Grow Your Business: Cannabis ERP Pros & Cons

Cannabis cultivation businesses are subject to complex regulations, which can be challenging to manage with decentralized systems. Manually importing data into an Excel spreadsheet or Doc file doesn’t ensure that information is in front of the people who need it, when they need it.

The cannabis industry also faces data concerns. If you’re using multiple systems to manage your business, fragmented data storage presents a security risk and multiple points of entry into your company.

Enterprise Resource Planning software was created to centralize processes in the manufacturing industry and evolved to include back-office processes as well. The system acts as a central hub for your business to automate tasks, improve internal communication, and provide insights into your business as a whole.

Growers have a lot to manage between the business side of cultivation and the precise science of cultivation. A cannabis ERP system provides a clear view into your business where operations can know what’s going on in cultivation and management can see the plants and the financials in one place.

Investing in an ERP can help you grow and scale your business more efficiently.

Streamline Operations

One ERP system can streamline inventory management, production tracking, sales, seed-to-sale tracking, reporting, and more, making it easy to keep track of all the important benchmarks.

Improve Compliance

Cannabis-specific ERP systems can help alleviate the burden of compliance by automating tasks, keeping detailed records, and generating reports for cannabis regulatory bodies. It doesn’t take away the need to stay on top of compliance management, but ERPs can make it much more efficient to do so.

Robust Data Security

ERPs offer one place for centralized data storage and come equipped with industry-standard security features and customizable user access controls.

Better Business Visibility

Your ERP offers a real-time look into your business. Customized dashboards and reports help inform better decision-making and risk management to stabilize growth. Instead of searching through documents to compile a report or review last month, it’s all at your fingertips.

Scalability

ERP’s can be easily scaled to accommodate growth and adapt to changing industry demands or regulations, making them an ideal partner for a rapidly growing business.

Integrated Risk Management

Many ERPs come with the capability to integrate risk management modules so you can proactively identify, mitigate, and risk risks in your business.

However, implementing an ERP is not without a few potential downsides. These can be managed, but it’s important to consider the capacity of your team and your budget.

Upfront Costs

Implementing an ERP can add up quickly. There’s the initial cost for the system itself, as well as sales tax. This cost may vary depending on the size of your organization and your requirements for the system.

You don’t own an ERP system, you license the software, which is an ongoing cost. Some ERPs offer a monthly payment plan while others require payment annually.

Onboarding

Onboarding onto a new system, whether for the first time or from an existing system, can be challenging. After purchase, you may have assistance in setting up the back end of your ERP, or the process may fall to your team to complete, before the system can be used. Setting up user permissions, creating workflows, if/then automation, account tracking and more have to be done before your team can start actually using the system.

Changing Workflows

Implementing an ERP gives your business an operational overhaul and a new daily interface for employees to use, which takes time to adapt to. Tracking all parts of your business in one place requires new workflows and it can take a few months to smooth out all the bumps.

Potential Customization

The cannabis industry is still considered emerging, and tailored ERP system options are limited. If you have to customize an existing system to your specific cannabis needs, it adds time to the onboarding before the system is ready for employees to use.

Migrating Data

Migrating data from an existing system into a new system is nobody’s favorite task. Every time you move data, there’s a risk it could get corrupted or twisted in the process.

Security Concerns

As a centralized hub for your business, an ERP is a potential vulnerability, providing a window into how your company works. Following cyber security best practices is important to reduce the risk of an ERP becoming a cyber liability and maximize the data protection capabilities.

ERP systems help rapidly growing businesses centralize processes for manufacturing and back-end operations. But given the cost upfront and the downtime to get it up and running, it’s worth being meticulous in weighing the pros and cons of getting one.

Consider the following:

• How big is your company currently, and how fast is it growing?
• How complex are your operations? How will your operations scale with you?
• What’s your projected growth rate?
• Do you have a strategy in place for stable growth?
• Do you have established scopes of work?
• What does your current leadership structure look like? How do departments communicate? Where do people turn to for commonly asked questions?
• Where could an ERP system fill gaps and streamline processes?
• Do you have a comprehensive view of your business? Operations, finances, etc.

Implementing enterprise resource planning software for your business may not seem connected to risk management, but the two go hand in hand. Your ERP can be a valuable resource for risk insights into your business, which can inform your risk management plan and your insurance coverage. If you’re not sure how to maximize the two working together, a risk management consultant can help.

An ERP system can be a valuable tool for centralizing processes, risk management, and compliance for a growing team, if it’s handled properly.

Protecting your cannabis company can seem confusing; however, we’re a full-service insurance brokerage working with carriers worldwide to offer you the best coverage possible. We’re here to help! Please reach out to us today by email [email protected] or calling 646-854-1093 for a customized letter or learning more about your cannabis insurance options.