ERP in the Cannabis Industry

by | Mar 7, 2022

Industry articles feature contributions from cannabis tech industry experts, company representatives, PR agencies, and ghostwritten Op/Eds. While we provide basic editorial reviews, views expressed in these articles do not necessarily represent those of Cannabis Tech.


Think about it. Cannabis companies have many of the same FDA requirements as food, drug, or medical device companies that require extensive quality controls and follow Good Manufacturing Practices. What’s different is the reporting that each state requires to track cannabis material from seed to sale. This type of reporting can have nuanced differences by federal, state, or provincial jurisdictions. Ultimately, regulating bodies want to ensure cannabis companies can account for the quality of their products, whether the cannabis is turned into a medicinal product, an edible, or becomes spoiled or wasted as part of the manufacturing process.

One of the toughest obstacles of any business is efficient vendor and supply management. Such an endeavor is further complicated when the market is new and heavily regulated, like cannabis. How does an organization break down the intricacies of moving an idea from a notepad scribble to a developed product delivered to market? The robustness of a company's supply chain can often be the deciding factor separating success from failure. How can a company replace the multitude of legacy systems in its organization, one that has typically been built through acquisition, to a complete and comprehensive set of apps built for a larger, integrated organization?

At present, most cannabis companies are struggling to properly manage inventory and optimize production for the raw material they can acquire, so they need an industrial-strength ERP system to plan and produce more optimally. The other issue is ensuring quality management, compliance, and customer service are all embedded in one system. Legal cannabis companies compete on quality versus the black market, so value management is critical to their business strategy. Therefore, ERP systems need to help them produce, test, and ensure that they are producing superior products.

Furthermore, ERP needs to be tied to customer-service systems when a compliance issue does arise. Are they handling that issue quickly, documenting it correctly, and tracing the problem to the source of the issue back into production? This is where detailed track-and-trace ERP capabilities with a call center and quality management system are critical. Finally, reporting is a big issue. Beyond classic business reporting and FDA reporting, cannabis-specific reporting is required in each state.

Benefits of ERP       

With a cloud ERP solution and QHSE support, customers can:

            1. Optimize production based on demand forecasts, production capacity, and supplier constraints. This reduces time to market.

            2. Leverage “track and trace” capabilities for lot control and serial number tracking, raw material inspection, in-process checks, and final inspections to be made and the generation of relevant Certificate of Conformance (CoC) reports.

            3. Manage inventory and costs across multiple locations by items, lots, and serial numbers.

            4. Maintain compliance with Good Manufacturing Practices (GMP) and Good Production Practices (GPP).

            5. Benefit from single-cloud-platform interoperability with ComplianceQuest. It delivers enterprise-wide control and predictable quality so regulatory and product safety requirements are fully met.

            6. Reduce the cost of compliance while fully meeting industry expectations and regulatory agencies' requirements (such as FDA and other Federal Health).

            7. Improve profitability by reducing variability, eliminating waste, adhering to schedules and commitments, and reducing cycle times.

            8. Leverage a worry-free infrastructure with data and document access anywhere, anytime, and from any device.

            9. Complete visibility and control from a single pane across different divisions and locations.

Also, finding and retaining qualified manufacturing staff is difficult. Having a greater chance of retaining key staff wherever they are is a great advantage in handling remote working, security, and compliance challenges.

Also of importance is the software is focused on the cannabis vertical. Over the last few months, has it strengthened features required by the industry, meeting all the requirements requested? These include order processing, production management, supply chain management, IoT and serial number trackability and traceability, compliance reporting, costing and financial management.

Customers need their software to transform their operations, inventory, and production processes overnight, while desiring seamless interoperability between their software partners.

The flow is one in which companies take seeds and cultivate them. And then, they have to perform testing and QA to measure potency and ensure consistency in their product. Once their product is available “on the shelf” and available for market, they need to process orders efficiently and compete on both the service and quality fronts.

On the CBD and recreational fronts, after packaging their products, they either fulfill orders to retailers or sell them through their own storefronts or websites. And all cannabis companies – both recreational and medicinal – have to be able to track incidents, when consumers experience an adverse reaction. This is a huge challenge; and one that requires robust IoT and traceability features in their system and processes.

Oftentimes, organizations have track and trace capability where they can drill down from a CRM system. Companies also will have the service case. They have the serial number or the lot number and can track it in the ERP system. They can see if it was tested in the QHSE system, and then determine if they need to pull/recall the whole lot.

The computer system helps facilitate precise production, inventory, and supply chain management, enabling a company to be highly responsive to market needs. It allows the user to set the standard for worldwide leaders in the cannabis industry through a diversified approach to innovation, corporate citizenship, strategic partnerships, and global expansion. With these system implementations, they will be technologically equipped to take their competitive advantage to new levels of market leadership.

Many states are deploying tools like Metrc to track and trace cannabis inventories and products to their origin when there are health issues. Besides the compliance issues, there is the inventory shrinkage issue. Whenever it is needed to know from where certain plants originated or what product is missing, the ERP systems should be able to track down the answers quickly.  

This article was originally published on Rootstock