Paul Botto is president and co-founder of Lucid Green, a Brooklyn-based inventory management company.
The cannabis industry is one of the fastest growing industries in the world. With retail markets emerging, the US cannabis market is projected to reach $72 billion in legal sales by 2030. But despite this exponential growth, the cannabis industry is hampered by outdated processes.
Due to complicated regulatory requirements and the emerging nature of the industry, you haven’t experienced many of the benefits that technology can bring at scale. The widespread use of technology can help grow the industry and create a more streamlined cannabis supply chain that lowers costs and increases transparency and trust for all stakeholders.
As another retail market gears up to launch, the proposed regulations put the industry at a tipping point for other markets to follow suit. New York is leading the way in incorporating innovative technology into its proposed regulations to ensure its market is as efficient, safe and successful as possible.
Impact on consumers
Educating consumers will be key to growing the New York market and the industry in general. The state has proposed a series of technologically advanced regulations for packaging, labeling, advertising, and testing requirements for cannabis products. One of the requirements calls for a scannable barcode or QR code to be included on cannabis products so consumers can view verified product information, including COA certification, from a simple scan.
A product’s COA confirms that the product meets the safety and quality standards set by regulators. Some QR codes can even verify the authenticity of the product, which helps prevent counterfeit and black market products from entering legal markets. For consumers, having a verified product and getting direct access to the COA in an easily digestible and accessible format is a huge step forward in giving them additional information and confidence in their purchases.
Currently, the industry is predominantly based on high-end product classifications such as indica, sativa, or hybrid, with a heavy reliance on THC levels. However, these ratings don’t give consumers much detail about what exactly is in the product or how it will affect them. A product’s COA goes beyond these high-level classifications and details what the product actually contains. By having a product’s COA easily accessible, the industry can better educate consumers about the product, giving them more information and control over their experiences.
For the cannabis industry to continue to grow, consumers must have confidence that they will have a safe and enjoyable experience. This industry is not growing because current cannabis users are buying more products. It’s growing because your family, friends, and neighbors are starting to have more information available to them to feel safe and informed about their purchase and experience.
Supply Chain Modernization
New York is projected to become the second largest legal cannabis market in the country, with an estimated $4.2 billion in legal sales within five years. As New York prepares to open up its retail market, it has assessed the many hurdles industry stakeholders face to ensure its regulations position the market for success.
In addition to the superior consumer experience the technology brings to the industry, every stakeholder in the supply chain will benefit from its widespread use. Currently, cannabis distributors and retailers are experiencing high and sub-optimized manual inventory management costs.
For distributors, this often means costly extra “touches” when managing inventory flow and order fulfillment. While retailers often experience delayed product delivery to their shelves and increased costs due to manual data entry and secondary labeling. On average, manual inventory management costs retailers over $10,000 per store, per month, which can easily add up to millions each year.
Using the same QR codes described above allows for dynamic product-specific information, allowing brands, retailers and distributors to continue to add digital information about a product throughout its lifecycle and share it with their partners. This eliminates the extra “touches”, data entry and labeling steps. And by using this technology for their own internal efficiencies, brands, distributors and retailers can pay that benefit back, reducing costs and increasing sales for all.
A new marketplace that takes advantage of advanced technology regulations also positions social equity licensees for success by leveling the playing field. Equity licensees typically have less access to capital, so every dollar carries a higher weight compared to some of the larger players in the market. The dynamic information sharing capability of these types of QR codes helps social equity licensees open their stores faster by reducing costs and time spent on manual inventory management and even highlighting their social equity status in the results. , which makes it easy to build trust with customers.
New York is close to proactively addressing issues within the industry with its high-tech regulations. These should be a model for other markets and the future of the industry.
Related: NY Cannabis Insider Week in Legal Marijuana for August 28, 2022