive advantage, it’s a necessity. As importantly, it’s a security issue and a compliance issue requiring your A game.
  3. Consolidation: “Plan for growth, or plan an exit strategy.” The cannabis industry is feverishly consolidating. Good data will enable you to pursue effective growth strategies and also make you more attractive as an acquisition to other entities.
Jake from CPShop talking at Cannabis Workshop
Anthea table at Cannabis Workshop

After the event I sat down with Jack Oxton, Retail Solutions Advisor at Anthea, to discuss key takeaways as well as his own outlook on the cannabis industry. I think I know a lot about the industry, but he can run circles around me. He’s excited to be supporting cannabis retailers for several reasons: the opportunities, the challenges and the impact it can have on a patient’s quality of life.

“I think as more and more research comes out and more medical uses are found, the Schedule I classification is going to change,” Jack says. “And this will be one of the largest opportunities in a long time.

“Beyond that I’ve had firsthand experience with family members who are on chemotherapy or have had other debilitating illnesses that have found a lot of comfort in cannabis. And before they had that option they were taking really heavy opiates like OxyContin and stuff. The difference in quality of life is astronomical. That’s something that I’ve always felt really strongly about.”

Jack expanded on the three themes mentioned above, drawing from his own knowledge and that of our partners.

1. Finding the right partner is paramount.

Annie Iselin speaks about industry trends at the Cannabis WorkshopWhat do you want in any business partnership?

  • First, you want someone who is trustworthy, competent and accessible. Ideally, this is also someone who believes in what you’re doing beyond the purely business rationale.
  • Second, if your partner has any role in compliance, security, accounting or managing data, they need to have experience working in regulated industries.

NCR Counterpoint, for instance, has specialty solutions for alcohol, tobacco and firearms sales. When you’re working in a heavily-regulated industry, experience and specialization matter a lot. When MJ Freeway had a series of operational disruptions and security issues ten months ago, a lot of people learned this the hard way.

  • There are also issues such as whether your partner offers the right suite of services for you, whether those solutions are integrated and whether your partner is reliable and available when needed for support.
  • Finally, it’s valuable to have people who take a personal interest in the business and regulatory environment. In Colorado, cannabis regulations vary widely by locality, making this a practical consideration as well as a cultural one.

Jack loves finding ways to overcome challenges unique to the cannabis industry, but acknowledges that they’re weighty:

“Even in Colorado, just from city to city there might be significant differences in the way you have to either restrict your sales or report on those sales. Or maybe there’s specific hurdles you have to jump through to offer online ordering or something of that nature.“

2. Consolidation

Anthea entered the cannabis market at a tumultuous time, Jack recalls. “Consolidation was happening on a dramatic scale here in Colorado where they issued a freeze on new licenses and it just turned into crazy acquisition wars.”

“With the 280E tax code I think a lot of people found out really quickly that it was tedious, it was a tremendous amount of paperwork and compliance concern, tremendous amount of back-end work to barely break even in a retail dispensary environment. If you don’t have a vertical supply chain where you’re producing your own goods … it’s really, really hard to turn a profit with the tax codes and the inability to claim cost of goods.”

The 280E tax code, banking issues and other challenges undoubtedly drove consolidation and reaffirm how important good enterprise-level software is.

“I don’t think there’s anyone left who’s just kind of idling at this point,” continues Jack. “They’re either preparing themselves to be acquired or they’re preparing to grow.“

Documentation and compliance. Whichever path you’re on, you need it. We also touched on this in our April blog.

Email us to receive information on the next Anthea  Cannabis Technology Workshop.

3. Data Integrity: Integration is key

Andee Williamson speaking at Cannabis WorkshopWhether you’re actively expanding, preparing to expand or positioning yourself for an acquisition, data integrity is hugely important. If your retail solutions aren’t both good in themselves and well-integrated with one another you won’t have data integrity.

Traditional retailers have moved away from using a single piece of software to manage all their operations towards using very tightly integrated, specialized solutions. This is much needed in the cannabis industry.

“I think there’s a lack of proven retail platforms in the industry and when we started exploring the market … we found that there really wasn’t any enterprise level software that was available.

Poor integration means that you can’t trust the data you’re collecting or that you have to enter a lot of data manually. Either way, you’re going to be miserable.

With good integration between systems, you can use data from your retail transactions to make marketing and manufacturing decisions.

Quality enterprise resource planning (ERP) and business intelligence tools allow you to effectively quantify demand or get far more accurate forecasting. These things have been widely adopted by traditional retail today, but they’re just finding their way into the maturing cannabis industry.

The right ERP system integrates sales, accounting, inventory and compliance. It’s secure, meaning customer data and your reputation are secure.

Trying to do seed-to-sale tracking, accounting, managing staff, ecommerce, on-site point of sale, digital marketing and other business functions with a single software solution is untenable. Having separate solutions that are poorly-integrated presents its own headaches. Poor integration means that you can’t trust the data you’re collecting or that you have to enter a lot of data manually. Either way, you’re going to be miserable.

Cannabis Enterprise Business Solutions

Talk to one of our reps to learn how our industry-leading point of sale and inventory management solutions can keep the boogie man away from your dispensary.

3 Must Have Features of a Cannabis POS System

3 Must Have Features of a Cannabis POS System

Cannabis Business, E-commerce, POS System

by Ryan Parks

It’s hard to believe that medical cannabis was legalized over 21 years ago in California and recreational cannabis has been legal for over 5 years in Colorado and Washington. With a relatively new industry, business owners are questioning whether they should opt for a retail point of sale system that has been around for a long time or a system with a shorter history that has been purpose built with features for the cannabis industry? Why not have a business management solution that does both?

Anthea, powered by Retail Control Systems, is built on the backbone of NCR’s industry proven hardware and software. NCR was founded in 1884 and Retail Control Systems has been in the game since 1987. With all that experience what features should you expect from your solutions provider and what features will speed up your day to day operations?

Security & Compliance

Security cameras on a wall staring at two women on the streetSecurity is a key feature in all retail and it is especially important in the Cannabis industry. With several recent security breaches plaguing the industry, the software security should be at the top of your mind.

  • Level 1 PCI/DSS Data Center: being a certified Level 1 service provider is one example of RCS’ commitment to strong security.
  • Closed Loop Reporting: Keep analytics and customer details secure while providing marketing automation with NCR Customer Connect.
  • In Depth Audit Trail – Log Aggregation: detailed insights into transactions. Every action is time stamped, logged, and aggregated for compliance reviews or audits.
  • Built in compliance reporting: ensures you provide the governing body of your state with the information they need, when they need it.

Reliability

Your business management solution needs to be reliable and notify you immediately if anything is amiss. Whether it is April 20th or the Friday before Thanksgiving, RCS is available for support. With a few key features Anthea will hopefully prevent the need to call.

  • Real Time Operational Alerts to Mitigate Risk: NCR Smart Alerts mitigate risk by notifying key managers via text message in real time about possible issues.
  • Tracking: Anthea tracks the true cost of your goods sold, tracks sales by customer, by strain and by plant. With reliable tracking you will never run low on product or miss a transaction
  • Server Uptime and Offline Ticket Entry: RCS’ data center boasts a 99.9% uptime with redundant systems that allow you to keep selling no matter what.

Feature Rich Integrations

Woman and man sitting at a table with a laptop and a phoneEven a well thought out point of sale system will need some customization. Make sure your POS solution has everything you need or can be customized the way you want.

  • Microsoft Power BI: With the Power BI add-on, you no longer need to create spreadsheets of your data by hand. Power BI is a suite of business analytics tools with connections to hundreds of data sources including Microsoft SQL that powers Anthea.
  • Foyer Live: Foyer Live is a part of Anthea and has the capability of; touch screen ordering, queue management, concierge order management, and digital signage.
  • Axis Cameras: Premier cameras with DVR functionality, people counting, zone mapping, and advanced HD clarity that minimizes bandwidth usage while maintaining crystal clear picture quality.
  • Your Specific Integrations: RCS has a staff of developers that can help customize the system to fit your businesses specific needs.

In conclusion, make sure your software and hardware are at a level that can grow with your business, it’s better to invest in a quality system now. The last thing you want is to replace everything in a couple years when your business expands.