Data analysis best practises are making the cannabis industry and big data unlikely partners.
Across just about any industry today, data analysis is playing an increasingly important role. As such, the cannabis industry and big data are forming an unlikely partnership.
Companies are using market and consumer data to put a finger on the pulse of the average consumer, to plan for emerging market trends, optimize operations and more. As we’ve entered into an age where previously unfathomable categories and volumes of data are generated with every transaction, the data industry creates remarkably insightful avenues for analyzing and putting that data to work.
Data is no less important in the emerging legal cannabis market, but the circumstances of the legal cannabis industry create a unique set of complications for companies working with cannabis data. As the cannabis industry develops, cannabis players are beginning to realize how powerful data analytics can be as a tool for discovering new markets and niches and putting themselves ahead of the curve in a fast moving industry.
The cannabis data gap
It’s a well-known phenomenon that more than a century of cannabis prohibition in developed countries has kept the plant out of the hands of researchers and created a gap in our understanding of how cannabis works that we have only begun to close in recent years. This same phenomenon has also manifested as a gap in cannabis market consumer research. Heading into the legalized era, we had little more than stereotypes to inform our picture of the average cannabis consumer. This is changing fast, driven by a recognized need by cannabis businesses to better understand their customer bases.
Colorado became the first jurisdiction in North America to legalize cannabis in 2014. This gives market researchers a miniscule five years of data to work with. Data that exists from pre-legalization markets is largely government collected and tends to be skewed towards highlighting perceived harms of cannabis use rather than presenting a nuanced picture of cannabis consumers. More useful data exists for the medicinal cannabis market than the recreational market. While there are some correlations between these two markets, they are very distinct in terms of consumer needs and buying habits.
Cannabis market data is indispensable to the cannabis industry going forward, and the fact that it’s so rare right now makes it all the more valuable. The good news for the industry is that we’re now seeing tens of thousands of cannabis transactions occurring every day in legalized jurisdictions. Those transactions are only going to become even more frequent and every transaction helps to generate data. Through a range of means, cannabis consumers are also increasingly willing to provide insights on their wants and needs from the product. That’s terabytes of solid gold generated every day.
Cannabis industry and big data landscape
We are still in the early days of cannabis data monetization but more and more cannabis retailers are seeing the value in partnering with data analytics companies to produce big data with big implications for their industry. This presents an incredible opportunity for the cannabis industry and big data sector. A few companies have stepped up to help fill the cannabis data gap, working with licensed producers, retail outlets and, in some cases, consumers to generate and monetize data from their sales and operations.
Today, the cannabis data industry is relatively small, but this will almost certainly change. As more jurisdictions open up to legal cannabis and more players enter the market the demand for data will continue to grow. Roy Bingham, CEO of BDS Analytics told Marijuana Business Magazine in April 2017 that his company projects demand for cannabis data to grow at a rate of 40 to 50 percent per year.
BDS is one of a few data companies working in the cannabis sector, partnering with dispensaries and licenced producers to provide insights from their point of sale transactional data. Other US companies providing the cannabis industry with data services include New Frontier Data, New Leaf Data Services and Headset.
Canadian business technology company Cannvas MedTech (CSE:MTEC) is taking a more crowdsourced approach to cannabis data. The company has launched an online educational platform for cannabis consumers called Cannvas.Me, through which the company will generate data to be used by its Cannvas Data division to provide insights on consumer tastes, needs and habits. Through this platform, according to the company, Cannvas hopes to evolve into the “census data of the cannabis industry.”
Cannvas.Me and Cannvas Data provide an interesting synergy by educating consumers on the world of cannabis while also collecting vital market data. As an educational resource for cannabis consumers the platform offers a valuable product that brings in the target audience for cannabis businesses. The user-generated content and data provides important insights into the needs of consumers that can translate to identifying underserved spaces in the market and a better understanding of which products will carry the highest demand.
Platforms like these utilize cutting edge methods to generate insights from raw data that businesses 20 years ago could have only dreamt. The emergence of artificial intelligence and machine learning algorithms have made it easier than ever to take raw data generated from a dispensary point of sale system or user-generated data from an app like Cannvas.Me and find patterns with greater accuracy and reliability than even the most talented human data analyst. Amazon’s (NASDAQ:AMZN) predictive analytics algorithm, for example, is able to predict what customers on its site are looking for well before they find it.
Whether your business is real estate, entertainment or cannabis, data is power. Insights generated from the consumer base and properly analyzed using cutting edge machine learning and artificial intelligence are no longer a “nice to have” but a necessity for keeping up with consumer wants and needs and a rapidly shifting business landscape. As a newly emerging industry, the cannabis business has a lot of ground to cover in terms of understanding its customers, but new tools in data analysis will ensure the industry will get up to speed fast.
This article was written according to INN editorial standards to educate investors.