GROWING CANNABIS BUSINESSES have growing technology needs. But building an in-house IT department is typically out of reach cost-wise for businesses correctly focused on their core competencies—growing, manufacturing and selling cannabis products.Enter the dedicated IT solutions provider, an increasing number of whom are focusing specifically on meeting the needs of cannabis clients with what we call “cannatech” solutions.
How big is cannatech becoming? Analysts like Grand View Research forecast a 14.9 percent compound annual growth rate (CAGR) through 2030 for a U.S. cannabis market valued at $13.2 billion in 2022. That kind of addressable market has IT solution providers such as value-added resellers (VARs) and managed services providers (MSPs) seeing green.
Finding the Right Partner
But how can you know if the cannatech provider pitching solutions and services to your company is the best choice for your business? Evaluate potential partners based on the criteria below:
1. Cannatech Expertise. Technology expertise is table stakes for a company that you’re considering contracting with to provide you with IT solutions to help manage and drive your business. Many have retail point-of-sale (POS) technology know-how, which will benefit your business.
They can help you manage transactions, create fast and efficient customer experiences, launch a loyalty rewards program, and track diverse inventory. However, ask questions about the solution provider’s familiarity with how those things work in a cannabis business rather than at any retail shop.
Look for the provider’s expertise in seed-to-sale tracking, integrating NTEP-certified scales, and solutions that confirm buyers’ identities and document their purchases. The basis of the solutions a cannatech provider offers may be standard POS software, touchscreens, barcode or RFID technology, label printers, self-service kiosks, and digital signage. But if that provider has adapted them specifically for a cannabis business, they’ll be a much more valuable partner for you.Advertisement
2. Industry Trust. Part of your due diligence before entering into a partnership with a cannatech provider is to research their history and reputation. While this is important for any IT provider partnership, it’s particularly vital for cannabis businesses. If you find red flags in a provider’s past or if your colleagues have a negative impression of the company, proceed with caution—or keep looking.
Also, like it or not, there’s still a bit of stigma attached to the industry. Because cannabis is subject to different opinions and, in the United States, a different regulatory status in each state, it’s vital that you work with someone who understands the challenges you face and operates completely above board. Look for a cannatech provider who approaches you with respect and professionalism and demonstrates a real desire to help your business succeed.
3. In the Weeds with Legislation. If you’re operating in the U.S., the patchwork of cannabis legislation across the states is also something cannatech providers need to understand to be of value to your business. Different states are in various stages of legalization and laws governing businesses in one state can look vastly different than laws in another.
Colorado, for example, was among the first movers to legalize cannabis for medical use in 2001. But operating compliantly in Colorado isn’t the same as doing so in Maryland, which only legislated the use, distribution, regulation and taxation of marijuana in 2022. Each state has its own granular rules on things like how much cannabis can be sold in an individual sale or, in medical-only states, what counts as a prescription-worthy medical condition. Only cannatech providers who do their homework and study up on the rapidly evolving cannabis sector will position themselves to competently provide businesses with the technology they need.
4. Cannabis Payments. Another industry challenge that cannatech providers need to understand is payments. Because the U.S. federal government has yet to legalize cannabis, some financial institutions worry that doing business with a cannabis retailer or dispensary might be risky or even perceived as money laundering. However, competent cannatech providers have solutions that will allow you to legally accept digital payments or manage the large volumes of cash that you handle day to day.
Remember that there are no shortcuts or workarounds. Consider it a deal-breaker if an IT provider attempts to deploy a payment solution without full disclosure about the type of business you operate. Your business needs good guidance from an ethical and trusted provider. Don’t work with a provider who will give your dispensary or shop a bad name or even cause you legal problems.
Too Big to Ignore
The projected growth of the cannabis market is good news for your business—and when cannabis is legalized at the federal level, a $100 billion market isn’t outside the realm of possibility. This opportunity will attract technology solutions providers working in saturated markets looking for ways to expand their businesses. However, everyone professing to be a cannatech provider won’t actually be your best partner as you equip your business with the technology you need to operate efficiently and compliantly and deliver the best customer experiences.
Enter into partnerships with your eyes open and only with your business’s best interests in mind.Advertisement
Cannaconvo with Peter Su of Green Check Verified
Cannabis Last Week with Jon Purow interviews Peter Su of Green Check Verified. Peter Su is a Senior Vice President with Green Check Verified, the top cannabis banking compliance software/consultancy in the space. A 20+ year veteran of the banking industry, Peter serves on the Banking & Financial Services committee of the National Cannabis Industry Association. He chairs the Banking and Financial Services Committee for the NYCCIA & HVCIA. He is an official member of the Rolling Stone Cannabis Culture Council. And, he is on the board of the Asian Cannabis Roundtable, serving as treasurer.
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