Can AI Help Cannabis Companies Struggling With Profitability?

January 9, 2023by Staff Writer0

In 2023, cannabis companies will struggle to turn a profit. There are many reasons for this, including the fact that marijuana is still illegal at the federal level in the United States, which limits the ability of these companies to access traditional forms of financing. In addition, many states have implemented strict regulations on the production and sale of cannabis, which can be expensive to address. AI can help cannabis companies to make a profit.

One of the biggest challenges faced by cannabis companies is Congress’ failure to pass the SAFE Banking Act. Because cannabis is federally illegal, banks are hesitant to work with cannabis companies for fear of being prosecuted for money laundering leaving many cannabis companies to operate on a cash-only basis, which presents risks, especially to one’s life. Last spring, a Tacoma employee dispensary was shot and killed during an armed robbery.

Another factor contributing to the lack of profitability in the cannabis industry is the astronomical cost of production. Growing marijuana requires a significant amount of energy and resources, and many states have implemented strict regulations on how it can be produced, which can drive up production costs. In addition, the cannabis market is highly competitive, which can lead to price wars and thin profit margins.

Despite these challenges, all is not lost for cannabis companies to become profitable. One way they can do this is by adopting artificial intelligence (AI) technologies. AI can help cannabis companies in many ways, including:

  1. Improve efficiencies: AI can help cannabis companies streamline operations and reduce costs by automating tasks and making data-driven decisions. For example, AI can optimize irrigation and lighting systems to reduce energy costs and improve crop yields.
  2. Increase productivity: AI can help cannabis companies increase productivity by automating inventory management and order fulfillment tasks. Automation can free up time and resources for employees to focus on more value-added activities.
  3. Enhance customer service: AI can help cannabis companies improve customer service by providing personalized recommendations and addressing customer queries in real-time. Improving customer experience can help build customer loyalty and increase sales.
  4. Facilitate compliance: AI can help cannabis companies ensure compliance with regulatory requirements by automating the tracking and reporting of data. These activities can reduce the risk of non-compliance, which can be costly in terms of fines and legal fees.

The cannabis industry faces unique challenges that make it difficult for companies to become profitable. According to market research firm BDSA, cannabis retail prices fell by 13%. However, by adopting artificial intelligence (AI) technologies, cannabis companies can overcome these challenges to achieve a healthy bottom line. AI can help improve efficiency, increase productivity, enhance customer service, and facilitate compliance, which can drive revenue and increase profits.

For investors, adopting AI technologies should be a key consideration. AI can help drive profits for cannabis, but it can also provide a competitive advantage by allowing companies to separate themselves in a crowded and competitive market.

Of course, investors must do their due diligence and carefully evaluate the companies’ specific AI technologies and strategies they are considering. Some AI technologies may be more suitable for the cannabis industry than others. It is essential to ensure that embracing AI-driven technologies aligns with the company’s business goals and objectives.

AI offers massive potential for the cannabis industry and those willing to take a long-term, strategic view of the market. By implementing AI-driven technologies, cannabis companies can overcome many challenges and achieve profitability, creating value for shareholders and driving long-term growth.

If you want to know how AI can help drive top and bottom-line growth for your cannabis company, schedule a discovery call here.

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