After decades of prohibition, cannabis is finally legal in at least 30 U.S states. Although cannabis’s legal landscape still needs plenty of work, the industry has proven to be insanely profitable, with states bringing in millions from cannabis tax revenue. Even as the coronavirus pandemic rages on, slowing down commerce and causing catastrophic damage to the economy, the cannabis sector has set monthly sales records.
Experts project the cannabis sector, which is currently one of the fastest-growing industries in the country, will achieve revenues of more than $30 billion by 2024. However, that doesn’t mean every business that joins the cannabis bandwagon will thrive. Companies must first achieve and maintain profitability, something that can be quite challenging in the nascent cannabis industry. So how can cannabis businesses maximize return on investment (“ROI”)? Here are a few tips:
Keep an eye on the costs. The cannabis industry is young, and new firms tend to have trouble getting a clear understanding of what it costs to create a product, from cultivation to processing and finally sales. This is made even more challenging by the fact that cannabis businesses lack access to cashless banking, making accounting and financial reporting more difficult. Businesses that can overcome these challenges and find a way to congregate all their operational and financial data will be better able to plan and budget their finances.
Visibility across the supply chain is crucial for cannabis businesses. They are required by law to track products from seed to sale and back again, a concept referred to as forward-backward traceability, to prove that regulatory standards are being met every step of the way. Without traceability from seed to sale, businesses may find themselves facing fines, loss of license or even prison time. Investing in effective tracking and reporting technologies will allow these businesses to achieve forward-backward traceability.
Quality and consistency will help a business stand out in an industry that has tough restrictions on marketing. Cannabis businesses are competing with both the prolific black market and each other, and consistently producing high-quality products is the best way to attract — and retain — customers. Customers expect both premium and value-priced products to maintain a high quality because, at the end of the day, black market cannabis is cheaper and more accessible. Giving customers a quality product on a consistent basis is the only way to get customers to fork over that extra premium.
Make technology a friend. Adopt financial reporting and accounting software as soon as possible. Something scalable and affordable that will be able to adapt and grow as the business grows. Integrating technology into a business right from the start will allow that business to automate processes, streamline workflows, provide visibility and insight, increase quality and consistency, and reduce errors.
Pure Extracts Technologies Inc. is one cannabis sector player you should watch. This plant-based extraction firm recently piqued interest in the psychedelic mushrooms space, a segment that not many companies were prepared to take advantage of.
CNW420 spotlights the latest developments in the rapidly evolving cannabis industry through the release of two informative articles each business day. Our concise, informative content serves as a gateway for investors interested in the legalized cannabis sector and provides updates on how regulatory developments may impact financial markets. Articles are released each business day at 4:20 a.m. and 4:20 p.m. Eastern – our tribute to the time synonymous with cannabis culture. If marijuana and the burgeoning industry surrounding it are on your radar, CNW420 is for you! Check back daily to stay up-to-date on the latest milestones in the fast -changing world of cannabis.
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