By Elijah Basore • May 1, 2020

Your Cannabis consultant just presented an ERP short list, Now What?

As the cannabis industry begins to become more normalized across the country, with 42 states having laws allowing cannabis or hemp cultivation, processing, and sale, with varying use levels, that expansion has brought a wave of new business potential with many people coming from other industries in hopes of laying claim to their piece of the green rush.

However opening a business in the cannabis space can be difficult not only from a financial aspect, but also from the need to understand the ever evolving regulatory environment. This coupled with the normal struggles of finding staff, logistics of building or renovating a space, and wearing one or more of the many hats business owners have to wear on a daily basis. For this reason many business owners opt to hire a consultant to help them navigate and manage the aspects of their business that are unique to cannabis. 

When deciding if a consultant is right for your business the first question you should ask yourself is “is the need really there or am I just feeling overwhelmed?” Many business owners feel the need for a consultant at the beginning of the process, but after a short time realize that a full time consultant wasn’t right for them. They realize they were actually just overwhelmed and having some temporary help with the more technical aspects of getting started was all that was needed. If you do decide to bring on a full time consultant then it is very important to do your research. Check their references, check their background, and put them to the same level of scrutiny that you would apply to interviewing an executive level employee. 

Once you find the right consultant for your operation it’s important to allow them to examine operations as they are and make suggestions accordingly. Remember that you are paying them to share knowledge that they acquired over years of experience, however this does not mean to just blindly follow their suggestions. It’s important to ask follow up questions to make sure that their logic is sound and that the suggestions are really what is going to be best long term for your company. Many consultants are generally just working for a contracted period of time and know that once the contract is up then they are on to the next operation. This can sometimes lead to short term solutions for long term problems, which is why it is important to fully understand the consultant’s suggestions prior to implementing them. 

One of the largest hurdles many cannabis business owners face is the use of a seed to sale tracking system. Few industries have the level of oversight found in the cannabis industry. One of the major aspects of that oversight is having to report to government systems like BioTrak and Metrc. To make matters worse many people coming from more formal industries that utilize inventory tracking software find the state systems lacking as a stand alone solution and turn to third party integrators to help fill the gaps. This is one place that consultants can make life much much easier on you and your staff, assuming you make the right choice. But, how do you know that their suggestion is right for your business? 

The first follow up question about your consultant's suggestions should be “are these top three systems integrated with my state system?” If you don’t have to provide data to a state system then asking “do these systems generate reports that the state/agency can and will ask for?” Asking one of these two questions out of the gate will help eliminate any options that may sound great, but result in daily double data entry. 

The next question should be about scheduling a demo with the software vendors that provide systems that meet your state compliance reporting requirements. A smart move is to schedule these demos yourself by contacting the vendors directly. Scheduling the demo yourself will help to insure you and members of your team, don’t forget to include all high-level stakeholders, are in attendance for the demo which will shorten the evaluation process and help avoid the possibility of functional misunderstanding.

Once you have scheduled the demos, your next question should be for yourself. “How big are we going to be?” Now obviously everyone wants to be the next Apple or Coors of cannabis, but the reality is that not everyone is destined for that level of complexity  and scale, so being realistic is important. The main reason for a realistic view of your business’ future is because with scale comes complexity and your seed-to-sale systems must match your needs now and in the future. You don’t want to end up using a hammer to eat a salad.  

The next questions that will help you vet your consultant’s suggestions are “what are the systems financial capabilities” and “what is the training like (on-boarding and on-going)?” These two questions will give you a better understanding of what is on the other side of signing the contract. If the system checks all of your boxes on the grow or processing side, but comes up short at tax or audit time, are you really getting what your business needs? The training question will let you know the secondary cost of labor. If a system requires a lot of multi-hour meetings with all levels of staff then the logistics may not be feasible for larger or faster passed organizations. On the other side of that smaller organization or a business experiencing a slump in sales may not have the capital to spend on the payroll to have their employees go through training on top of paying for a new system. However, it should also be said that too little training or too few sessions are just as bad. 

Once all of these questions are answered to your satisfaction, the last question to ask is “what is the support process?” Many companies will charge an additional fee for support post-go live, which almost certainly won’t come up during the demo. This fee can range anywhere from $50 to thousands of dollars depending on the size and scale of your operation. This hidden charge can result in frustration and buyer’s remorse, which should not be the sentiment after finding what you thought was the right solution for your business. Not only is cost a factor, availability and location of the support staff should be clearly explained.

The decisions made around seed to sale systems can be difficult and costly to undo so asking the right questions early can save you thousands of dollars and tears. Remember, cannabis is complex and finding someone to help you navigate the minefield of the cannabis industry allows you to make more confident business decisions, but always ask yourself “Does this system and vendor provide the right fit for my organization now and in the future?”

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