Increase Margins via Streamlining Supply Chains (by Jake Haworth, SVP of Operations, Lucid Green)

Who wants to increase their margins? Everyone! Unfortunately, for many California-based cannabis brands, improving profit margins has become difficult due to increasing external market pressures.

California cannabis growers are experiencing an unprecedented challenge with flower prices dropping dramatically in 2021. In some cases, according to a recent article in MJBizDaily, wholesale prices have dropped almost 60% in the wholesale market in 2021. Simply put, supply is well outpacing demand in the state. The Humboldt County Grower’s Association estimates that there is at least twice as much product in the market than demand can satisfy, and with another harvest coming up in the Fall, it is possible farmers could be squeezed even tighter on pricing in the coming months and into 2022 (source). The issue could exacerbate even further with more light deprivation products hitting the market and additional growth capacity opening to larger growers in 2023. Unfortunately, this situation is putting many small-medium legacy farmers in dire financial situations. 

One section of a grower’s business where they can take control of minimizing these impacts is optimizing their current supply chain processes for retailers. Lucid Green believes in enabling simple solutions that help growers of any size improve their business processes and bottom line with retailers today. We also believe in solutions that create better profit across the entire cannabis distribution chain, from growers all the way through retail.

Minimizing the time for products to go from “Truck to Retail Shelf”

Many organizations focus intensive efforts on optimizing their supply chain processes from within, but well run supply chains look at downstream impacts of their processes as well. The more you, the brand, can help retailers get your products onto the shelves with the least amount of effort, the better for all concerned. Dispensary back rooms and break rooms are overrun with unopened boxes that require manual intake, stickering and data entry; waiting for staff to have the time to open boxes, label products and update product description. Brands think that products are on shelves, but they’re not and in many cases lead to stock out positions where your customer is looking for your brand and there’s nothing there to purchase. In addition, if these boxes sit in the back room, unopened for long enough, they’ll be returned or sold at a huge discount. No-one wins!

All of these inefficiencies add up and destroy retailer margin, which in turn puts pressure on your margin. For brands that are trying to fend off condensing profit margins, it’s much more beneficial to be spending your time talking to dispensaries about your sales strategy than managing inventory challenges. Lucid Green aims to be an enabler for this process.

Lucid Green’s solution is the perfect way to eliminate these dynamics and allows brands and dispensaries to work seamlessly together on ensuring inventory is always reconciled. Product information can be captured from a simple scan on any mobile device. This includes regulatory tracking, quantities, product name, description, images, COA’s and more. Dispensaries will no longer have multiple names for the same product, nor will products show up on dispensary menus with outdated information. Dispensary monthly inventory cycle counting is also reduced by as much as 40% with zero errors. By using Lucid Green’s solution to help dispensaries manage their inventory, you turn one of the largest liabilities in the industry into one of your biggest assets!

At Lucid Green, we believe the time is now for growers and brands to start thinking of how streamlining simple elements of the supply chain can help offset some of the rising cost pressures. We also understand the necessity to make upgrading current processes as painless and seamless as possible, and have a team dedicated to working with your teams to make this happen. If you would like more information on how to streamline your inventory processes for retailers, please reach out and we would be happy to start the conversation!

 Jake Haworth, SVP of Operations, Lucid Green

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