Pivotal Moment for the Industry
The cannabis industry is experiencing transformative growth as evidenced by the increase in markets and demand for medicinal, industrial, and recreational applications. The accelerated progression of legalization promises a strong global market where value is generated at various stages of the cannabis supply chain.
Despite the recent seismic shifts the industry has experienced, it still remains new and very much in the discovery phase with methods, applications and preferences by segmented markets being explored. At the forefront of this complex industry is mitigating the significant regulatory and compliance factors that vary across federal, state, and municipal levels. Additionally, the fluid nature of legalization by states puts this industry in a constant state of flux, requiring highly adaptive and responsive operating ecosystems. These considerations, coupled with the economic storm of the COVID pandemic, create a pivotal moment for this industry to invest in digital transformation initiatives.
Why Digital Transformation?
Digital transformation will be the key differentiator in securing and maintaining market share and remaining ahead of the competition, particularly as Canada starts to outpace the U.S. in legislation with fewer barriers to growth. By incorporating technology into every facet of the supply chain, cannabis organizations can create sophisticated operations that deliver deeper value to customers and drive better business outcomes.
Digitalization throughout the cannabis supply chain offers significant potential to level-set operations, distribution models, and volatile price points, as well as to balance supply and demand in the wake of regulatory and compliance factors.
Digital Transformation Initiatives Driving Supply Chain Value
With the industry still in its discovery, best practices for cultivation, extraction and processing are still being established. There are numerous variables at play to ensure full optimization of output.
Adopting digital tools such as the deployment of sensors and advanced lighting technologies to collect data, along with custom algorithms, enables cultivators to create visibility and transparency to perform real-time analysis and make predictions to aid in future actions. Analysis may include evaluating physical data such as crop conditions and THC levels, environmental data such as humidity level, commodity data such as price demands, and compliance data such as packaging date. With the right tools and analysis, cultivators have the essential information from seed-to-sale to strategically plan supply and further streamline operations.
Retailers and sales distributors invest significant time and resources to keep up with inventory management, and the various tax and compliance intricacies. Leveraging and combining data from all systems to analyze seed-to-sale functionality will provide the tools necessary to manage financials and customers, track sales, produce accurate reports and regulate inventory from planting to final sale.
The illegality of interstate movement presents the largest functional barrier in the supply chain, and integrating the right cloud-based e-commerce platform that factors in regulations and intricacies by state will have a positive and critical impact on timing and supply management. These platforms are designed to connect nearly every aspect of the supply chain, from tracking plants during growth and production, to comprehensive client databases, automated prescription management, and most importantly, data on quality assurance and compliance.
The sheer number of regulations facing the industry makes strict compliance systems that capture data from seed-to-sale even more critical. Integrating measures to capture data for reporting at every stage in the supply chain will be paramount to success. Collecting and organizing data creates opportunities for analysis from regulators to suppliers to retail channels to end consumer, revealing windows of opportunity to streamline and optimize outcomes throughout the cannabis ecosystem.
How Cherry Bekaert Can Play A Role
With business requirements constantly evolving, adopting digital transformation initiatives will enable the cannabis industry to drive enhanced business outcomes, improve its environmental, social and governance performance, and position it for innovation and growth. Whether you’re just getting started or looking to transform your existing business, Cherry Bekaert’s Digital Advisory team can help.
