Connecting the Cannabis Industry to Build Trust
Blockchain infrastructures enable stronger models for brand differentiation and revenue optimization for the cannabis industry.
The text below contains personal opinions on where we see the future of the cannabis industry.
The market for software companies catering to the Cannabis industry is becoming crowded, with large players such as Sage getting into the space. In late 2018 we saw MJ Freeway, a seed-to-sale technology provider enter into a merger agreement with Mtech, resulting in a $70MM deal. As the space heats up, there’s no lack of competition for cultivation, compliance, e-commerce and ERP software. It seems like new competition is entering the space by the day.
Although we are seeing the software space becoming crowded, the cannabis industry is anything but mature. We see the following changes coming (based on reputable industry sources):
- Internationalization and commoditization of cannabis supply; (e.g., the shift from greenhouse grown product in North America to outside production in Latin America/Africa),
- Freeing up of constraints on retailers (e.g., selling and marketing restrictions),
- Emergence of brands resulting in the need for much richer data analytics and integration with POS data,
- Huge growth in product diversity as uses of cannabis is explored.
As the cannabis industry matures, businesses will need to heavily rely on data to maintain market share. And as the data providers become more and more fragmented, enabling interoperability between them is key to generating the next level of valuable intel.
The problem with siloed data — data is the new oil, the most valuable asset in the world being utilized by companies to increase revenues through personalized customer experiences and scarily-accurate targeted sales and marketing tactics. In the world of search engines, companies like Google have enough market share that they’re able to leverage their own users’ data to create value. But in the cannabis space, although we expect some consolidation of software companies to happen, there will still remain many software providers that cater to specific geographies and niches within the industry. In an environment with such quick changing regulatory landscapes, companies are bringing compliance and reporting services to local cultivators and retailers. With this fragmented state, we predict existing solutions will be faced with the problem of multiple data sources that overlap and are out of sync or missing data. For example, as the retail cannabis market grows, store data like that provided by the Ontario Cannabis Store (OCS) will have to be merged with users’ mobile data, IoT, transportation, chain of custody, etc.
Not re-inventing the wheel — existing cannabis software companies have invested heavily to iterate on their products and have delivered much functionality which covers lots of the intricacies of the cannabis space. To be clear, CannaProve’s goal isn’t to replicate what has been done, it is to partner with best-in-class software providers to create valuable insights for their clients from a holistic data set. We are connectors of dots, not-re-inventors.
Today, cannabis suppliers are rushing to generate supply because there’s simply still a serious lack of it. Suppliers haven’t yet faced the challenges of brand management, low cost foreign production flooding the market and price optimization. Fundamentally, we see a need for suppliers to become much more data savvy especially around retail/pharma uses. We believe that this is only possible using a blockchain — linking all the parts of the supply chain together so that:
- Customers can see the chain of custody, especially in medical/pharma, food & beverage, cosmetics,
- Governments/Insurers can validate the compliance of every product at any time,
- Cultivators can become brand owners.
By enabling industry participants to use a shared ledger to store proofs of business processes, we create stronger models for brand differentiation and revenue optimization. Integrated data across multiple parties is the key to the market long term.
By sharing data, the industry wins together. By capturing the chain of custody of cannabis products throughout their value chains, we will enable new standards of quality, which will increase brand recognition and revenues for all participants. Let’s connect the dots.
If you’re a cannabis software company interested in collaborating to create value for your customers, schedule a call with our team. We’d love to talk to you.