Local Cannabis Businesses Are Failing To Be Supported By Big Tech

Cannabis businesses and dispensaries must be conscious of the danger of monopolization as the federal legalization of cannabis looms.

FREMONT, CA: A likely federal legalization of cannabis has made the threat of monopolization more real, propelling dispensaries and cannabis businesses to be wary of the "Amazon Effect." Based on a recent white paper titled "Bigger Is Not Better," big corporate alliances that conquer emerging cannabis markets can endanger social equity efforts if the government and other stakeholders do not interfere.

Investopedia describes the Amazon Effect as "the effect created by the online, eCommerce, or digital marketplace on the conventional brick-and-mortar business model because of the change in shopping models, customer expectations, and industry contest." This phenomenon shows how large corporations overwhelm local, small businesses in online sales.

Despite the possibility of technologically supportive services, the drawbacks of large cannabis e-commerce and marketplace platforms may damage local businesses in the long run, supporting the Amazon Effect within the cannabis industry. Besides, if companies and governments do not take these events seriously now, they risk being replaced in the future.

Cannabis players to acquire local markets with big tech

sizeable online retail and marketplace platforms are replacing local cannabis retailers. Big tech companies are often marketed as a solution for small and medium-sized cannabis businesses, but they can terminate being the bane of regional industries.

In permitted cannabis markets, e-commerce and marketplace services are incredibly popular. Yet, the growing fame of big tech in the cannabis industry can be intimidating, given that these behemoths overpower the cannabis industry as the go-to tech solutions for mediating things such as cannabis delivery sales. This dynamic creates an "if you can't beat us, join us" scenario, the same as those faced by spaces selling out to dark store models after a pandemic.

Important players in cannabis technology may proceed to replicate the anti-competitive bullying strategy of big tech generally, but, probably, you will still need technology services for your "canna-business." Big tech platforms are not all dangerous to small businesses; thus, how can small cannabis brands find partnerships that satisfy their needs?

How do local cannabis businesses detour disruptive competitors?

Small cannabis businesses should associate with technology platforms that satisfy their specific requirements. Nevertheless, in performing due diligence on these partnerships, looking for the largest brand or the cheapest deal is inadequate. If a company is not careful, tech titans can seize control of customer relationships and make it hard to compete in the market.

Big tech knows that data holding equates to power, which is probably why many provide all-in-one solutions at discounted rates. Cannabis businesses must keep ownership and control of all customer data to thrive. 

Here are a few warning signs to sidestep a partnership with a possibly harmful tech platform:

• The tech platform's extra fees diminish a company's profits to the point where it is damaging for businesses to be listed on the platform.
• The technological platform expects consumer interactions to gather data and suggest substitute products.
• The technological platform "conceals" product listings from the public Internet.
• The technological platform does not endorse the legitimacy of all of its merchants.
• The technology platform expands its product lines to contend with established retailers on its platforms.