The North American cannabis market is a competitive industry, but cannabis industry ancillary businesses fill less crowded spaces and provide essential services around the industry.
Like any business, the cannabis industry doesn’t exist in a vacuum. Every cannabis business large and small relies on a supporting cast of services that might only be tangentially related to the plant itself, and certainly nothing that the customer will be thinking about when they’re standing in the dispensary deciding between the Hindu Kush or the Sunshine Sherbert. All the same, these ancillary services are integral to the industry’s ability to bring that top quality product to the consumer. Because of their places behind the scenes, the average investor might not realize the kind of opportunities offered by the cannabis industry’s ancillary businesses, but these services can be profitable niches to be involved with and revenue streams in and of themselves.
The US cannabis sector is projected to more than triple to $25 billion by 2025, according to data from New Frontier Data. Meanwhile, Deloitte Canada projects that the Canadian cannabis industry could grow to a total market size of C$22.6 billion in the coming years. These figures take into account a considerable amount of revenue generated by security services, growing tech, data analytics, marketing and packaging and so much more that might not involve contact with the actual cannabis plant.
Enter data analytics
For an industry that has only just come to be in its current legitimate form, data analysis plays a very important role when it comes to understanding industry trends and the cannabis consumer. Data analysis has a place in virtually every industry today, but few if any other industries have the kind of gap in understanding of the consumer than what currently exists for the cannabis industry. For decades, cannabis was a black market business, and black market sales don’t exactly generate a lot of usable data. Companies like BDS analytics, New Frontier and Cannvas MedTech (CSE:MTEC), through their Cannvas Data division, are working to fill this gap, using data generated by cannabis retail transactions and more to paint a picture of the real North American cannabis consumer as well as the market and where it’s headed. The cannabis data industry is among the fastest growing ancillary industries in the cannabis sector with a compound annual growth rate of 40 to 50 percent according to BDS Analytics CEO Roy Bingham.
Growing role of blockchain
Also disrupting a wide range of industries, but particularly the cannabis industry, is blockchain technology. The technology, which uses an unalterable shared ledger to record transactions across a decentralized network of computers, has been put to work for a range of applications in the the cannabis space. Companies like Blox Labs Inc (CSE:BLOX,FWB:BR1B) and TruTrace Technologies Inc. (TSXV:TTT, OTC PINK: BKKSF) are using blockchain to keep illicit activity out of the legal cannabis market by tracking supply chains and creating records of where product is coming from and whose hands it passes through that can’t be tampered with.
Both cannabis businesses and government regulators are working with blockchain technology companies to make sure cannabis supply lines are securely traceable and transparent. Blockchain is also being used in the cannabis clinical trials space by companies like CBDS Health and Global Cannabis Applications (CSE:APP) to ensure data security and privacy for trial participants while also ensuring data accuracy and transparency. These companies are also helping cannabis researchers log information about specific cannabis specimen, creating an immutable record so that clinical researchers know the entire history of the plant and helping to produce accurate and repeatable results.
Supporting cannabis agriculture
Cannabis producers are, of course, at their core agricultural companies and always looking for ways to improve their product while maximizing cost efficiency and sustainability. This is why the cannabis and agritech industries are natural partners. Modern agricultural innovations like improved LED lighting systems, automated hydro/aeroponic systems, air filtration systems, climate control and more are as useful for cannabis grow operations as they are for vertical farming setups for food. Canadian company Lumigrow is one such company developing agricultural tech innovations in the cannabis space, developing an innovative LED lighting solution that allows growers to adjust grow lights along the color spectrum for the specific stage in the plants’ grow cycle, or to achieve desired levels of specific cannabinoid production.
As cannabis gains legitimacy and loses its stigma as a result of legalisation, more and more adults who previously would have never considered trying cannabis are likely to give it a go, be it for medical purposes or recreational curiosity. Some of these newcomers are bound to wind up overwhelmed by the sheer volume of variance and choice offered by the wide world of cannabis products. This is particularly true for new medical users who’s considerations and concerns when figuring out what product is best for them will be far more complicated and have greater implications than recreational users.
Educating these new users lowers the intimidation factor and helps to ensure a positive and constructive cannabis experience. This is why there’s a place in the legal cannabis space for companies focused on educating consumers and many of these companies are partnering with cannabis producers and retailers to help lower these barriers to entry for their products with information resources and awareness campaigns. Cannvas Medtech is involved in this area of the cannabis industry as well. Though the company’s Cannvas.Me educational platform, Cannvas partners with players across the cannabis industry to create a white-label cannabis education solution that provides a free and unbiased resource for physician-backed cannabis learning.
Branding in cannabis
Every consumer product or service needs a well thought out brand identity. This can be difficult for cannabis, particularly in Canada where restrictions on cannabis branding and packaging are excessively restrictive. This is why cannabis companies need to turn to specialized experts of the cannabis industry if they’re going to outsource their branding and packaging design process. As such, marketing and branding firms are popping up with the specific focus of working within these restrictions while still developing unique and compelling brand identities for brand strategy, commercialization, and full go-to-market strategies through multi-channel campaign design and management. cannabis companies. Cannvas Creative is one such company set up specially for cannabis.
The future of cannabis industry ancillary businesses
The cannabis business is expansive and encompases so much more than just selling plants. Potential investors interested in the emerging cannabis industry would do well to explore these ancillary revenue streams and find opportunities that not everyone is going to think of. There’s nothing wrong with being part of the supporting cast.
This article was written according to INN editorial standards to educate investors.