Over the past few years, data has overtaken big oil as the most valuable commodity in the world.
By definition, “data” is factual information used for reasoning, discussion or calculation. This definition fails to capture the enormous impact as data drives so much of the world we know today and predicts the future we’ll have tomorrow. Data has changed the way we work. Where sales success in the past was often primarily credited to relationship building, today’s sales leaders are leveraging data-driven, actionable insights to increase their pipelines.
By crystallizing connections between data points and providing valuable input on processes, data can support your business in several areas, including strategizing, optimizing, identifying problems, planning, and reporting. Companies across all industries often employ platforms and consultants to provide them with actionable insights.
Data application in the cannabis industry is especially intriguing, given that cannabis isn’t federally legal in the U.S. and in many parts of the world. How can cannabis operators in legal markets leverage data to optimize and grow their businesses?
Regulation, Compliance and Safety
I like to focus on the “3 Ps of safety” regarding cannabis: public safety, product safety and patient (consumer) safety. The murky waters of the slowly changing illegal-to-legal market left products untraced and consumers wary. Like alcohol and pharmaceuticals, cannabis is a controlled substance, which requires strict regulation and compliance to ensure that the products coming to market are safe.
Although there are many purported and potential medicinal benefits of cannabis, the unfortunate consequence of the substance being illegal for so long is that it became an illicit-market item. This can lead to counterfeit products and incorrect dosing due to a lack of regulation and transparency. Given the current state-by-state legalization process, regulatory and compliance standards and processes aren’t typically enforced.
We’ve seen this lack of transparency with the 2019 vaping crisis, of which we still do not know the direct cause. Another example was the romaine lettuce E.coli outbreak in 2019. It took the FDA weeks to identify the source of the contamination while hundreds of consumers fell ill. Had they used seed-to-sale tracking technology, the FDA, producers, and retailers could potentially have been able to trace the exact trail of contamination and remove all related and potentially infected offerings from shelves to protect consumers. As I write this, there is an ongoing investigation into a multi-county E. coli outbreak in Washington, which will likely be long and, potentially, inconclusive.
To ensure cannabis products meet safety standards and prevent issues like the uncontrolled lettuce E.coli outbreak, regulatory officials in the legal cannabis industry require strict compliance systems that prove transparency across the supply chain. These compliance systems should capture data along every part of the plant’s lifecycle — from seed to sale to self.
Regulators are only one of the stakeholders across the cannabis supply chain. Cannabis businesses also have a responsibility to consumers, who are increasingly becoming more conscious about what they are putting in and on their bodies. To fulfill this need, brands must provide a record of safety measures and backed-up data that sufficiently prove transparency and safety across the supply chain.
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Understanding the Cannabis Consumer
The ever-increasing “conscious consumer” phenomenon is just the beginning of understanding shopper preferences. Data from my company shows that these consumers propelled the cannabis industry to gross nearly $18 billion in legal sales in 2020 amid an economic downturn. It’s critical to satisfy consumer preferences for continued sales growth.
There are few generalizations you can make about cannabis consumers as one collective group. From locale to gender to age, every demographic has different preferences. Brands must thoroughly understand each demographic’s buying habits to identify what products to place, where and when. Through digestible data analytics, brands can derive actionable insights into consumers and increase their sales and brand recognition.
Data can show brands trends in customer preferences, or even consumption, which can help inform how brands craft their offerings. For instance, my company has found an increase in cannabis consumption among women in particular over the past year.
Brands must consider the nuances and the ever-evolving consumer trends when creating, marketing and selling products. With many new cannabis markets opening in the future, it’s safe to say that data is a critical piece of the cannabis ecosystem when it comes to fully understanding consumers and successfully placing products.
Entering New Markets
As more markets legalize, operators are looking to expand. These businesses should aim to leverage tech and software to streamline operations and oversee their products’ lifecycle. Without this information, such as backed-up data for each step in the supply chain, operators risk duplicating costly efforts and falling out of compliance in any given market.
In the past, when cannabis markets were more fragmented and siloed from state to state, individual operators could get by with “check the box” compliance solutions. Now, as operators begin to enter multiple markets and manage their operations across them, rejecting technology’s advantages quickly proves unprofitable.
Data provides operators with insights into their fundamentals and allows them to decide where to invest, improve or pivot so they can remain competitive.
Smaller brands that wish to participate only in a specialized region require detailed data to stay in the game. Consider leveraging enterprise resource planning (ERP) software to gain more visibility into data-driven insights that can enable your brand to remain competitive in the market.
The Covid Case
Early 2020 saw a crash in cannabis stocks and a subsequent spike in cannabis sales as the pandemic continued. During this time, cannabis businesses, especially enterprise operators, had to focus on their fundamentals. This collective refocus on business led to an industry-wide realization of the value data-driven decision-making brings to business.
Technology plays a vital role in providing transparency and accountability that enables businesses, governments and consumers to have confidence in how the legal, regulated cannabis industry works safely. Data is essential in helping all types of cannabis operations make intelligent, informed business decisions.
Data can drive the growth of the cannabis market, just like oil fueled the development of the industrial revolution.
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