The legalized cannabis industry provides, for the first time in maybe decades, the introduction of a new vertical for IT solution providers and ISVs. As such, the opportunities are huge. Unfortunately, due to changing state regulations and an overall contrary federal stance, the path to success isn’t yet clear. So if you’re interested in an opportunity with high risk and high reward, read on.
Doug Lloyd, VP of Global Sales Operations with Janam Technologies is bullish on the legalized cannabis industry. Janam is a manufacturer of handheld mobile computers used in supply chain traceability applications. With states requiring seed-to-sale tracking of cannabis, Janam provides one key piece of the technological puzzle. “This market is estimated to be an $8 to $20 billion opportunity and growing,” he says. “Twenty-nine states have legalized cannabis for either recreational or medical use. With such a boom, we see many new opportunities for ISVs.”
One such ISV seizing the opportunity is Mariner Business Solutions (MBS). MBS began as a provider of financial accounting solutions for retailers. The Denver-based company identified the legalized cannabis opportunity early and developed a custom seed-to-sale management application, CannaPoint. Terry Buff, GM of Mariner Business Solutions says, overall, the legalized cannabis industry is one of the most tech-savvy verticals that have entered the marketplace in the last 10 years. This is not only based on the demographics of the customers, but also the employees of any dispensary or grower who need the fastest and best solution that technology can provide.
That said, Buff says the legalized cannabis industry is similar to any other retail industry in that the business owners and operators must have the ability to track their data. “Customers, patients, inventory items, what’s selling, what’s not, and who is buying are all very important topics to running a successful business,” he says. “ISVs building applications for this market should start with these areas.”
From Lloyd’s standpoint, seed-to-sale tracking requirements mean cannabis businesses need technical assistance in adhering to government regulations via traceability systems. “We are seeing increased demand for software that can provide transparency and accountability for the tracking of plants and managing transplant schedules,” he explains.
He goes on to explain that with increased complexities associated with the conversion of multiple types of product into byproducts, inventory management software is also in high demand. “ISVs should focus on delivering tracking and reporting tools that can be customized for individual state regulations to help growers remain compliant,” he says. “As most seed-to-sale tracking systems require barcodes to be scanned at every point in the growth and distribution process, we are working closely with various resellers and ISVs to ensure their customers have access to rugged mobile computers that can not only capture data, but can also withstand the most demanding work environments.”
Buff adds that ISV’s would be wise to market towards this inclination with top of the line handheld computers, Bluetooth peripherals, desktop printers, barcode printers, and software applications.
Mobile Sale of Cannabis
Since the legalized Cannabis industry is still new, many details are still being worked out, and you’ll often find a lack of clarity. For instance, when it comes to legalized home delivery of cannabis, Lloyd says things are muddled. He points out that the Cannabis Control Commission in Massachusetts just recently announced that they would delay awarding licenses for home delivery, but plan to revisit the topic in October. The state of California licenses and allows delivery services, but local municipalities retain the legal right to prohibit them.
This level of complexity isn’t uncommon, and yet, despite delays, challenges, and confusion, Lloyd says mobile sales of cannabis are booming nationally. In turn, he says there is increased demand to equip delivery drivers with mobile technology that can capture and share estimated delivery times and customer signatures in real-time. “Demand for mobile payment applications is also on the rise, as cannabis companies look to deploy a cashless payment system that will make transactions safer and more convenient,” he adds.
The Rise of Luxury Cannabis Brands
As if the overall legalized cannabis industry doesn’t provide enough opportunity, Lloyd says there’s a burgeoning market for craft cannabis similar to the huge boom for craft beer and liquor. “Many growers are focusing on producing special strains in limited batches — fueling a trend towards luxury cannabis brands,” he says. “Technology will play a key role in helping growers prove the quality of their products, as well as manage inventory and efficiently ship and sell the products.”
The Path Untraveled
The cannabis industry isn’t without huge significant risk and those currently involved are true pioneers. Buff admits that with the Federal Government listing cannabis as an illegal drug, the risk of a shutdown of the industry is still possible. Additionally, state regulations are continually changing in the legalized cannabis market. “ISV’s need to have the flexibility to respond to these regulation changes as quickly as possible,” says Buff. “An example of a regulation change is in the package and sales label required data for the consumer. These changes will challenge and require ISVs to develop faster and easier ways to modify the product labels and to ensure regulation compliance for the dispensaries and growing facilities.”
Despite the inherent challenges, evolving regulations, and the threat of an entire shutdown, the payoff can be huge for those getting involved now. If you’re looking for a wild ride with an unknown ending, here it is.