Authored By: Rob Woodbyrne, CEO, Regrow
From the black market to an industry with $20 billion in legal sales in just over 20 years, the cannabis industry has boomed since its legal beginnings, spawning a myriad of successful companies. As the cannabis industry begins to see its first large-scale, multi-state operators, many businesses are finding that their current operations are being hindered by not having the right technology, especially operations management software, available to them. What should you look for when choosing an integrated software solution?
Legalization Boosts Cannabis Market
The primary factor for growth of the cannabis industry continues to be state level legalization. Because of this state by state legalization, the cannabis market experiences artificial growth with sudden expansion whenever a new legal cannabis market comes online. This wholesale creation of new markets and the race to claim shelf space has forced some companies to expand rapidly before their operations have been properly scaled to handle the new business.
Consolidation of the Cannabis Industry
Since the beginning of legalization with the start of medical marijuana in California, the cannabis industry has been driven by small businesses. However, as the cannabis industry matures and markets move from primarily medical to recreational, the industry is now starting to be dominated by big players gobbling up smaller companies to solidify supply chains and expand market share. This was the case in 2018, where the cannabis industry experienced over 300 M&A deals.
After a stagnant 2019 and 2020, when these deals dropped by over 100 each year, mergers and acquisitions in the cannabis space have again rapidly increased pace in 2021 with major companies adding to their holdings.
These larger cannabis players are looking at smaller companies as an easy way to gain a foothold in new markets. Since 2020, several well established multi-state operators like Trulieve, Cresco Labs, Curaleaf, and Ayr Strategies continue to enter new legal markets through acquisitions of businesses in recently legalized states, like Pennsylvania, Ohio, Arizona, and more. North of the border in Canada, two cannabis giants merged when Tilray and Aphria combined to create the world’s largest cannabis company.
In other cases, businesses are looking to expand control over their supply chain by joining with operators from cultivators to retailers to streamline everyday business needs and keep revenue streams in-house.
A Barrier to Success
The cannabis industry is evolving at breakneck speed in order to keep up with consumer demand and market trends. Current cannabis industry technology is, in many cases, no longer adequate for the needs of growing cannabis businesses. Over the next few years, innovating industry specific technologies is set to be a growth industry in and of itself as executives begin to search for solutions to the common roadblocks they face.
One of the biggest pain points for cannabis businesses is supply chain management. Whether it is sourcing from within your verticals or from a 3rd party vendor, having the materials you need on hand prevents hiccups in the manufacturing process.
2021 has demonstrated just how overstretched the global logistics industry is, with weaknesses being exposed as manufacturers struggle to secure necessary components, leading to empty retail shelves. This inability to meet market demand can hinder a company’s ability to grow its market share and scale appropriately.
A lack of automation in the cannabis industry is also holding back many companies, especially cultivators, from reaching their full potential. Part of this is due to wasted time and resources from over-watering crops, mismanagement of employee time, and ordering supplies too early or, even worse, too late in the manufacturing process.
Managing Vertical Integration
Many smaller businesses that existed before the transition to legalization are still using antiquated task management and tracking systems, if any at all. On the other end of the spectrum, large multi-state operators are finding that existing solutions offer little more than compliance capabilities. Modern cannabis businesses are looking for a tool that can manage cultivation, inventory, manufacturing, distribution, and retail fulfillment from a single platform, linking the many facets of their business.
This need for smarter, more dynamic management solutions drove us to introduce Regrow. Our software helps cannabis businesses plan operations with real-time analytics from throughout their organization to optimize output based on consumer demand by product type, streamline supply chain management to minimize delays or overstock, and automate workflow to increase efficiency.
Cannabis businesses are starting to embrace the value of technology to improve their bottom lines. But in order for them to continue to scale properly, tech like software solutions must evolve as well. When looking for an operations management program, be sure to select one that is customizable to your business needs, offers complete functionality, and is capable of evolving alongside your company as the industry grows.
