Number Crunchers: Data Analytics Companies Cropping Up in Cannabis Industry

marijuana market data

By John Schroyer

Knowledge is power…and can lead to big profits.

That’s why businesses in mainstream industries utilize data to analyze their performance, markets and competitors.

Now, a handful of firms are providing cannabis companies with in-depth data that hasn’t been available in the past given the industry’s youth.

Think wholesale pricing figures, investment stats, point-of-sale data and benchmark information.

“The data side is going to look more like it looks in other industries. We’re just playing catch-up right now,” said Roy Bingham, CEO of BDS Analytics, an information-centric company that helps marijuana dispensaries and recreational shops in Colorado and Washington State cater to their customers.

Some companies such as BDS are selling data as their main product, while others are providing figures, statistics and information to generate interest in their own businesses or as a side offering.

New Leaf Data Services has gained traction through its Cannabis Benchmarks division, which provides regular reports on wholesale cannabis prices in 12 different markets. It also offers financial and operational benchmark data for cultivation businesses.

The company has three different levels of data services: a free weekly report, a premium report that goes for a $75 monthly subscription, and a high-end data package that costs $200 a month.

“We have growers, we have processors, we have dispensaries, we have law firms, we have accounting firms, we have academia, we have hedge funds and private equity and venture capital,” New Leaf CEO Jonathan Rubin said when asked about the makeup of his client base. “The industry is continuing to grow rapidly and become more credible, and as it becomes more credible, it’s drawing the interest of more professionals.”

And those professionals want professional numbers to examine, including everything from pricing trends to THC potency levels to sales figures of different products and cannabis strains.

“This is the type of data that the financial markets are looking for,” said Robert Ruiz, chief marketing officer for Amercanex, an online marketplace for buyers, sellers and investors. “In Wall Street, data is a very important tool. Companies purchase data from you left and right… So data is going to become a tremendous revenue stream for us in the future.”

Amercanex, like several other online cannabis marketplaces, differs from BDS and New Leaf Data Services in that it’s not focused primarily on providing intel for its customers. Rather, clients can purchase seats on the exchange, which now go for $10,000 for a lifetime membership (up from $2,500 when the exchange launched in July 2014).

Along with that membership comes all types of data, as long as a seatholder is a licensed company in Colorado. That’s the one catch right now with the exchange: It’s limited to a single state.

But that’s going to change, Ruiz said, indicating that Amercanex is looking to expand not just throughout the United States but internationally as well.

Other online trading platforms are also increasingly making more data available for customers, though many are so far only in one or two states (mostly Colorado).

Some, such as Cannabase and Tradiv, are looking quite actively to set up wholesale platforms – and provide the pricing data that comes with them – along the West Coast.

“We take our data incredibly seriously,” said Jennifer Beck, the CEO of Cannabase, an online wholesale marketplace that also has a social media platform.

One of the company’s extras is what it calls “cannalytics,” a breakdown of charts and graphs that looks at pricing trends and sales numbers, and goes for $20 a month. It includes Colorado pricing data that goes back six months, Beck said.

“The more mature businesses who are using the data available are going to continue to rise in a healthier and more streamlined way than businesses who operate in a vacuum,” Beck said.

That’s the same attitude that BDS and New Leaf have when it comes to how cannabis companies in general can use serious data to improve their business models, whether that’s for retailers trying to decide which strains to carry or for cultivators trying to decide which strains to grow.

BDS Analytics, for example, has 20 million transactions involving 20,000 products already in its database since its founding roughly a year ago. Bingham said that information can be used by retailers to figure out which edibles are most popular with customers, or by manufacturers to decide if they need to change their marketing scheme or packaging to increase sales.

And, Bingham said, vendors are getting on board with it.

“The adoption by dispensaries has been faster than we experienced in any other industry,” Bingham said. “We worked with Whole Foods in the health food market, and we were able to add a store a week. Here, we’re adding multiple stores a week, because they realize the value of this data.”

New Leaf Data’s Rubin added that the numbers his company provides can be used as a starting point for wholesale negotiations, which can vary depending on if the cannabis was grown indoors or outdoors, if it’s a particular strain or potency, or any number of other factors.

“We have hundreds and hundreds of transactions, and thousands and thousands of pounds that go into our weekly national benchmark,” Rubin said. “We are the common reference point, to provide a baseline. And then the seller can say, ‘Here’s why I think my cannabis should be priced higher.’ Or the buyer can say, ‘Here’s why I think your cannabis should be priced lower.’”

Because cannabis is moving at an ever-quickening pace into the mainstream, data analytics is poised to become a part of everyday life for successful companies – especially those that want to grow into national or international brands.

“It’s inevitable that we’re going to see data play as important a role as it does in other industries,” Beck said.

Correction: The original version of this story stated that New Leaf Data Services offers a premium report for a $75 annual subscription. That was incorrect; the fee for the premium report is $75 a month.

John Schroyer can be reached at [email protected]

3 comments on “Number Crunchers: Data Analytics Companies Cropping Up in Cannabis Industry
  1. Vito P. on

    In the canna-biz, there’s been a lot of talk about business intelligence and operating dashboards. While it’s good to have industry numbers for a big picture context, the small business owner is far better served by getting the best possible operating numbers from his or her own enterprise. This means precise, up-to-date bookkeeping and actionable management reports to keep costs in check and stay in the game. Industry-wide numbers and trend-lines – how many grams, how many dollars, how many stores – these are of some big-picture utility and can present a compelling picture to investors. But unless you have your own numbers under the microscope and available for comparison, it does little good to know what the rest of the country is doing. There’s a difference between indoor and outdoor operating costs, between a $1-million/year pot store, and a $1-million/month cannabis emporium. Averages from a data dump are not entirely meaningful. If you are a CO2 processor with a 20 liter machine, you have little in common with a 5-liter processor using butane for small-batch specialty oils. Make no mistake, there are valid strategies for each of these business situations, and the success of one does not mean the failure of the other. In all cases, success is measured using the numbers on your own income statement and your own balance sheet.

    Reply
    • Adam Koh on

      Full disclosure: I serve as Editorial Director for Cannabis Benchmarks, featured in the article above.

      Mr. Vito, you make some great, salient, and correct points. My post is not intended to refute anything you said, but to cast some of the different ways that our data at Cannabis Benchmarks can be employed. Cannabis Benchmarks is intended to bring price transparency to an industry that still operates without the all of tools and knowledge of traditional markets. Cannabis Benchmarks price assessments and reports are employed by buyers and sellers to set price and transact with confidence. When I was managing a facility in CO, I knew prices in my immediate distribution network via word-of-mouth, but I think most would agree that a larger picture of what is happening in the state is advantageous when trying to make the most margin out of wholesale transactions. Also, now that OR and WA are opening up their markets to out-of-state ownership and investment, respectively, investors can use the price streams to evaluate and compare competing investment opportunities; owners and operators of cultivation facilities and dispensaries looking to grow their business can also use our data and reports to determine the best investment: expansion of a current facility in one location or opening a second facility in a different location. Those are just a couple uses. I would invite you to check out our website, http://www.cannabisbenchmarks.com, for some other examples.

      Again, though, you make some great points that most businesses would do well to heed. Thanks.

      Reply
    • Eric Layland on

      @Vito P – absolutely correct! Data for data sake are just numbers. The vast majority of companies in the legal (rec & MMJ) cannabis space are small operations (under $10M in yearly revenues). These start ups and mom & pops are best suited to focus on their numbers. Start first by building a strong operational base, make smart investments to improve efficiencies, and don’t worry about national trends. Talk to your customers and ask what’s important to them. They’re your best source for market research.

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *