Although the political landscape has largely leaned towards more positive sentiment towards cannabis, it is still very expensive and risky to do business in the industry largely because of compliance burdens like tracking the entire operation from seed-to-sale.
There are licenses required to do different parts of the process like growing, manufacturing, selling. What’s worse is, they cannot participate in the financial markets because banks will ultimately get fined for doing business with them.
Regulation 280E and Significant Growth Constraint
The cannabis industry has been set up to fail. Although it’s getting more mainstream, there are still significant choke points that prevent businesses from thriving like Regulation 280E, a piece of legislation that punishes banks for doing business with any company that deals with a schedule I or II drug (Cannabis is still a Schedule I drug federally). Some large cannabis companies receive their transactions in cash only and have a difficult time getting capital to scale businesses. Furthermore, individual states have different regulations and amounts of license, which makes it much more difficult to participate.
Capital comes to Cannabis
As the industry grows and becomes legal in more states, there is a new interest in investment. In 2018, there was a $13Bn investment into the legal marijuana industry up from $3.4Bn in 2017. When capital starts flowing into the industry, the entrepreneurs start finding ways to solve more problems!
We talked to Stacey Hronowski, an entrepreneur that is trying to get rid of the compliance burden by creating an Enterprise Resource Planning (ERP) tool called Canix to handle just that.
Since everything from growing the product to selling it needs to be tracked, Canix has found a way to make it easier for businesses to collect their data, use their data, and strive with it. As I was pointing towards the gold mine of data in the podcast, Stacey kept emphasizing the importance of understanding what the customers needs are with the data that they collect.
Canix doesn't only become an ERP for compliance purposes but also a place to figure out how to become successful in the industry. The current suite has all sorts of functionality like live inventory tracking, METRC integration (The regulation stuff), Chart of Accounts management (the accounting stuff), RFID harvesting, and clone data. Yeah.. if you aren't very familliar with the industry, Stacey can help explain that to you!
Sit back, light it up, and absorb a little more than THC and CBD. Actually, just a lot of THC.