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The cannabis industry is expanding but faces challenges such as banking restrictions, supply chain disruptions, and inventory management issues.
Cowen, a financial services firm, is projecting that the industry will obtain $75 billion in sales by 2030. But, that level of financial growth could be derailed by crises such as the Russia-Ukraine war and supply chain problems.
The war is limiting access to fertilizer, a farming material needed by cannabis cultivators. In April 2022, CNBC.com reported that disruptions to fertilizer shipments from Russia and the Ukraine had led to a fertilizer shortage and an increase in fertilizer prices. For the cannabis industry, a fertilizer shortage could lead to lower crop yields and higher prices for consumers.
Software companies can help the industry adapt to these problems by providing customized enterprise resource planning (ERP) software.
One ERP software solution that can be customized is NetSuite, which contains a suite of tools for managing supply chains, inventory, and overall financial stability.
The COVID-19 pandemic disrupted the global supply chain, leading to shortages in a wide variety of products. Unfortunately, the cannabis industry isn’t immune to such problems.
In an interview, Eric Schneider, managing director of AlphaRoot, said that cannabis dispensaries were particularly reliant on third parties for supplies and could incur significant losses from supply chain disruptions, according to InsuranceJournal.com.
A supply chain is a network used by companies to deliver products to customers. Managing a supply chain involves sourcing supplies, planning, managing inventory, storing and delivering products, and processing returns.
NetSuite ERP, a suite of integrated software applications, gives businesses a clear picture of the processes that they use for supply chain management.
With NetSuite’s supply chain management system, cannabis companies can avoid common setbacks such as stockouts and production delays. A customized version of this system can be used to cover points along the seed-to-sale chain such as grow automation, CRM systems, and point-of-sale.
For cannabis dispensaries, managing inventory properly is critical. Cannabis Business Times, an online publication, noted in an article that these companies could be fined or subjected to other penalties for inconsistencies in inventory information.
That’s why dispensaries would benefit from using NetSuite Inventory Management, a software solution that includes features such as lot-numbered and serialized inventory items. The lot-numbered items feature enables users to manage the cost of inventory. The serialized items feature enables users to determine which products are being kept in stock.
In addition, inventory managers can use the auto-calculation functions from NetSuite to calculate the lead time, preferred stock level, and reorder points for inventory. Ultimately, managing inventory properly is one of the keys to maintaining the financial health of a company.
Financial management is a major challenge for the cannabis industry. Most banks are reluctant to work with cannabis companies because marijuana is still illegal at the federal level. So, these companies are heavily reliant on cash and can only accept electronic payments via debit cards.
In an article for CFO Dive, accounting professional Andrew Hunzicker wrote that the use of outdated accounting control techniques could expose cannabis companies to legal fines. He added that these companies would have to keep flawless records of payments and daily cash counts in order to comply with regulations. And, he also stated that dispensaries should use daily, weekly, monthly, quarterly, and annual accounting procedures.
Those procedures can be implemented through the use of NetSuite’s financial management tools. Those tools includes features for ledgers, cash management, accounts receivable, accounts payable, tax management, and payment management.
NetSuite delivers tailored insights into company performance and generates accurate financial statements that comply with generally accepted accounting principles (GAAP).
A customized NetSuite ERP system suited to cannabis-based businesses can be helpful for managers who are trying to solve problems related to cash control, accounting, and compliance.
Cannabis businesses can overcome these issues by using a customized version of NetSuite ERP software. And, of course, any software company that would like to profit by serving cannabis businesses should hire a software development company that has experience customizing NetSuite.
Chetu can not only create custom NetSuite ERP solutions but also help software companies tailor those solutions to cannabis business operations throughout the supply chain, from cultivation and manufacturing to dispensaries. Contact Chetu today for innovative software solutions.
Chetu, Inc. does not affect the opinion of this article. Any mention of specific names for software, companies or individuals does not constitute an endorsement from either party unless otherwise specified. All case studies and blogs are written with the full cooperation, knowledge and participation of the individuals mentioned. This blog should not be construed as legal advice.
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