Legalization of marijuana has arrived in Canada, and technology is playing a big role in this new industry, everything from artificial intelligence in production, to software for supply chain management, to e-commerce sites for distribution and apps to help track usage.
With Bloomberg predicting $4.5 billion in sales by 2021, there is a lot to be gained from entering the new cannabis industry and companies across Canada are looking to cash in, from Canadian tech-giant Shopify, to local startups, these organizations are finding new ways to plant their seeds in the recreational cannabis market.
E-commerce key for sales
The main way Canadians will be able to purchase recreational cannabis is through e-commerce, through either provincially or privately-run online stores. While regulations vary between the provinces and territories, some offering brick and mortar stores, some not, on Wednesday each launched an e-commerce site to provide consumers access to marijuana.
Shopify will be leading the way in Ontario, it was chosen by the provincial government to help run the online sales through the LCBO-owned Ontario Cannabis Store. The partnership announced in February uses the company’s cloud-based e-commerce software to allow consumers to purchase legal cannabis product from the provincially mandated store.
“This is something Shopify has been doing for many, many years. It’s really what the company is all about, and being able to fire up the retail cannabis industry is just something that we’re very excited about,” Brad Goble, director for regulated industries for Shopify Plus told ITBusiness.ca.
The Ottawa-based e-commerce giant was also chosen by three other provinces, British Columbia, Newfoundland and Prince Edward Island to build their online retail sites as well run some of the brick and mortar retail sales systems.
Cannabis isn’t necessarily a new industry for Shopify, Goble says the company has been working with medical marijuana distributors for the past few years, and other than differing provincial regulations and age restrictions its not much different from another other e-commerce product.
Shopify Point of Sale https://t.co/Q2h7LsbRDK
— Tobi Lutke (@tobi) October 17, 2018
However, since each province is so different Goble says Shopify has been treating its four contracts as different projects.
“Shopify has been all hands on deck to make sure that we have the appropriate platform and the appropriate things that are unique for each province,” he said, “we’ve dealt with each province as its own project, a separate project, to make sure that we’re addressing all the issues and all of the challenges that the individual provinces have.” He also noted that other than policy restrictions, making the sites accessible and easy-to-use is the most important factor for the e-commerce software company and in the future, as provinces grow their services, private cannabis sellers will be able to use Shopify’s platform as well.
Shopify is helping these four provinces build out their e-commerce operations, but policies and regulations around the sale of cannabis vary between the provinces, some opting for government-run systems, others fully private. In the later cases long-time medical cannabis producers have been able to win the online sales market.
Canopy Growth Corp., was chosen by Manitoba and Saskatchewan, both opting for privately run sales models, as the designated online store. One of the largest cannabis producers in the world, Canopy Growth has been producing medical marijuana out of Smith Falls, Ontario since 2014 and already operates an e-commerce site, which combines the company’s three main cannabis brands and has been called an “Amazon-like” platform by the Financial Post.
It’s unclear how the other provinces and territories will be operating their online cannabis stores, Brad from Shopify said it did originally bid for the opportunity to work with other provinces, but is only currently working with the four.
Technology brings weed from seed-to-sale
Shopify is also working with the Toronto-based software company Ample Organics Inc., which touts itself as being the number one seed-to-sale cannabis software in Canada. It offers cloud-based compliance software to ensure that the product is tracked from growth to retail.
Similar platforms exist, including fellow Canada startup Trellis Solutions Inc., which according to the Globe and Mail has been awarded three government contracts to be the point-of-sale software for provincial online stores.
Seed-to-sale platforms connect almost every aspect of the cannabis industry, from tracking the plants during growth and production to comprehensive client databases, automated prescription management, their own e-commerce sites and most importantly data on quality assurance and compliance.
Ample, which was named as one of Canada’s top startups by LinkedIn for 2018, was founded, similarly to Trellis, in 2014 when Prentice noticed that there was no easy to keep track of what is a highly regulated and complex industry and his previous experience working with licensed producers, “really illustrated for me was the need to build technologies specifically for the industry.”
Now Ample works with 70 per cent of Canada’s licensed producers, and with the legalization of recreational marijuana ITBusiness.ca asked Ample’s president and CEO John Prentice, if it changes anything, his answer is not really. “We’re in great shape leading into the legalization and now we’re just going through the ’11th hour’ stuff….our relationship with Health Canada moving into legalization hasn’t really changed if anything its become a lot more communicative. It’s been very helpful in terms of answering our questions with the new regulations and trying to help us along the way.”
He has however noticed a large increase in licensed producers, noting that in 2014, there were only 12 in Canada total and just last week alone, nine received licensing. He validates worries that supply is going to be an issue, noting that he doesn’t see that resolving for another 12 months, similar to what places like Colorado experienced when legalizing cannabis.
More ‘weed tech’
There are ‘weed tech’ companies out there though, attempting to help producers get the most out of their yields, like Grow Ratio and MotorLeaf that are using technology to analyze how producers can increase their growth rates.
As our sister site IT World Canada has previously reported, Grow Ratio uses a computer-controlled LED lighting systems to produce natural lighting needed for indoor plant growth, while driving down power consumption costs and reducing the cooling requirements.
According to its website, cannabis harvests are up to 25 per cent greater and is using only half of the electricity of traditional lights, “enabling growing operations to meet the increasing demands of the modern consumer.” The Toronto-based company also offers an app to allow users to view the data that is collected about its crop.
Then there’s Montreal-based MotorLeaf which is using artificial intelligence to predict the size of a producer’s yield. Its platform gathers data with sensors and cameras and uses computer vision algorithms to help make the predictions.
Outside of the production and distribution, there are many other tech companies getting in the ‘weed game’, apps like StrainPrint help educate users on the best cannabis strains and methods of consumption, and even dating apps for like-minded weed smokers.
And even more companies are interested in interested in applying blockchain technology to the cannabis industry, such as Blockstrain Technology, which is similar to seed-to-sale software, and is working to use blockchain in the cannabis supply chain.
Toronto even has its own, newly-founded cannabis startup accelerator, Leaf Forward, which will undoubtedly produce more ‘weed tech’ businesses in Canada.
It’s not often that a new industry is created, and Canada is only the second country in the world, after Uruguay in 2013, to legalize marijuana for recreational purposes, and it’s evident that companies around the world, especially in technology will play a big role.