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How big data is influencing the medical cannabis industry

By January 30, 2017Article

Marijuana has gotten a bad reputation over the years, having been the target of President Nixon’s “War on Drugs” in the 1970s. More recently, both medical and recreational use of marijuana has been legalized in many states throughout the country. 

Florida, one of the latest states to legalize marijuana for medical use, is estimated to have a $1.6 billion dollar market for the drug by 2020. While legalization is obviously one of the biggest factors influencing this market, it’s not the only factor.  

Big data is playing an enormous behind-the-scenes role as well. Let’s examine how big data is impacting the medical cannabis industry and how it could potentially change it in the future. 

Big data is longer optional 

Big data is a buzzword, but it is also becoming an indispensible tool to help businesses grow in every industry across the globe, medical marijuana included. 

Big data, in essence, is the amalgamation of every piece of data an industry or company collects. By placing this data into a computer and applying predictive algorithms, medical marijuana companies and sellers can predict trends, assist sales and even make sure growers and dispensaries maintain their operation within the state and federal regulations. 

New Frontier Data is one such company leading the charge in big data applications for the cannabis industry. Gretchen Gailey, vice president of communications and government affairs at New Frontier, says that big data is especially important for industries as misunderstood as the cannabis industry. 

“The medical aspects of the cannabis flower are of course the most critical within the industry as they directly impact lives,” says Gailey. “So it follows that in a nascent, fast-growing industry impacting millions of lives, big data is indeed hugely important.” 

Gailey says 36 states plus the District of Columbia now have some level of medical cannabis legalization, representing approximately 1.6 million medical cannabis patients. However, she points out there is very limited visibility on how to properly and effectively recommend cannabis medicine in terms of proper dosage or the right mix of terpenes and cannabinoids.  

Gailey advocates the need for data collection to help understand how to best improve the efficacy of medical cannabis, since the existing clinical research is limited. “Big data enables statistically meaningful analysis that will advance this research despite the lack of rigorous scientific methodology applied to the plant and its application, and will also provide a strong basis from which to propel clinical research once it becomes legal,” she says. 

Even drug testing should be considered part of such data. As private companies, many employers still require employees to pass a drug screening. However, the process of testing urine in a lab takes time and money; therefore, finding additional applications for the information obtained from urine tests could make such practices more worthwhile for employers.  

Non-patient-specific data collected could be used to assess consumer adoption of medical or recreational cannabis, and could provide insights into the kinds of careers where employees are more likely to use marijuana.  However, while marijuana is legal for both recreational and medicinal use in many states, there are no laws in place to protect individuals who use medical marijuana from the repercussions of a workplace drug test. Thus, it will be up to employers to decide if marijuana use is acceptable by company standards. 

Regulation tracking is opportunity for software companies 

Medical marijuana is one of the most highly regulated industries in the world, and staying in business means adhering to the letter of those laws. That opens up opportunities for new software startups and offerings. 

One of the earliest applications of big data in the medical marijuana industry was courtesy of a point-of-sale setup known as Flowhub. This cloud-based software was designed to help dispensary and store owners by maintaining inventory and sales records, as well as generating and submitting required reports to the Marijuana Enforcement Tracking and Reporting Compliance (METRC), ensuring the dispensaries are in compliance with all regulations. The program also allows workers to check on customers and prevents them from purchasing more than their prescribed amount of medical marijuana. 

Catching up with retail 

One of the biggest applications of big data in retail is company-wide inventory management and price suggestions. Even giant companies like Wal-Mart are relying on big data to provide the best customer experience possible for their millions of customers worldwide. Until recently, medical marijuana dispensaries were, by and large, on their own when it came to pricing, inventory management and other similar tools. 

Headset, a big data startup designed for the cannabis industry, has set out to change that. The app uses cloud data from dispensaries around the country to provide real-time market insights based on current sales trends. It is also able to use predictive analytics to determine, with varying degrees of accuracy, what direction the industry is going to move in next. 

Lessons for other industries 

Implementation of big data in the medical marijuana industry has applications to other types of businesses. What are the lessons learned? 

1. Predict potential problems early 

The medical marijuana field is constantly changing as new states legalize the plant for medical use and regulations change on both the state and federal level. Despite overwhelming voter support, medical marijuana in many states still faces many obstacles. In Florida, for example, while qualified individuals should have been able to obtain medical marijuana by prescription on January 3, 2017, state and local officials could potentially delay sales in the states for anywhere from six to nine months. 

Businesses in other industries could face similar obstacles. Big data and predictive analytics can give companies the tools to get ahead of those problems before they begin to impact a business.  

2. Information transparency and sharing data   

Even though states like Colorado have seen millions of dollars in tax revenue as the result of their marijuana legalization, it is still an industry that is taking its first steps into a larger corporate world. As such, alliances within the industry are not an option — they’re essential to the continuing success of the medical marijuana industry as a whole. This train of thought can be applied to nearly any industry in the world. Seek out alliances within your industry to help your business grow. 

Gailey points out that “despite many organizations’ hesitancy to share information in fear of giving away competitive intelligence, there are many ways to support information transparency across an industry without such risk. According to Gailey, New Frontier Data, for instance, aggregates data from competing aggregators across the cannabis sector and provides both micro-level analysis and insights to individual operators, and then contextual industry benchmarks, or macro-level analysis based on regional aggregated data without any risk to the individual operator’s livelihood. 

Access to real-time business intel necessary to mitigate competitive risks and improve profitability benefits companies and the industry as a whole. But Gailey advises companies to take proper precautions to collect data responsibly. Firewalls across data sets is one method. Another is strict reporting protocols to ensure the data is aggregated and reported in an anonymized manner. 

3. Focus on customer experience 

For a medical marijuana dispensary, one of the most common core values is ensuring the right relationship with customers.  For a dispensary, the person walking through the front door isn’t a potential customer — he or she is a patient seeking help to deal with a medical problem. 

This is an important lesson for companies looking to improve customer experience in a digital/big data world. By treating each person as an individual rather than as an entry on the bottom line and focusing on their needs, businesses build relationships with their consumers and create a better overall experience. 

When you compare it to some of the other lucrative industries in the country, medical marijuana is just a baby, but it is growing faster than we can keep up. The implementation of big data in the cannabis industry is just the beginning. As more states legalize medical or recreational use of marijuana, this industry will continue to grow and adapt. The lessons that have made it successful thus far can also be used to help improve businesses in other industries. 

Kayla Matthews is a technology journalist and blogger. To read more posts about big data, technology and artificial intelligence, follow Kayla on Twitter or subscribe to her newsletter on Productivity Bytes.

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