Don’t tell AG Jeff Sessions: the cannabis industry is here to stay (with seed-to-sale software continuing to play a vital role in the growth of the industry). After the 2016 election, cannabis passed a crucial tipping point. Three conservative states where Donald Trump comfortably won the popular vote — Arkansas, Florida, and North Dakota — passed voter initiatives legalizing medical marijuana. This brought the total number of legal medical marijuana states to 29. Add the other 17 states that have legalized low-THC, high-CBD cannabis products, and we now have far more than a super-majority of states that have legalized medical cannabis is some form.
Despite AG Sessions rescinding the Cole Memo in early 2018, little has changed in the industry. In fact, the industry continues to be America’s fastest growing industry, projected to create more jobs than manufacturing as early as 2020. However, because cannabis continues to exist in this legal gray area, it is more regulated than virtually any other industry. Intense scrutiny and regulation have made seed-to-sale solutions an indispensable segment of the cannabis ecosystem.
State regulatory agencies want to be able to track everything and everywhere a plant has been, from when it was just a seed to the day the product is sold. Unsurprisingly, given the complex tapestry of laws, maintaining compliance can be a major pain-in-the-butt!
Moreover, given the unique needs of distinct business segments within the cannabis supply chain, the seed-to-sale market is highly fragmented, often leading to confusion in the marketplace. Cannabis entrepreneurs can easily become overwhelmed by the seeming myriad of seed-to-solutions.
To help demystify the industry, we’ve put together this guide to walk you through what you need to know about seed-to-sale, including what exactly seed-to-sale is, who uses it and why, and finally, how to choose the right solution for your business.
So, what exactly is seed-to-sale software?
Seed-to-Sale Software, Defined
Given the crucial role of seed-to-sale software to provide oversight and transparency in the cannabis industry, it should come as no surprise that seed-to-sale is widely considered the industry’s hottest market segment. Every entity in the cannabis industry that touches the plant must use a seed-to-sale solution.
Seed-to-sale (which is commonly also known as track-and-trace) describes any software solution whose function, first and foremost, is to support businesses across the cannabis supply chain manage inventory and maintain compliance with their state and local governments.
Moreover, seed-to-sale solutions are designed to provide comprehensive tracking to protect the safety and health of consumers. Seed-to-sale solutions track and trace every touch point in the cannabis supply chain, starting with cultivation and concluding at the point-of-sale.
The Cannabis Ecosystem: Who Uses Seed-to-Sale Software?
Because cannabis is such a tightly regulated industry, essentially every company that touches the plant uses a seed-to-sale software solution. The cannabis industry is unique in that it combines manufacturing, agriculture, healthcare, retail, distribution, in a single vertically integrated market.
The cannabis ecosystem is generally segmented into four categories:
- Cultivation: The farmers who grow cannabis.
- Extraction: Companies who extract cannabinoids and terpenes from cannabis flower to produce extracts (or concentrates) including oil, wax, crumble, shatter, vaporizer cartridges, etc.
- Distribution: The companies that supply the cannabis products to dispensaries and retailers who sell directly to the consumer.
- Retail: Includes any outlet where consumers can purchase cannabis including medical dispensaries, adult-use recreational stores, and delivery services.
Within the cannabis ecosystem, there are other ancillary services such as processing, labs for testing, and technology companies. Through each step of the supply chain, every company must be able to track all materials they receive, what they plan to do with that material, and where products will end up.
Regulators: Why Seed-to-Sale Software Is Important
Regulators are the state and local agencies who oversee the production and sale of cannabis.
How do regulators use seed-to-sale software?
- Seed-to-sale cannabis tracking software provides regulators with chain-of-custody tracking from seed-to-sale. (Chain-of-custody is a paper trail that shows custody, control, transfer, analysis, and disposition of cannabis products across the supply chain.)
- Seed-to-sale helps regulators ensure cannabis producers adhere to the highest possible standards of hygiene and safety so that products are safe for human consumption.
- Seed-to-sale helps regulators monitor cannabis companies and track which companies are paying appropriate taxes and complying (or violating) state and local laws.
- Regulators use seed-to-sale to recall products in the event a product has been compromised. Chain-of-custody tracking allows regulators to identify the exact time, location, and batch number of any products (including flowers, concentrates, extracts, or edibles) that may have been adversely affected and need to be recalled.
How does seed-to-sale benefit regulators?
- Seed-to-sale software helps regulators ensure cannabis companies follow all laws and mandated safety measures, that companies pay all applicable taxes and fees, and that potentially contaminated products can easily be traced and recalled if necessary.
- Provides states and municipalities with the tools to enforce compliance.
- Tracking is particularly important in states like Colorado where cannabis taxes provide funding for education and other important programs. The tracking helps states and municipalities maintain balanced budgets.
- Seed-to-sales helps regulators keep the public safe from potentially contaminated products.
- Prevents companies from engaging in illicit activities.
Operators: Why Seed-to-Sale Software Is Important for Operators
Operators include cultivators, extraction companies, distributors, and retailers.
How do operators use seed-to-sale software?
- Operators use seed-to-sale to track several compliance metrics, including inventory tracking, tax payments, lab testing, waste disposal procedures, transportation procedures, packaging and labeling requirements, and licensing requirements.
- Growers use seed-to-sale to track important dates including seed acquisition, planting, seed germination, harvest, and processing. Growers can also track the phase of grow-cycle, identify strains and batch numbers, and who products are sold to.
- Operators use seed-to-sale tracking to improve business operations and profitability.
- Provides additional layers of security by housing customer data in the cloud.
How does seed-to-sale software benefit operators?
- Helps producers, distributors, and retailers maintain compliance with all state and municipal laws and regulations.
- Mitigates risk by helping operators avoid oversights or infractions that could result in expensive fines or even criminal charges.
- Provides businesses with greater visibility over their business operations so they are able to run their businesses more efficiently and profitably.
- Companies are often able to increase profitability because they have greater oversight of critical processes involved running their businesses.
- Protects a company’s reputation.
While the level of scrutiny cannabis businesses undergo may seem excessive, the oft-overlooked benefit is that because these businesses must monitor their operations more closely than other industries, they’re able to more efficiently identify chokepoints and areas where processes can be streamlined and improved.
Consumers: Why Seed-to-Sale Software Is Important
Consumers are the ultimate beneficiaries of seed-to-sale software systems. While consumers don’t knowingly interact with seed-to-sale systems, they work in the background to protect them:
- Consumers are protected from damaged, contaminated, or mislabeled products.
- Recalls, when necessary, can be done quickly and efficiently, ensuring consumers don’t acquire compromised products.
- Knowing where their products are coming from, consumers can feel more comfortable that they are purchasing safe products.
How to Choose a Seed-to-Sale Software Provider for Your Cannabis Business
- Define your requirements. Before you begin evaluating solutions, develop a clear and extensive list of your business requirements.
- Solicit objective and independent advice. Ask business peers, employees, and reputable experts who understand your unique business needs.
- Focus on your specific business processes and system requirements. Keep in mind there is no single solution that is appropriate for all businesses. Some companies are more data-driven, others are more compliance-driven, while others may be more interested in making their business more efficient.
- Don’t rush! Take the time to carefully evaluate all your options before you select a seed-to-sale solution.
- Get references. Ask the seed-to-sale companies you’re evaluating for a list of references you can speak to about their experience with the vendor.
- Determine the total cost of ownership. Keep in mind it’s much easier to embrace potential costs earlier in the process rather than after you’ve already committed to implementing a solution. Be mindful of hidden costs such as implementation costs, training, and software maintenance.
- Develop a realistic implementation plan. Your implementation plan should include all activities related to the implementation, including the initial installation, any activities required to ensure the software is tested and fully functional.
Ready to manage compliance, increase yields, and optimize your cannabis business? Request a demo today and we will walk you through how the Trellis platform will help you grow, track and sell.