Jerry Abiog   |   October 06, 2021

How Infusing Artificial Intelligence (AI) Into Your Seed to Sale Process Can Lead to Tremendous Yields

Weaponize your data with artificial intelligence.

Hemp Industry Daily reported in 2020, the number of licenses granted to growers in the US totaled 21,496. The nascent cannabis industry projects to grow to $70.6 billion by 2028, according to Grandview Research.  With tremendous growth comes opportunity.  Yet, unlike other verticals, the cannabis industry must abide by strict government regulations in its seed-to-sale process.

The seed-to-sale starts with the cultivator’s seed planting and culminates when the end-user purchases the completed product.  In between, there are several steps to account for and voluminous amounts of data to analyze with regards to growing, harvesting, testing, processing, and packaging.  Each state and has its own rules and regulations on how to handle each step to be compliant.  As legalization grows, adherence to compliance measures will become arduous, leaving those using an archaic, manual process to fall by the wayside.

Digital Transformation Begins with an ERP (Enterprise Resource Planning) Software

The smart cultivators use spreadsheets, usually moving from the pen and paper method initially used for tracking. According to Med Well Health, there are 779 recognizable cannabis strains. Growers are constantly developing new strains - each of which encompasses different grow characteristics: water, soil, genetic classifications. These strains that serve as the base for the completed product help solve a host of problems for the end consumers: PTSD, insomnia, migraines. 

The smarter cultivators graduate from spreadsheets as their operations grow. They invest in an ERP system that uses business intelligence (BI). Actual digital transformation beings as these ERPs now automate cultivation, processing, manufacturing, wholesale distribution, reporting, and most importantly, ensuring METRC (Marijuana Enforcement Tracking Reporting & Compliance) compliance.

Those growers shifting from manual to automated processes experience almost immediate benefits that translate into time and cost savings, particularly in the area of labor. However, the one-percenters of cultivators are always looking for something more, a competitive edge that will separate them from the pack.

The AI Infusion Into Your Existing Processes

"If two markets are pretty much guaranteed to make money over the next decade separately, it’s artificial intelligence and cannabis," Forbes

The smartest of cultivators are using AI in their ERP. They want something revolutionary.  BI looks at data from a historical lens.  AI, the ability to get a computer to think and act like a human, provides a historical, descriptive perspective and a forward-looking perspective of what can happen in the future by predicting and prescribing the next course of action to take.

Incorporating AI supersedes the advantages that BI alone can bring.  Analyzing the strains, plant data, and buying patterns of dispensaries and customers goes several levels deep.  Benefits can include:

●      Predicting micro-level behaviors on what strains and corresponding plant data will sell to a particular type of customer and dispensary

●      Predicting inventory levels to unlimited depths

●      Segmenting customers or dispensaries on their potential profitability

Outside of growers, AI can benefit the cannabis industry in other areas:

●      Processors - these people are responsible for manufacturing and packaging the products that the cannabis users know and love, such as edibles, creams, and topicals.  AI can help predict the amounts one needs to manufacture for each product type in a given day, month, and year.

●      Online B2B marketplaces - make it efficient for dispensaries to purchase their products from wholesalers and brands.  AI can help predict what products are likely to sell in a dispensary, especially for those dealing with the challenges of optimizing shelf space.

●      Dispensaries - serve as the final destination for cannabis-related products.  Your average dispensary can have upwards of 10K customers and 500+ SKUs.  Residing in their POS is a treasure trove of data that AI can study to offer personalized recommendations on what each of your customers is likely to purchase from your entire line of products.

Now that you have all this information regarding your data, it’s time to turn insights into action.

Weaponizing your Data

Having data just sitting in your ERP, POS, or e-commerce platform is only half the equation. It’s like owning a nice car and having it just sitting in the garage and not driving it. Now, whether you are a grower, processor, online marketplace, or dispensary, you have to reach out to your respective customers in data-driven, relevant ways.  Doing so improves customer experience, prevents customer indecision, and tells your customer what to do next.  With the democratization of AI in recent years, cannabis-related businesses can now target the right person with the product at the right time to improve sales.  In addition, this can enhance average order value and reduce customer churn in all areas of the seed to sale process. 

The Future of AI and Cannbis

It’s only an upward trajectory, albeit with growing pains.  The digital transformation process involves a crawl, walk, run mindset.  It starts with the growers moving out of spreadsheets and implementing automation with an ERP platform using BI.  This strategy morphs its way to the dispensaries, where the end customers purchase the completed product before the seed-to-sale process repeats. Those growers, processors, online B2B marketplaces, and dispensaries who want to run away from their competition are the ones using AI.

Malcolm Gladwell states in his book The Tipping Point, “The Innovators and Early Adopters - are visionaries. They want revolutionary change, something that sets them qualitatively from their competitors.”  Ask yourself, regardless of where you fall in the seed-to-sale process, are you the crawler, walker, or runner?

 

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