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:
- 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.
- 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.
- 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.
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.
What 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.“
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.
3. Data Integrity: Integration is key
Whether 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.