By Sarah Bugden
Software Canna-Tech Evolution
Farming is an art, but it’s also a science. The same can be said for business, and that’s where technology comes into play in 2018’s cannabis industry. While the flower sells itself, tech helps business owners in all areas of the supply chain organize and streamline their processes. Technology is here to stay, and its impact on the cannabis industry will unquestionably influence the industry’s evolution.
Hardware in the cannabis industry is integral to its growth and evolution. Every month, new tools come out that make cultivation easier, including hydroponic grow systems, lab tech, bud-trimming machines, extraction rigs, security systems, drying ovens, filtration systems, grow lights and greenhouse-enhancement tools. While there are constantly new hardware innovations, what’s right for a business varies, depending on its niche.
New software in the cannabis industry is also constantly evolving. However, observing the importance of software to business is hard to separate from a universal conversation about regulations and the challenges cannabis business owners face in simultaneously preparing for the best- and worst-case scenario in a market with unpredictable legislation impacting day-to-day functions.
The California Cannabis Track-and-Trace (CCTT) program was put in place in 2018 to monitor the movement of cannabis and cannabis products from cultivation to sale. The consequence for cannabis business owners operating in all parts of the supply chain is a requirement to report product sales data to a statewide software system called METRC. All state-issued annual cannabis licenses are required to use the CCTT-METRC system to record, track and maintain information about their cannabis and cannabis-product inventories and activities.
While some business owners are hesitant about recording their sales and business data, those who wish to obtain a permit and operate legally now have a clear reason to jump on the software train. Software can help businesses automate the process of recording and reporting their inventory and sales transactions to METRC and ensure that their operations stay legal. Software also minimizes the errors inherent in human-generated records.
To better understand the nuances of the relationship between software and the evolving cannabis industry, I caught up with Christopher Dell’Olio and Hilart Abrahamian, the founders and CEO and COO of Webjoint, a cannabis-focused software company that is prominent in the seed-to-sale arena.
Dell’Olio and Abrahamian first went into business offering simple website design roughly four years ago, but they grew with the cannabis industry to offer more comprehensive software that helps business owners track their operations and stay compliant.
I asked them about how they’ve seen cannabis business owners’ perceptions of software change over time as legalization came into play in California, and how software can alleviate some of the tension around regulations.
Emerald Magazine: Have people treated you differently between when you started and now?
Dell’Olio: We used to get laughed at. We used to do sales demos or present to an audience on why people need our software. People would say, “Oh, I can just use Quickbooks.” Or they’d say, “This is stupid, there’s no point to it.” But at the end of the day, the way they’re tracking and tracing cannabis in California specifically is different from the way they’re doing it in many other states, so therefore people are finally starting to understand that you need a specific software that can track the purchase orders that you’re getting from your distributors, like where you store your inventory, when sales transactions happen, which package of inventory is that coming out of—it’s very, very specific. People are starting to understand that. Those who don’t understand that are really falling behind and are putting themselves in a position where they’re going to get audited, and the BCC (Bureau of Cannabis Control) is going to come in and shut them down.
As of right now, no one is scared of the BCC or any enforcement coming in and shutting them down, because that hasn’t been happening for the past few years, but all people do is, they get a slap on the wrist and then open up a new location. But now enforcement will be coming in and putting real actions in place to enforce everything in the industry.
Abrahamian: Hundreds of businesses have been shut down. People are going out of business because it’s tough. By the end of the year, it’s looking like nobody without an actual license is going to be able to operate.
EM: Will the black market be gone?
Abrahamian: As far as METRC goes, it’s going to make it much harder. METRC is supposed to go live in March of 2019 at the latest. So, if you have a temporary license currently, you don’t have to use METRC.
Dell’Olio: You don’t have to tell the state where your product’s going or where it’s coming from.
Abrahamian: So, that’s a big piece of the problem. But temporary licenses will expire in March of 2019 at the latest, and some have already started to expire.
EM: Do you anticipate huge growth in business at that time?
Abrahamian: Yeah. Essentially, if you have an annual license, you’re using METRC. If you’re using METRC, you probably don’t want those headaches. So, you want to use a retail software such as ours to help automate those tasks.
Dell’Olio: We even have had retailers who’ve said, we love Webjoint and your services, but I’m not operating for the next few months, because they don’t want to compete with the black market. If they’re trying to operate legally now, they’re gonna have to charge 35% tax, and why would they try to sell the consumer on paying that much tax when the dispensary or delivery service next door is charging zero tax? You also have licensed manufacturers who are the biggest brands in California, brands people know and love. You can go to a licensed dispensary and get that product with a 35% tax, or you can go and get that same product at a delivery service or dispensary that’s illegal with zero tax. Where we see the industry going, is there’s going to be the Marlboros, there’s going to be the Bud Lights of the industry. It’s getting to the point where people don’t care where they get it as long as they have the product they want, but why is the product people want available in legal and illegal dispensaries?
Everyone is looking at the illegal retailers as the problem, and they’re trying to bring more enforcement into the industry, but as long as there’s a demand for that product, illegal retailers will always exist.
EM: Do you think when METRC goes live that’ll cut back on illegal retailers?
Dell’Olio and Abrahamian: Definitely.
EM: Where do you want to see yourself in the next five years, nationally and internationally?
Dell’Olio: We feel like the best way to go international is by solving the problem in California, because California is one of the biggest markets. We’re essentially “Our Country, Ourselves.” So, by solving the problem here, a lot of other states are going to follow what we’ve been doing, and a lot of other countries are going to follow what we’ve been doing. As long as we can solve the problem here, we will continue to be able to do that elsewhere.
Chris Dell’Olio and Hilart Abrahamian are unquestionably leaders who will help bring the cannabis industry to the next legal phase, whatever that will entail.
While software helps keep business owners legal with reporting, it also goes above and beyond that minimum requirement. It helps leaders have more insight into customer behavior, efficiency and business processes they might not currently be tracking closely.
Tech might not be an obvious component of the cannabis industry, and reporting data might not immediately come across as important, but both are integral to the industry’s success. Keep an eye on software developments and businesses that adopt tech early that will soon be the industry standard. Change is a-brewing!