Data analytics tools are harnessing the power of consumer data to enable growth in the cannabis industry.
Cannabis legalization in the digital age is resulting in massive amounts of consumer data, enabling companies to optimize operations through cannabis data analytics.
Advances in data analytics, artificial intelligence and machine learning have made that raw data all the more valuable. Technology companies are designing data collection and analytical tools that specifically target stakeholders at each stage of the cannabis supply chain, including clinical researchers, cultivators, distributors, retailers and consumers.
Harnessing the power of consumer data to define and refine product offerings and marketing strategies is not a new phenomenon for most customer-facing industries. Every transaction along the supply chain generates valuable data. A whole industry has grown out of using data to understand consumer profiles and develop successful brands and product lines around those profiles. Today, technological innovation in data analytics and intelligence tools has become one of the major drivers of growth in the cannabis industry. Recognizing the opportunity, data technology companies are creating platforms for collecting, analyzing, sharing and monetizing cannabis consumer data.
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Data analytics in the cannabis industry
Data generated through seed-to-sale tracking systems, dispensary point of sale (POS) systems, cannabis consumer apps and even vaping technology can be used by cannabis companies to improve their offerings. The knowledge gleaned from cannabis data analytics also benefits cannabis consumers and the mainstreaming of marijuana.
“Cannabis consumer data can relay information about which cannabis products are the most popular, how consumers are using those products and how cannabis companies can refine their product offering to target consumer preferences. The data from POS systems can provide valuable information about consumer preferences and spending habits,” Ryan Hamlin, CEO and co-founder of fintech company POSaBIT Systems (CSE:PBIT,OTC Pink:POSAF), told the Investing News Network. “Cannabis companies realize that data analytics tools can help them discover high-margin niche markets and develop new product lines to supply those markets, giving them a competitive edge in an evolving market.”
POSaBIT has developed a blockchain-enabled payment processing and POS system for cash-only businesses, including US cannabis companies. POSaBIT’s technology has been implemented in over 120 dispensaries across six legal cannabis states. The POS system’s interactive tools facilitate consumer education and engagement, and the customer profile feature helps track consumer product preferences and purchase history. The data generated from this system can help cannabis companies educate consumers, improve products, increase sales and refine marketing strategies.
As cannabis legalization spreads across the globe, the market is bound to see an exponential increase in the amount of data generated at each point along the cannabis supply chain. “As the industry grows, it tends to consolidate, and it’s the larger companies that have a greater demand for data,” said Roy Bingham, co-founder and CEO of BDS Analytics, to Marijuana Business Magazine. “So we expect the demand for our services to grow faster than the industry. If the industry is growing at 26 (percent), maybe demand for our services grows at 40 or 50 (percent) a year.”
BDS Analytics and New Frontier Data represent the cannabis industry’s biggest providers of data services. Their business models center on partnerships with dispensaries and licensed producers to gain actionable insights from their POS transactional data. “We partner with dispensaries, they provide us their (point-of-sale) transactional data, we do a tremendous amount of work with that,” said Bingham. “Then we provide that back to the dispensaries, so the dispensaries can then say, ‘Now I understand my own trends.’”
New Frontier Data recently launched a new feature on its Equio online platform, which the company says is “the first global and digital cannabis data marketplace.” Through a subscription, stakeholders in the cannabis industry can access data sets covering a variety of metrics including cannabis consumer trends. “We have spent over five years building the only cannabis Big Data technology platform that is able to ingest, scrub, process and report millions of data points. Our industry reporting has now reached over 80 nations worldwide, and so the time has come to support others’ research and reporting by leveraging what is ultimately our core competency: data reporting,” said New Frontier Data founder and CEO Giadha Aguirre de Carcer in the press release.
Cannabis data analytics improving consumer experience
The cannabis plant contains nearly one hundred different cannabinoids as well as numerous terpenes and flavonoids that are unique to specific strains. Each of these plant components plays a role in the therapeutic and psychoactive effects of cannabis. The diversity of cannabis strains and different cultivation methods can make for significant differences in consumer experience from one strain to the next. The effects of cannabis on the body can also vary widely from one individual to the next, and be further impacted by the delivery method. As an illegal substance for decades, minimal clinical studies have been conducted on these variances in effects.
The lack of product knowledge in the cannabis industry presents a serious challenge for those within the industry looking to target consumers with tailored products. For consumers, matching the right cannabis products to the desired experience can prove equally difficult.
Advanced data collection and smart analytical tools are able to mine consumer data for valuable insights that can improve the consumer experience. In addition to POS systems, new systems and methods are emerging to extract valuable data from the cannabis industry. For example, RYAH Medtech has developed a digital ecosystem for the medical cannabis industry that leverages the internet of things and patented artificial intelligence technology. RYAH’s smart vaporizer device can store cannabis lab results, measure patient inhalations in real-time, provide instant feedback for dose management and share data on strain consumption with cannabis companies. RYAH recently released a data analytics report on women and their medical use of cannabis through its data platform.
Data collection and analytics can help cannabis users gain further insight into which strains and cannabis products will help them achieve the effects they desire, whether medically or recreationally; cannabis researchers can use the information to target further studies or enhance existing research; cannabis growers can use the information to determine which strains are best suited for specific value-added cannabis products and specific consumer demographics as well as which strains are fetching the highest price points; and cannabis retailers can also that information to decide which products to stock on their shelves, directing customers to the products that will bring them the most satisfaction.
Going forward, data technology is expected to play a major role in the growth of the cannabis industry. Cannabis companies that have access to actionable data and analysis are better positioned to understand, educate and satisfy consumers by capitalizing on this growth.
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