This interview is taken from an episode of the Spend Culture Stories podcast. In the month of April 2019, we’re launching a monthly segment that focuses on cannabis businesses and best finance and operational practices. In this episode, Scott Berdell, the CEO of cannabis business Stryps and former dispensary CFO shares his views on software and technological tools that cannabis business owners use, and his learnings on operating a successful business.
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What Technological Tools Do Cannabis Business Owners Use?
Former Financial Trader. Cannabis Business Owner. Former Dispensary CFO
Scott Berdell is the CEO of Stryps, a Seattle based cannabis processor dedicated to making tasteful and quality products.
Formerly, he was the General Manager and C.F.O. of Sacred Garden, a Medical Cannabis dispensary located in Santa Fe, New Mexico. His responsibilities at Sacred Garden include financial analysis, Head of Product Development, Director of Sales and Marketing, oversight of store operations and Liaison with Government and Business Community. Since working at Sacred Garden, he has learned, in depth, strains, extracts and the key factors that are required to successfully manage and operate a successful Cannabis Dispensary.
Speakers: Scott Berdell, CEO, Stryps
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What are some of the trends that you’ve noticed over the past couple of years, in terms of how the regulatory structure has been adapting and changing as you’ve been establishing your business?
Sudden Changes in Law
One of the bigger things you have to worry about is changes in the law. But you know, fortunately, they’re not going to come just out of nowhere. As long as you’re a member of an industry group, or unless you pay attention to what bills are going through the state House and Senate at any given time, you’re going to have a little bit of a heads up.
For example, there are some big packaging changes that would have had a huge negative effect on the edibles market here. And actually, if those changes had gone through, I imagine 30-40% of the companies and the processors would have probably gone out of business.
Here, the laws are pretty clear – you’re not supposed to make edibles in bright colours in certain shapes, but it was a rule that really wasn’t enforced. In this case, you had a lot of processors who are making a lot of really good edibles, but they were brightly coloured and they were in the wrong shapes. And you know, the state said, “Nope can’t do that”. There was a bit of an uproar, and so the state kind of backed off and re-evaluated, and that was a big one.
Compliance Systems are Difficult to Use
At the beginning of 2018, the state switched compliance systems on us. We went from one to another. I don’t really want to name either one of them right now. That was a huge challenge because the current system is kind of tricky and doesn’t really work that well. When we first started with the new compliance system late 2017, it really it didn’t work.
Unreliable Seed to Order Software
Let’s say I manifest some orders to go to Spokane, which is four hours from Seattle. I get to the stores in Spokane, and I do everything that the compliance system says I needed to do – but I get to Spokane and they’d say: ‘You know we haven’t received the order on our end’. Here’s the process: before I leave Seattle, I put everything I’m making and selling to this store in a manifest, and after that, I hit a button says ‘transfer material’. This is all part of our compliance that we have to go through within the seed-to-sale compliance system.
After that, I made a four-hour drive in Spokane, and they just kind of looked at me and they look at their computer and said: “we haven’t received the order yet”. So I’m like: “Wait. I guess I’ll go have a coffee and come back.” By the time I got back, they still haven’t received it. In this case, I’d have to go back to Seattle without having made the delivery. It was frustrating.
Are you mandated to use the actual state system or can you go ahead and use your own seed to sale program as well?
Layover Systems Ontop of State Systems
Well, we pretty much are mandated to use the state system. But the state system is clunky, and it’s difficult to maneuver through, unless you’re very, very, computer literate. And so most companies have a ‘layover system’ that we use. And honestly, I don’t think anyone in the state uses the state mandated system only.
On the purchasing side how do cannabis business owners usually manage purchase approvals and processes for procurement?
Procurement Departments Are Still Quite New in Cannabis
When I was working as a CFO in Secret Garden, we ordered really based on need.
That function of procurement as department in and of its own – I’m only now beginning to see in Washington. The businesses for the most part in are really quite small. There aren’t that many that are so so big that they need a department or an individual devoted to procurement.
Purchasing Volume and Orders Based on Needs
So after saying that you know in New Mexico, it was kind of on a need basis. But you know if you’re doing your job properly as CFO – you try and predict that. You see what your needs are, and then try and project what you’re going to need. Whether it’s nutrients for plants, packaging material, or just try and you know one one real tricky thing that I absolutely haven’t mastered, which is trying to predict what your customers are wanting in the future.
Have you noticed that either your company or others in the industry have been moving towards other business software solutions, I mean whether it’s ERPs or order management solutions as the industry matures?
I’m beginning to see that in some of the larger companies. I go to a lot of industry gatherings and networking events. We’ll get together and talk and say “Hey- what are you doing for this?” or “How do you solve this issue with procurement and purchasing?”
Maturing Market Breeds the Need for Tools That Scale
I personally feel that the industry is now beginning to use software for that particular function. The time is ripe right now as this market starts to grow. In Canada, the way the industry was set up, you have a lot more players who are much more mature to be able to adopt something like that. But within the United States, probably 70-80% of these businesses are pretty small businesses.
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