The Industry Is Fragmented; The Right CannaTech Ensures Your Business Isn’t.

Business Strategies
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Technology and the Cannabis Industry

Even though cannabis attitudes, consumption techniques, and legislation have significantly evolved over the past decade, one thing still hasn’t changed: fragmentation and the lack of technology standardization. As more states take steps towards legalization, operators are now more than ever expected to grow premium-flower, manufacture high-quality products, and build out Apple-style dispensaries. All while carefully crafting a unique, tailored experience for consumers, who for many, will be shopping for the very first time. For operators, this means being a jack of all trades and master of none as they try to piecemeal together multiple technology solutions, oftentimes dictated by nothing more than simple geography.

The Problem

With cannabis being both highly regulated and federally illegal, operators across the country are mandated to use a state-sponsored track and trace system. These systems are chosen arbitrarily and differ from state to state. METRC, for instance, is the most common system awarded, with 17 states, followed by BioTrack and MJ Freeway. Because of this, no operator is immune to the technology fragmentation that exists across their entire organization. Take Curaleaf, the largest MSO in cannabis, as an example. In a majority of the states Curaleaf operates in, they are required by the state to use METRC across their cultivations, manufacturing, and retail operations. On the cultivation side, METRC does a fine job of tracking planted seeds to their harvest. Yet, METRC as a technology system does not allow the operator to make sales forcing distributors and retail operations into purchasing a second system integrated by either API’s or the good old, manual entry. So, while it is mandated across the full vertical, distributors and retail operators in METRC states need to learn multiple technologies just to make a sale, oftentimes triaging broken integrations and failed API calls. This is just half of the technology solutions that Curaleaf will have to learn, just to operate in cannabis. This story is all too common for operators across the country who struggle to standardize any real SOP’s surrounding their technology.

The Solution

For businesses to successfully continue to scale, operators need to seek out additional solutions that don’t compete for their time but ones that are flexible and nimble enough to complement the systems they’re forced to use on the back end. Fragmentation isn’t new in cannabis, however, the CannaTech that powers today’s modern operations has just recently caught up. This is why operators, when seeking out additional tech stacks, should be looking for a few key things:

Seek Out Open Integration, Platform Style Solutions That Complement the Backend

To deliver on the cannabis experience consumers expect, operators must implement sound processes and plan carefully to optimize and streamline business operations for continued growth. This means seeking out technology that doesn’t require much heavy lifting on the backend and saves you time rather than taking away from it. Like the Curaleaf example, operators have to use multiple backend software. Additional solutions should be easily able to integrate into whatever software exists in an individual location while maintaining overall organization visibility. Always ask on a demo what a company is doing to connect all of your technologies. They shouldn’t just tell you, they should show you.

Seek Out Cannabis Specific Technology

There is a level of complexity in cannabis that only someone that operates in the ecosystem understands. For instance, there is the compliance aspect. This should be table stakes, but usually, operators are fined or shut down for something as simple as labels. That’s why you not only need a system that is nimble and flexible enough to complement your existing systems, but robust enough to handle the changing regulations. If the software company isn’t able to build the guard rails for you, it definitely won’t be able to keep you open. This is why sometimes the grass isn’t always greener. While larger, more traditional companies may look shiny, they’ll never cater to the specific cannabis needs. They’ll expect you to cater to them. Ask software companies that you demo in cannabis what they’re doing to protect your business. They should have an answer.

Seek Out Innovative Solutions Solving A Problem You Didn’t Even Know Existed

In cannabis, operators are typically putting out fires that any problem less isn’t even a problem. This is why operators should be open to demoing new, innovative CannaTech because they may not even know there is a solution out there that can help their day-to-day. Thankfully, the industry has progressed and solutions have been designed to help streamline overall businesses that have nothing to do with POS or Seed-to-Sale. Make sure to ask technology companies where your time will be saved. The company should be able to give you specific examples, specific to your role.

Seek Out Solutions That Don’t Claim To Solve Everything

Cannabis is too complicated for any one company to claim they solve for all aspects of the supply chain, especially when factoring in constantly changing regulations and business models. Those that claim to do will fall into three categories: They’re lying. They’ll fail because someone will come along and do it better. Or you’ll fail because they’ll lack the infrastructure to support you. As the industry progresses, solutions have progressed that target a niche problem and offer a simple, sophisticated solution. Operators need to leverage the entire CannaTech ecosystem and partner with these niche market leaders to successfully scale and get to a point of overall business process efficiency. When talking to software companies, make sure to ask what specific problem the company targets and how they fit into the cannabis ecosystem.

Seek Out Solutions That Are Driven By Data

Everyone in this industry wants to get to a point where they can make the right business decisions based on accurate data. This means both investing in technology that provides data in real-time and also investing in technology that you can grow with. In this industry, operators constantly move systems as they begin to scale, which at the end of the day hurts the data. Data moving from system to system, ecosystem to ecosystem, typically means one thing: it’s inaccurate. Make sure that you invest in a company that can easily produce a specific roadmap for six months, one year, two years with your business. Ask that software company how they plan to grow with you — they should have an answer because they should also be driven by data.

There’s a lot to be excited about as we enter the Golden Age of cannabis, but remember to invest in technology solutions that will help propel your growth through it. There are a bunch out there. Sometimes, they’ll even come to you. Always accept the demo; if they check the above boxes, they may be the right cannabis solution for you. Don’t expect them to solve everything, but make sure they’re solving something.

About Mainstem

The MainStem Supply Chain Ecosystem is the ONLY fully integrated B2B procurement solution built to solve complex issues for the cannabis industry. MainStem enables companies to easily source all their supplies while also simplifying the fragmented finance and operations technology ecosystem. With almost a decade of experience in the cannabis industry, MainStem is dedicated to helping cannabis companies grow with robust technology and by partnering closely with cannabis growers, manufacturers and dispensaries. To learn more about the technology solution we offer, click here.

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The MainStem Supply Chain Ecosystem is the ONLY fully integrated B2B procurement software built to solve complex issues for the cannabis industry.We give cannabis operators and suppliers the tools and data to manage their business – all in one place.
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