The Secret to Success in the Cannabis Industry Today

Many cannabis industry leaders rely on gut instinct for making business decisions, but data lets them quantify their level of success and predict sales once products are available.

FREMONT, CA: Recent market issues have created a more challenging environment for industry leaders to manage as the cannabis business expands. To be successful in today's market, business leaders must implement a solid, data-driven strategy to tackle, among other barriers, the surge of new brands, emerging markets, and pricing issues. Using data, cannabis brands and businesses may make more educated decisions to enhance their business plans and promote growth.

The Development of the American Cannabis Market

As the legalization of adult use and medical cannabis continues to rise, the cannabis sector remains one of the fastest-growing industries in the US. In the 1990s, when California originally authorized medicinal cannabis, the absence of market controls allowed new production enterprises and dispensaries to emerge. These pioneers of the cannabis industry leveraged cash to expand and flourish, creating a business model that has been duplicated numerous times over the years in markets such as Washington, Michigan, and Arizona.

During this time, some of the most potent cannabis brands of today were created. Today, the cannabis scene in the United States appears drastically different, and tight government laws and static federal rules make it more challenging to achieve success. Today's prospering and surviving brands have made significant investments in data operations.

Spending money on Data Operations

In the past, data was not vital for cannabis businesses, but today, it can determine a company's success or failure. Analyzing data provides cultivators, processors, and dispensaries with a broader perspective that enables them to pivot swiftly and remain relevant.

Decision-making based on data is crucial for cannabis businesses seeking to reach and surpass revenue goals at every level. Data can assist farmers in establishing the best environment for growth. Utilizing data, manufacturers may enhance environmental conditions, cut waste and costs, and more. By leveraging data, businesses may learn which products should be stocked on their shelves and reap substantial benefits.

Leaders in the nascent cannabis industry can benefit from adopting the infrastructure and business processes prevalent in other sectors. Today's top-performing cannabis companies are structured similarly to other consumer packaged goods (CPG) companies. Those who utilize these time-tested techniques will be in the best position to succeed. Similar to the beverage alcohol business, cannabis entrepreneurs are using a three-tiered system for manufacturing and selling their products, which provides economic, regulatory, and commercial benefits for all parties.

Unlocking Productivity through Pricing

In the past 18 months, the cannabis business has been beset by pricing issues. While an inflationary atmosphere has caused costs to rise in many industries, cannabis has generally remained immune. However, because cannabis is not yet federally legal, markets have been divided, and each state's pricing heavily relies on demand considerations. This unique dynamic and rising competition have compelled many producers to accept reduced profit margins instead of passing on costs to customers.

These challenging market conditions have made it imperative for businesses to implement more efficient operations. Leaders in the cannabis industry can operate more precisely to save costs and generate high-quality goods by utilizing data-driven technologies. In the current cannabis retail industry, keystone pricing is prevalent. Producers might benefit from reevaluating how wholesale products are priced to evaluate the ultimate impact on the bottom line and optimize revenues.