As the legalization movement continues, cannabis dispensaries have become more and more like any other mainstream retail operation, such as a shoe or clothing store, Customers expect a superior and tailored experience and the highest quality products for the best prices.

But there's one big difference between the two. Unlike other retail stores, cannabis shops must be in compliance and report to state track-and-trace systems. In order to deliver on that experience while maintaining high levels of confidence in compliance, a dispensary owner must hire top talent, implement sound processes and plan carefully in order to optimize and streamline business operations for continued growth. The technology stack that powers today’s modern dispensary is at the epicenter of executing a successful retail operation in a burgeoning industry.

Why the existing solutions fail

All cannabis retailers need a point-of-sale system (POS) to manage the front-end operations such as processing payments and promotions, as well as a back-of-house functionality for inventory management and compliance tracking and reporting. This requires performance-driven technology that arms retailers with powerful data insights and tools to drive their business further and create seamless experiences.

Many of today’s existing POS solutions deliver a “jack of all trades, master of none” approach by providing the tooling and technology for the entire cannabis supply chain. From growing to manufacturing to selling, they’ve developed homegrown solutions that attempt to make the retail owner’s job as easy as possible by relying on only one vendor for everything. On the surface, this is appealing because it removes the burden of having to build and operate a sophisticated tool stack by him or herself.

However, each dispensary has different growth priorities and not all shops operate under the same business models. The sacrifice for a single-solution software is a lack of customization, scalability and continued product innovation. It also presents issues for the vendor, especially on resource allocation and deciding which tools receive the most resources.

Why a platform approach works

Innovation, regardless of industry, is driven by consumer demand and business need— and there is no shortage of either in a market expected to reach $26.3 billion by 2025. 

The technology industry has long been gravitating toward an openly-integrated "platform approach" that draws on a complex and rich ecosystem of vendors and partners each providing complementary offerings. It is no surprise that the emergence of the cannatech market should follow the same path as pioneers like Salesforce or Apple by redefining the solutions to modern technology problems. 

The world is too vast and complicated for any one company to build the software and hardware that supports the entire cannabis supply chain. Those that try to do so will fail because there will always be someone doing one category of the chain better. From cannabis cultivation to payments to CRM and customer loyalty to delivery, HR, advertising and analytics, new players are emerging as category leaders in each of these sub-markets. The solution is to leverage the growing cannatech ecosystem and partner with these niche market leaders to deliver an extensible POS and inventory management platform that can be built out to support all facets of the supply chain.

The tool stack solution

With the right intelligent POS platform at the core of any retail business, dispensary owners are able to hand-pick the best essential elements of the cannabis tool stack for their business. For instance, they can automatically update online menus with Leafly, power their delivery services through Dutchie, integrate with BDS Analytics to drive better decision making and then track customers through CRM and loyalty rewards software like SpringBig or Sprout.

Cannabis retailers deserve to pick and choose what their cannabis tool stack looks like -- from hardware to software -- to create the perfect customer experience that aligns with their store’s unique mission and vision. No dispensary takes a one-size-fits-all approach, and neither should their point of sale system.

At the end of the day, it all comes down to one thing: the customer experience. The future of cannabis legalization and medicinal use is bright and as technology leaders and innovators, it is our responsibility to provide the best technological solutions to solve modern challenges that benefit the greater good.

Cannabis potency in Europe has risen dramatically with THC levels more than doubling in a decade.

And, cannabis remains the most widely used ‘illicit’ drug in Europe, show findings from some recent research. The European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) report shows that the THC concentration of ‘herbal cannabis’ doubled from 5% to 10%, from 2006 to 2016, whilst cannabis resin potency increased from 8% to 17% over the same period.

Legalization Drives Innovation

The report — Developments In The European Cannabis Market — provides an overview of emerging and established cannabis trends – and products – in Europe. It says the global moves towards legalization of recreational cannabis, and the wider adoption of cannabis as a medicine – is driving innovation.

17.5 Million Euro-Cannabis Users

“Therefore, monitoring and understanding new trends in cannabis products available to European consumers today is important to inform the policy and regulatory debate.”

With concentrates, edibles, and CBD nutraceuticals now prevalent in Europe  the report calls for new monitoring tools and regulations. It says: “Having the ability to distinguish illicit cannabis products from cannabis-based medicinal products and unregulated CBD oils will be important for law enforcement in many jurisdictions.”

The report gores on to say that some 17.5 million Europeans, aged between 15–34, are estimated to have used cannabis in the last year, while one per cent of 1% of adults – aged between 15 and 64 years, use cannabis every day. In 2017, some 155,000 people entered drug treatment in Europe for problems related to this drug, of those around 83,000 were entering treatment for the first time. 

Cannabis is now the substance most often named by new entrants to specialist drug treatment services as their main reason for contact in the 28-member states of the European Union, says the report.

Newly released data from Health Canada indicates Canadians just aren’t that into cannabis oils.

The agency reports that inventories of cannabis oil greatly outweigh the number of sales.

For the month of June, around 9,600 litres of cannabis oil was sold compared to a total inventory of just over 141,000 litres — that is 14.7 times more inventory than sales.

Sales of cannabis oil also decreased in June by 2.1 percent, but finished inventory actually increased 15 percent, from a little over 85,000 to more than 98,000 litres.

Meanwhile, dried cannabis sales increased 4.7 percent in June from a month earlier, from a little over 9,500 kilograms to nearly 10,000 kilograms, and finished stock was held at around five times the number of sales, at around 50,000 kilograms.

Less appealing than edibles

Cannabis oils are made up of extracted resin and a carrier oil and are often taken sublingually from an oil dropper.

It is albeit not the sexiest way to consume cannabis but has proved popular with the medicinal market.

Aleafia’s Chief Medical Officer Michael Verbora said that the majority of his patients, about 7 out of 10, use cannabis gel caps and oils.

Cannabis oil’s effects are the same as taking an edible, meaning the high won’t be felt for at least a couple of hours and may cause more of a body-high.

Edibles will be legal in Canada in October, and Verbora thinks they will be more marketable than the oils, even though the effect is the same.

“[Consumers] have the perception if you put cannabis in a cookie it will be different from a capsule, for some reason,” he said.

Nevertheless, retailers seem to have been hit by the lack of current demand for cannabis oils.

Overstocked and not selling

One retailer told the Financial Post about their struggle to sell Canopy Growth Corp.’s Tweed-branded oils and gel capsules.

“They are just not selling. We have been talking to Canopy for some time now about the issues with their oils and gel capsules,” Mark Goliger told the Post.

Goliger is the CEO of National Access Cannabis, which has 35 recreational cannabis stores in Alberta, Saskatchewan and Manitoba.

“[Canopy Growth] have known for months that most of the retailers are having problems selling them,” said Goliger.

A Toronto-area store owner also told the Post anonymously that Tweed’s gel capsules were one of the store’s “worst-selling” cannabis products, but the store also had ordered “too much” of it because they wanted to stock their shelves.

“Our margins are going to take a hit because I have boxes of Tweed product — oils and gelcaps — sitting in my back office,” the owner said.

The oversupply has affected Canopy’s bottom line.

The company said an “oversupply of certain oil and gel-cap formats in certain markets” caused it to make a revenue adjustment of $8 million in its latest quarterly results, according to the Post.

Canopy Growth’s recreational revenue had declined 12 percent that quarter.

Kentucky Senator Mitch McConnell (R), a chief proponent of a hemp legalization provision in the 2018 Farm Bill, has put the pressure on the Food and Drug Administration (FDA) to expedite the path for lawful marketing of hemp-derived CBD products. It's the latest push by the Senator to get CBD products more funding to educate consumers and to utilize the benefits in food items or dietary supplements.

Prior to today's movement from McConnell, the FDA has said that allowing CBD to be sold as food items or dietary supplements would require it to develop alternative regulations that could take years to complete if no congressional action was used. 

McConnell's plan is to insert language into a congressional spending report that is asking the FDA to “issue a policy of enforcement discretion with regard to certain products containing CBD” within 120 days — something that will help stakeholders clarify rules, which, in effect, could make banks become more willing to service CBD companies.

Here's a look at the full report language from Mitch McConnell to the FDA:

“As previously mentioned, the Committee provides $2,000,000 for research, policy evaluation, market surveillance, issuance of an enforcement discretion policy, and appropriate regulatory activities with respect to products under the jurisdiction of the Food and Drug Administration which contain cannabidiol (CBD) and meet the definition of hemp, as set forth in section 297A of the Agricultural Marketing Act of 1946 (7 U.S.C. 1639o). Within 90 days, FDA shall provide the Committee with a report regarding the Agency’s progress toward obtaining and analyzing data to help determine a policy of enforcement discretion, and the process in which CBD meeting the definition of hemp will be evaluated for use in products. Within 120 days, FDA shall issue a policy of enforcement discretion with regard to certain products containing CBD meeting the definition of hemp as defined by section 297A of the Agricultural Marketing Act of 1964 (7 U.S.C. 1639). Such enforcement discretion shall be in effect until FDA establishes a process for stakeholders to notify FDA for use of CBD in products that include safety studies for intended use per product, and makes a determination about such product. FDA is encouraged to consider existing and ongoing medical research related to CBD that is being undertaken pursuant to an Investigation New Drug (IND) application in the development of a regulatory pathway for CBD in products under the jurisdiction of FDA and to ensure that any future regulatory activity does not discourage the development of new drugs.”

CBD industry response

In general, the CBD industry has been receptive to McConnell's proposal to the FDA. Here's what both John Huemoeller, CEO of AXIM Biotechnologies, Inc., and Jenelle Kim, Founder and Chief Formulator of JBK Wellness Labs, had to say.

Huemoeller: "Last year, hemp and CBD were legalized through the 2018 Farm Bill. A few months ago, the DEA requested an increase in the amount of cannabis grown in the U.S. for research. Now it's time for the FDA to recognize that cannabis and CBD products aren't just a fad, but, because of their many wellness benefits, they are here to stay. We look forward to understanding how these new regulations may help the industry grow by setting needed safety standards and provide consumers with an overall improved level of trust in CBD and other cannabis products."

Kim: "Mitch McConnell’s move to call on the FDA is certainly a progressive and important move, which will help to open the doors for more people to reap the incredible benefits of CBD. It is vital to remember that hemp is one of the 50 Fundamental Herbs in Chinese Medicine and its healing properties date back 4000 years. For a medicinal herb that has been used responsibly for thousands of years as a treatment for pain and fatigue, among other conditions, to be given a larger opportunity is certainly a winning situation for all involved."

In order to hit McConnell's target of 120 days, there's some work still left to be completed.

On Tuesday, the Senate Appropriations Subcommittee on Agriculture will mark up the provision of the spending report. Next, the Appropriations Committee will receive it two days later. Finally, The FDA would need to submit a report to the committee within 90 days, which opens up the possibility of a new policy. Lastly, if the new enforcement guidelines are established, they would continue to be implemented until the regulatory process is finalized by the FDA.

In support of Mitch McConnell’s proposal, Oregon Senator Jeff Merkley praised the bill during the subcommittee meeting last Thursday, with Merkley specifically mentioning the revenue that hemp will bring to his state alone. “You might note that this year in Oregon, the hemp industry may well be a billion-dollar crop, and that is an incredible addition to income for our agricultural community,” he said.

Only time will tell where McConnell's proposal and timeline goes, but it is a big day for the CBD industry as a whole to have such support.