This article was originally published on Cannabis & Tech Today and appears here with permission.
Every industry has its own jargon and terminology that can be confusing to learn. When your business spans more than one industry, the more there is to know. To help simplify some phrases often used in cannabis and technology, I’m breaking down the meanings of each with some context as to how they apply in the real world.
- Seed-to-Sale (STS)
Originally coined by MJ Freeway in 2021 and now widely used in the industry, the term Seed-to-sale refers to software that goes beyond simply capturing compliance data and is designed to provide complete 360 visibility into each point in the supply chain, giving operators insights into their business across all their verticals and locations.
By using this data, operators can make fully informed decisions to improve efficiencies and maximize their outcomes. Every software system that provides this service is participating in “seed to sale” technology, whether they are servicing a one location boutique or an enterprise level multi-state operator.
The top seed-to-sale software vendors integrate directly with state track-and-trace solutions so operators can enter their data into a single system, eliminating the need for double entry.
- Track-and-Trace
Cannabis operators often rely on several software systems to keep their operations compliant and efficient. There are two main systems that cannabis operators use: seed-to-sale and track-and-trace.
Although these terms are oftentimes used interchangeably, there is an important difference. Cannabis operators are often required by states or municipalities to enter their compliance data into their specific state regulatory system, also known as track-and-trace.
Track-and-trace platforms provide regulators with an overview of aggregated, compliance-only data from all licensed cannabis business owners in their region to ensure compliance with regulatory mandates.
- ERP (Enterprise Resource Planning)
Business management and optimization software assisting companies in their financial, operational, sales, reporting, and supply chain processes and activities.
As the cannabis industry experiences continued growth and the possibility of US federal reform increases, cannabis operators are seeking to grow their operations and expand into new markets.
To reach those growth goals while meeting multistate compliance, cannabis operators require a comprehensive ERP system that can scale with them.
For example, many large mainstream companies rely on ERP software such as SAP, Oracle, and Microsoft to ensure they are overseeing and automating business activities across their supply chain.
- Tax and Financial Software
Both publicly traded and privately held companies have financial and tax reporting requirements and rely on software platforms to satisfy these requirements.
However, these are not a one-size-fits-all type of software – the kind a business needs will depend significantly on its revenue and size.
When looking for tax and financial software, companies often seek platforms that offer a range of levels to support their company in each stage of their evolution, from startup to enterprise level.
As cannabis operators scale and manage their finances and operations across multiple markets, they quickly realize the spreadsheet solutions which enabled them to reach their first million in revenue don’t scale when the business becomes 100x the size, making the need for ranging financial software offerings crucial.
- POS (Point of Sale)
A digital platform that serves as a cash register for processing transactions while also tracking inventory, reporting sales and tax information, and automating the in-store experience.
Some POS systems allow for mobile use in a kiosk mode or setting, where budtenders can walk freely with the devices and/or consumers can take the device and shop themselves.
For a mainstream example, think of popular platforms Toast or Square.
- Compliance Software / Regulatory Software
Both of these terms are often used to describe the same types of platforms – platforms that assist cannabis businesses in ensuring and reporting on their compliance with laws throughout the cannabis supply chain.
Compliance is table stakes in the cannabis industry as failure to adhere to the rules – which vary widely in each jurisdiction – could lead to heavy fines or business-ending repercussions.
It’s crucial to ensure your compliance software integrates (more on this word later) with your other key platforms to ensure constant compliance across the supply chain.
- Regulator / Regulatory Body
Government agencies responsible for regulating cannabis in their states, cities, and jurisdictions.
Cannabis regulatory bodies may mandate a specific compliance regulation software for all operators in their jurisdictions to ensure they can oversee the market.
For example, the Commonwealth of Pennsylvania’s Department of Health (DoH) is its cannabis regulatory body.
- Payment Processors
Despite cannabis being medically legal in 37 states and for adult use in 18, it is still federally illegal in the U.S.
The lack of legalization has stopped traditional financial institutions from working with cannabis businesses as they could be hit with penalties.
This lack of traditional baking access has led the cannabis industry to run predominantly on cash, creating many security, compliance, and reporting issues.
Technology solutions – payment processors – have popped up to allow for digital payments to alleviate the cash issue.
Although compliant ACH and PIN Debit solutions exist, various solutions have been marketed and sold to operators as compliant but are actually not, such as cashless ATMs.
- Data, Analytics, Business Intelligence
Data is factual information used to make decisions, drive discussions, and analyze trends. That information is often called analytics or business intelligence.
By crystallizing connections between data points and providing valuable input on processes, business intelligence can support your business in several areas, including strategizing, optimizing, identifying problems, planning, and reporting.
With so many new cannabis markets opening over the next few years, cannabis businesses need these actionable insights and in-depth information about their supply chain.
For example, many alcohol businesses rely on analytics software and business intelligence to identify opportunities to improve alcohol sales, distribution, and profitability.
- Workforce Training Software
Every industry has its unique nuances that employees need to understand.
In a highly regulated industry like cannabis, workforce training is necessary to ensure employees adhere to all regulatory standards.
Workforce training software should train staff on the entire supply chain, as that knowledge creates a ripple effect down to the consumer.
An educated budtender speaks confidently about cannabis and, in turn, educates the consumer.
Say you have started a brand-new job at a sandwich shop. Before you are ready to start making sandwiches, you must understand the sanitary procedures, recipes, and processes.
An educational platform would help you to do so!
- Loyalty
Many of the traditional ways of marketing a business to consumers and potential consumers are not legal in the cannabis industry – multiple platforms, both online and offline, ban cannabis businesses from advertising or shut down accounts that post cannabis content.
Instead, cannabis businesses use text messaging and loyalty systems to market products and happenings to consumers, often called loyalty or SMS programs.
Loyalty, online ordering, and eCommerce can often come in one tool.
For example, if a dispensary is running a promotion and wants to alert frequent shoppers, it may likely get banned on social media.
Instead, they can have customers sign up for their loyalty programs and directly communicate with them via SMS.
- Online Ordering / Menus
While many industries offered online shopping ahead of Covid-19, the cannabis industry largely did not.
However, cannabis retailers adopted eCommerce options en masse once social restrictions were enacted. Wholesale cannabis distributors and purchasers also use online ordering for business-to-business (B2B) transactions.
Online orders are available for pickup and/or delivery, depending on each region and jurisdiction.
- eCommerce
A shortened word for electronic commerce – meaning online shopping. Like online menus, eCommerce became increasingly popular in the cannabis industry in the wake of the Covid-19 pandemic.
- Integration
When two different software systems seamlessly connect and communicate with each other.
If your POS and regulatory compliance tools aren’t on the same platform, you’ll want to ensure they are integrated so they can seamlessly share information and you can prove compliance throughout the supply chain.
In the past, when cannabis markets were more fragmented and siloed from state to state, individual operators could get by with “check the box” compliance solutions.
However, as operators enter multiple markets and manage their operations across them, integrating compliance across the board is crucial to success.
- API (Application Programming Interface)
APIs are secure integration points with rules and requirements that decide how different software offerings interact with each other.
Think of PayPal – if you’re shopping on another website with a “Pay with PayPal” option, it is connected via an API to the website you are shopping on.
- Open API
An API that is made publicly available to all developers. By offering an Open API, you open your platform to all tools from various providers, who then integrate into a single point of entry.
Providing an open API eliminates the need to re-write code, which can be lengthy and come with high costs and error rates.
For example, Meta’s Facebook allows outside platforms to post on user’s newsfeeds – made possible by their open API.
- SaaS (Software as a Service)
A business model where a software platform is centrally hosted on the internet and accessed/licensed on a subscription basis – as a service.
For example, Salesforce is a leading B2B (business to business) SaaS platform, and Netflix is a leading B2C (business to consumer) platform.
- Hardware
The actual physical devices on which you run your software, such as tv monitors, computers, laptops, tablets, and mobile devices.
For example, a clothing boutique may run Toast for their POS system, but they need a tablet or computer on which to deploy the system. In addition, they may use Quickbooks for billing on another laptop or computer.
In this example, those tablets, laptops, and computers would be that boutique’s hardware.
- Tech Stack
The collection of underlying technology on which software is built.
For instance, a personal computer has software which is built (or stacked) upon the operating system, which is built upon the computer’s bios, which runs on the code embedded in the hardware chips inside the computer.
Cloud-hosted software is often built upon many “stacked” layers of web application protocols.
- Blockchain
Blockchain is a decentralized digital ledger that stores information in a digital unit known as a block. Blockchain has two primary components: creating a blockchain and the peer review stage. The blocks of information can never be overwritten, only added onto.
New blocks of information about the same transaction connect to existing blocks – like a chain, which is where the term originates.
Then, that chain must be verified by other blockchain peers, which decentralizes the technology so that no single person has complete control.
Instead, all users retain control together. Without the peer process, it wouldn’t be blockchain technology.
Blockchain creates trust and transparency because it is not regulated by any government, business, or person. It relies on a public ledger to verify each part of the chain.
Current leading forms of blockchain are cryptocurrency, the blockchain answer to money, and NFTs (Non-Fungible Tokens), the blockchain answer to digital ownership and provenance.
This list of terms is just the tip of the iceberg when it comes to cannabis and technology industry terminology.
