The sector-agnostic use case of many technology-driven innovations has led to software becoming the foundation in various industries. Following decades of prohibition and patchwork regulations, many established software solutions have not yet been applied
to the cannabis sector. This has paved the way for specialized cannabis software start-ups
which are becoming the “picks-and-shovels”, or underlying technology, for the sector.
In many jurisdictions, the cannabis supply chain is strictly regulated, with products and a chain-of-custody being accounted for across every stage from cultivation, extraction, and retail. This has created a need for seed-to-sale platforms that manage
inventory, monitor product quality, and ensure customer safety. These platforms tend to fully integrate with companies’ operations, often leading to long-term sales cycles and value retention.
Company callout: Treez, Distru
Technology-assisted compliance helps operators ensure that they are implementing strong governance; positioning them as good corporate citizens as the sector matures. For operators, compliance is typically enforced through inventory tracking, lab testing,
waste disposal procedures, transportation procedures, and packaging and labeling. For regulators, chain-of-custody tracking is often essential to show control, transfers, and potential recalls. This requires proven regulation technology (regtech)
solutions that help both operators and regulators maintain compliance.
Company callout: METRC, Procurify
Today, the cannabis industry is fragmented among licensed producers, brands, and retailers. As the number of cannabis brands increases, it becomes more difficult for retailers to navigate procurement and inventory. B2B marketplaces can standardize wholesale
ordering between brands and retailers through features including live menus, sample requests, and order management.
Company callout: LeafLink1 processes over US$2.8B annualized gross merchandise value (GMV) by connecting
5,100+ retailers and 1,500+ brands online across the U.S and Canada. Its traction demonstrates how valuable B2B marketplaces can be in reducing friction between retailers and brands.
Once orders are placed, products need to be transported to retailers and consumers. Delivery and logistics companies aim to equip brands with a distribution network and user-friendly software, making it easy to ship wholesale orders.
While certain pure play technologies in this category primarily service brands and retailers through fulfillment technology, others focus on direct-to-consumer last-mile delivery software.
Company callout: In California alone, Nabis distributes 80+ brands to 750+ licensed dispensaries in the state, shipping wholesale orders within 36 hours and
processing US$90M in annualized products.
In the past, the purchasing dilemma was magnified by dispensaries manually managing their online menus, brands having limited options to showcase products, and customers not knowing where to find product information. Recommendation engines help solve
this problem by educating consumers through product reviews, price comparisons, and terpene or cannabinoid profiles. These platforms funnel users to e-commerce channels or connect users directly to local dispensaries.
Company callout: Leafly, Proper
E-commerce companies allow customers to place orders from various dispensaries and brands online, executing the fulfillment needed to deliver the product. For example, Canopy Rivers is a strategic advisor of Dutchie, a company that is partnered with 1000+
retailers, covers 24 regions in the US and Canada, and is currently processing over US$1.5B in annualized GMV. Other companies have partnered with governments to run online sales through cloud-based e-commerce software.
Company callout: Dutchie, Shopify
Since cannabis businesses in some jurisdictions (i.e. the U.S.) are unable to obtain bank accounts, they cannot process credit cards and rely solely on cash payments. This is where opportunities for fintech companies emerge to provide solutions for both
payments and compliance.
Point-of-sale providers are a subcategory of fintech companies focused on processing dispensary sales. They help maintain compliance in the cannabis industry with features like cumulative pricing, reporting functions, and product weighing. Flowhub, Green
Bits, and Meadow are already integrated with hundreds of retailers. Other fintech companies are digitizing payments between retailers and suppliers and providing cash management and merchant processing solutions.
Company callout: Hypur, Dama Financial, Flowhub, Green Bits, Meadow
Cannabis-specific marketing restrictions have opened the door for novel marketing and advertising technologies. Customer relationship management companies help strengthen communication with customers through loyalty programs, compliant marketing campaigns,
and personalized post-purchase messaging.
When it comes to advertising, cannabis brands and retailers generally have minimal access to mainstream media channels. To tackle this, advertising tools provide brands and retailers with compliant exposure to traditional media channels, as well as analytics
and demographic insights for retargeting purposes. These companies specialize in deploying digital media buys for their clients while adhering to regulations specific to different jurisdictions.
Company callout: SpringBig, Sprout, Fyllo,
Understanding today’s cannabis consumer is difficult. Tools used in the consumer packaged goods and beverage worlds are not always readily available due to federal prohibition in major markets such as the U.S., as well as social stigma surrounding
cannabis consumption. For example, a beverage company can use a global service provider such as Nielsen to understand how its beer is selling in bars in New York relative to those in California, while cannabis brands must use specialized software
to monitor the sales performance of its products.
Cannabis data analytics companies help operators understand the levers that influence purchase decisions and ultimately guide price and trade promotion strategies. Ultimately, these data-driven insights can help cannabis businesses to make smarter decisions.
Company callout: Headset, a Canopy Rivers portfolio company,
offers business intelligence gleaned from POS systems, providing real-time insights into sales trends, seasonal demand, and basket analysis. Headset supports 22 POS providers across 31 regions in the US and Canada, tracking 500k SKUs from 4,500 brands.
Our cannabis software landscape highlights over 300 companies that are organized into categories much like their traditional, non-cannabis counterparts. As big tech has, for the most part, not been able to directly enter the cannabis space, this has created
a highly competitive and innovative market that may help facilitate the industry’s growth.
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1 Canopy Rivers has invested in LeafLink Services International ULC, a subsidiary of LeafLink, Inc.
This is not an offer to sell or a recommendation to trade in any securities. This information is provided as of the date hereof. This document contains data obtained from third parties that Canopy Rivers has not independently verified. This document
also contains forward-looking information within the meaning of Canadian securities law, which is based on certain assumptions. While management believes these assumptions are reasonable based on information available as of the current date, they
may prove to be incorrect. Many assumptions are based on factors outside of Canopy Rivers’ control and actual results may differ materially from current expectations. Forward-looking information involves risks, including, but not limited
to, the risk factors set out in Canopy Rivers’ most recent Management’s Discussion and Analysis and Annual Information Form. You should not place undue reliance on forward-looking information. Except as required by applicable law,
Canopy Rivers assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances.
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