What will the cannabis industry look like after COVID-19? CannaInsider host Matthew Kind forecasts the 7 disruptive changes that will take place in the years to come.
Check out an infographic on these 7 changes at https://www.cannainsider.com/covid
- How COVID-19 will impact cannabis in the next few years, including:
- Automated grow rooms
- Pathogen detection policies
- Contactless delivery and payment
- Pre-purchase of discounts cards and gift cards
- Results-only business partners
- Commercial drones for cultivation
- VR education
Matthew Kind: Hi, I'm Matthew Kind. Every Monday look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at canninsider.com. That's C-A-N-N-Ainsider.com. Now, here's your program.
Hi, Canninsiders. I hope you're doing well. This is Matthew Kind. I wanted to go over seven ways the cannabis industry is going to change after COVID-19 and I've put together an info-graphic for you that detail these changes at cannainsider.com/COVID, that's C-O-V-I-D. You can go there and get a visual of what I'm talking about or what I'm about to talk about. Okay. With that, let's get started. The first way that the cannabis industry is going to change after COVID-19 is automated grow rooms. Human beings need breaks, they need pay, they need benefits. Let's face it, we make mistakes when tasks get repetitive and we get preoccupied with other things and for things that can be automated because they're routine and happen over and over again, like planting cannabis seedlings and harvesting. Those things are going to start to be automated away.
Also humans are expensive. These cannabis businesses only want humans involved where they truly add value or I should say the forward looking cannabis business are. Where do humans truly add value? Well, it's not going to be so much as gardeners anymore but more as technicians looking over their laboratory in a sense. They're going to be managing the whole grow as a high level technician would be looking over an assembly line. It's going to look more like that. Humans aren't going away though. It's just they're moving up the value chain where their expense has a return on investment. That's number one, automated grow rooms.
Number two is pathogen detection policies. What do I mean by this? Well, after the wake of COVID-19 passes, governments will feel the need to respond to public outcry to do something about COVID-19 and to make sure that we're mitigating the risk. Also, insurance companies will want to know that their insured customers are doing a certain minimum to manage risk so they don't have to have huge payouts. What we'll see is pathogens detection policies from businesses and local jurisdictions to show what they're doing to manage the risk or disclose how they may not be managing the risks, so you know that too. Look for that the next 6 to 12 months.
Okay. Onward to number three, contactless delivery and payment for cannabis products. I've been talking about this for a long, but it's happening now. Contactless payment is something people are demanding. In fact, I already got a credit card in the mail from my credit card issuer even though my credit card hadn't expired yet. It wasn't set to expire for three years and they sent me a contactless credit card so I can just hold it near a credit card terminal and have it work. Many of us are already used to this with Apple Pay, but this is just going to greatly accelerate.
Also people are in their pajamas, they're looking frumpy. They just want to cozy up on the couch and they're not really wanting to interface with people when they order cannabis many times. They also don't want to be dealing with coins or dollar bills or potentially even a delivery person that's coughing or they look sick or something that's going to worry them. Look for contactless delivery and also a distanced delivery where somehow, you can acknowledge you've got the product, even if the person's 10 feet away or something more that's step one.
Step two is going to be fully autonomous delivery. I would imagine that would come to California or one of the Western States first that's a little bit more progressive where electric autonomous vehicle can come to your house and that smart locker will open up once you give some biometric information, like a fingerprint or an iris scan or something like that. Look for that to come. Okay, so that was contactless delivery and payment.
Number four is pre-purchase of discount cards or gift cards. What does this mean? Cannabis businesses are strapped for cash right now. Some are doing really well, but all of them would like to be doing better or almost all of them. The way they're going to get you and me to finance their business is they're going to offer us a hundred dollar gift card for their retail experience or dispensary or their brand and only have to pay $80 for it. Essentially a discount off face value of the card.
Why do they do that? They want the cash now to operate their business, but they also know statistically that a good chunk of the people will not redeem those cards quickly. They'll wait months, may be even years, and some, maybe even double digits will lose the card entirely or they'll have some amount on the card that they can't remember. Let's say if you have a hundred dollars gift card and you have $9 left on it, but you can't remember how much it is. All those things mean that the cannabis retailer's really not losing 20% when they sell you that a hundred dollars gift card. We know Cannainsiders are smart and you're going to spend the full hundred and not be part of that statistics, right?
Moving on to number five, results only business partners. What does this mean? Startups and entrepreneurs want to get into existing cannabis businesses and offer their goods and their services and their ideas and their technology platforms. These cannabis businesses are a little bit overwhelmed by that, but they want to stay ahead of the curve. What they're going to do is say, "Hey, I want you to come in and try this out for a month or two and if it works, we'll start paying. Otherwise, we can't really be involved." It's like a wait and see or a show me type attitude where they put all the risk on the startup to prove that they can help them.
Now I think it's really helpful if you're in this category to be a business that helps other businesses make money. Because most businesses they perceive that shedding expenses is not as important as earning one marginal more dollar. They recognize expenses are an issue, but at any given day they'd rather make an extra dollar than cut expenses. Also everybody in a cannabis business is excited about making more money and no one's really excited about cutting expenses.
If I had to start a business in this way, it would probably be something that can clearly prove that for every dollar you spend on my good or service, you're getting more than a dollar back and it could be demonstrated in some objective way. Look for results only business partners or startups to be allowed into cannabis businesses. This is look for language like a results only partner or something like that. A lean partner relationship, meaning that we only want to invest when we know it's working, that type of thing.
Okay. Moving on to number six, drones, and specifically I'm talking about commercial drones here for mostly cultivation. These are will be like the digital shepherds watching their flock of plants both indoors and outdoors and they give business owners data but also reassurance that their plants are thriving and they can look at their plants 24/7 and start to collect data and feel better just knowing in the middle of the night, all my plants are still there and they're doing well. All of the metrics look really good so I can go to sleep and not worry about this.
These commercial drones are going to be much more heavily leaned upon in the near future to provide other data like machine learning to look at potential problems in the plants and proactively mitigate those problems. Think of mold or pests or things like that on the plant. Drones are going to become a much more heavily relied upon part of a cannabis business, particularly cultivation business to know what's going on and to help business owners. All right, that number six.
Number seven, VR education. I don't know if you've been watching what's been going on in VR for, gosh, it feels like two decades now has really been about the promise of VR, what it's going to look like and what it's going to be. It's always around the corner and we've been waiting, waiting, waiting. Well, it looks like the Oculus Quest is the killer product that's finally arrived. It's cheap enough, I believe about $199 and importantly you don't need to connect to a computer. It's free standing. That was drag on the VR systems of old, you had to connect to a computer. This is totally freestanding. You'll see this and Microsoft HoloLens jump into the fore for education.
Right now it's mostly about entertainment and gaming and that's really fun and it works and it is extremely immersive. You can go on YouTube and get a sense of what these feel like, but until you put one on and also have the hand controls, you can't really tell.
What I see happening here is that app stores will start to arrive where third party developers will be able to create apps and specifically education apps. For example, the difference between learning in a textbook about cannabis cultivation and then having a virtual reality grow that you manage, in an accelerated harvest, that instead of months is just hours and you can go through the whole process of what it looks like, and you're also touching and moving plants with the hand controls can really give you a much more immersive educational experience faster and much more cheaply, because you're not ruining plants or taking up other employees time so look for that.
Also look for training for bud tenders, who will get training and how empathy, sales up-selling and also helping customers to feel welcome and helping them return back to a retail environment. All these things will be happening in VR education, specifically app stores that you can buy right on your headset. Take a look at the Oculus Quest and by the way, Oculus is owned by Facebook so just FYI there.
If you think I'm wrong or you think I've missed some big ways the cannabis industry is going to change after COVID-19 please let me know you can tweet me at CannaInsider and don't forget, I've put together an infographic for you at cannainsider.com/COVID C-O-V-I-D and you can see all these seven ways that the cannabis industry is going to change after COVID-19. With that, I will end the podcast now. Thanks so much for listening. Again, feel free to tweet me or send an email at feedback@cannainsider and let me know your thoughts on these different trends