According to Grand View Research, Inc., the global legal cannabis market is expected to do two things: Reach USD 70.6 billion by 2028 and expand at a CAGR of 26.7% from 2021 to 2028. Support for federalizing cannabis and increased sales—during a global pandemic and a recession—have transformed the cannabis industry’s status as that of a relative newcomer into that of a seasoned player. As new markets begin to emerge, cultivators and processers are eyeing the possibility of becoming multi-state operators (MSOs).
Which states look promising for cannabis company expansion, how do they go about doing it, and what part does cannabis business software play in the process? The answers are provided in Cannabis: Guide to Expanding Into New Markets.
The Who, What, Where and When of Expanding in New Cannabis Markets
Anyone ready and willing to take on the complexities of a cannabis-related business is welcome to do so. However, there are challenges. Investopedia provides a list of these challenges, including (but not limited to) competing against other more established industries, such as alcohol and tobacco, that are joining the fray; facing the stigma of selling, producing and distributing a newly legalized drug; and complying with the differing laws on legality, use, distribution and growth in states.
If someone is ready to take the plunge, the guide offers a list of 10 states MSOs should focus their attention on, such as Nevada, New York, and Pennsylvania. It also highlights the pros and cons of each state’s legalization efforts. For example, here’s what it says about New York, which legalized adult-use cannabis this year:
“With adult-use cannabis officially legalized in the state as of March 2021, the New York market is predicted to be one of the biggest to watch for over the next few years. Sales in the state are expected to begin in 2022 and huge growth is expected in both the recreational and medical cannabis markets.”
For existing large-scale cannabis companies, these states represent expansion opportunities. To expand, they need to get a new license or acquire an existing cannabis company. Or do both.
However expansion occurs, challenges and benefits exist. For instance, a challenge for companies securing new licenses is the need to set up brand-new operations and production processes.
“Even if an MSO is successful in another market, rules around taxes, packaging and serial numbers vary from state to state, so new business practices will likely have to be built from the ground up,” the guide notes. “On top of this, MSOs vying for new licenses will also need a mother plant, seedlings, equipment, people and more to get the business off the ground.”
A benefit for companies going the acquisition route is that they are acquiring a company that has licensing in place and has established processes for state rules and regulations.
Irrespective of expansion benefits and challenges, cannabis companies looking to successfully manage their businesses must implement cannabis business management software.
The ‘How To’ of Successfully Expanding Into New Markets
With cannabis ERP software, MSOs can juggle multi-site, multi-company and multi-state requirements. But, as the guide cautions, they need realize that not all ERP solutions have the width and depth of functionality that is needed to support MSO expansion. MSOs’ research and evaluation process should lead them to a full-scale, true ERP software solution that operates as a single, unified system.
The right cannabis ERP software provides finance, operations and seed-to-sale capabilities. Here are some featural highlights to consider:
- Costing
- Compliance reporting
- Recall management
- Inventory control
- Multi-company features
- Traceability
- Robust Business Intelligence (BI) functionality
MSO cultivators and processors also should look for cannabis software that is flexible and adaptable to the changing needs of an expanding business, implementing only the features they need for their business now. As an MSO expands, such as adding a cultivation operation or purchasing an edibles manufacturer, the cannabis software’s built-in functionality will make it a seamless endeavor.
The Why of Choosing CannaBusiness ERP by NexTec Group
Why should cannabis companies choose CannaBusiness ERP as their cannabis software? It was designed for the cannabis industry by NexTec industry experts who understand the evolving needs of this growing industry. The software is constantly updated and improved. NexTec released the newest version of CannaBusiness ERP in April 2021, and the solution has gotten even more user friendly with improved flexibility, enhanced data visibility and new fertigation processes. The most recent updates also include enhanced quality management functionality that will be appreciated by any cultivator or processor who is looking for a single stop solution.
Learn More About the Cannabis Industry and Cannabis ERP Software
To learn about the pros and cons of federalization and how to manage compliance, company-wide integration, product quality and consistency, operational efficiency and unorganized data, download the free Cannabis: Guide to Expanding Into New Markets or listen to the recent webcast, Facing Cannabis MSO Challenges with ERP. NexTec’s CannaBusiness ERP is the specialized solution for cannabis companies looking to grow. Contact us today to learn more about it. We’d love to chat.