Marijuana Business Magazine January 2019

January 2019 | 71 A s new legal cannabis mar- kets emerge and states adjust existing regulations, inventory management and forecasting become increasingly challenging for marijuana retailers and product manufacturers. Regulatory shifts can mean unloading product that will soon be uncompliant, then stocking product that meets new re- quirements. And when new recreational markets come online, cannabis-related tourism can dip in established adult-use markets, causing sales to plateau. In the following pages, the owners of two vertically integrated cannabis operations and an infused product company weigh in on the challenges of managing retail and wholesale inventory, strategies to navigate those challenges and advice on how to improve inventory management. In “Leveraging Technology” on page 74, three technology companies share how you can leverage their platforms to improve inventory management and forecast products you will need to stock. Managing Wholesale and Retail Needs CHALLENGES: In October, Keenan Hollister, co-owner of Pakalolo Supply, opened the company’s second retail store. Cultivating cannabis for two shops and a handful of wholesale clients requires inventory planning up to half a year in advance. If you’re vertically integrated with wholesale operations, the challenge of managing cultivation inventory—and avoiding oversupply—is amplified. In new markets, some cultivators start with mass production and overestimate consumer demand or their ability to move product to retailers, Hollister said. That can lead to oversupply issues for growers or force them to cut their wholesale costs. SOLUTIONS: When it comes time to harvest Pakalolo’s cannabis and cut clones for its next round of growing, Hollister uses San Jose, California- based Green Bits, his company's point-of-sale system, and the state’s seed-to-sale tracking system, Metrc, to forecast what it needs to grow for its own retail stores and what it can put on the wholesale market. The business isn’t using data platforms or online wholesale marketplaces yet, because the two systems provide all the data Pakalolo’s team needs. “Green Bits shows us details,” Hollister said. “It shows us how grams and 3.5-gram units and pre-rolls are selling and what our top sellers are. Metrc is less useful as an inventory tracking system on the retail side because it doesn’t show subproducts. But it shows us what we’ve got growing and what we have coming up.” This inventory forecasting is done four to six months in advance, and it takes into consideration what sells well in Pakalolo’s shops and what the company can reasonably afford to put on the wholesale market. EXPERT ADVICE: If you’re a cultivator with too much inventory on hand, don’t rush product to the market. It solves an immediate need for cash flow, but it undermines your brand and marketing strategy. Four to six months before you plan for a product to hit shelves, analyze inventory and retail sales for particular strains. Invest more resources in cultivating popular sellers for your retail operation and devise a “get-to- market strategy” that allows ample time to advertise your products and partnerships, Hollister advised. PAKALOLO SUPPLY CO. Fairbanks, Alaska Vertically integrated with cultivation, retail, wholesale and distribution licenses Founded in 2016 Tyler and Keenan Hollister, from left, use Green Bits and Metrc to track inventory at Pakalolo Supply. Courtesy Photo