A year and a half ago FiduciaSoft began to cooperate with ISV that was engaged by their customer to customize Acumatica for the cannabis market in the USA. Our client, the abovementioned ISV, asked us to provide an Acumatica ERP development team for his project. Our client implements his customization for both types of cannabis companies: pure distributors as well as full-cycle growers & sellers. It was an interesting case and a challenging task that we are going to cover in this article. First, let’s dive into some facts about the Cannabis Market in the USA.
Сannabis Market in North America: volumes, growth, regulation
The Cannabis Market is a fast exploding market in United States and Canada. Cannabis is a lucrative investment with fast ROI and it created an entire industry around itself almost overnight. Nowadays the market is estimated at about $ 10 billion. In the USA, 33 states allow medical use of cannabis, and 10 states allow only cultivation. At the same time, the cultivation and further distribution of cannabis are still not allowed on the federal level and in many states. This is a market that’s regulated by each state with its own laws and regulations. Here we highlighted some of the main facts to know if you are going to start a business in the Cannabis market:
- The Cannabis industry in the United States is subject to some of the highest business taxes — up to 70%;
- Some types of activity are subject to mandatory regulation by two types of licenses at once;
- If you want to get a license — you must have a guarantor with the security of at least $5000, but the limit jumps from state to state;
- The business owners have to possess the needed documentation of the potential security risks and access control system for employees in recreation areas;
- The Cannabis Business or manufacturing facility must be at least 1000 feet from a school, church, or kindergarten.
- The average cost of starting a farm or production varies and ranges from $100,000 to a million US dollars — depending on the scale of the business;
- In addition to the standard investments in renting premises and salaries, the business owner will be charged up to a $5000 non-refundable application fee for registering as a seller (again, fees vary by the state).
How ERP helps to simplify and automate business processes.
The ERP system is designed to automate and simplify the work of the business, thereby reducing financial costs in operating activities. The specifics of Cannabis business include complete traceability and accountability for every single action, whether it’s planting, sorting, packaging, selling, or delivering goods to the government service or an end-consumer. The legal regulation of cannabis businesses can vary from state to state or even from municipality to municipality. And each region requires real-time reporting. Therefore, another main task for the developers is the need to customize the reporting module to the requirements of local authorities.
Acumatica ERP fits perfectly for these purposes. It can be a great solution while bringing the automation of all processes. With the help of API, the necessary data on goods’ actions are automatically unloaded from Acumatica and sent to the state authorities, which allows the companies not to waste time filling out forms and other regulations. Acumatica delivers a full suite of integrated business applications and brings the following possibilities and benefits:
- It’s perfect for both, companies with complex requirements as well as smaller organizations;
- It provides a full-featured accounting suite, completely integrated with CRM, distribution, and production management;
- It captures complete tracking of all manufacturing operations and steps, allowing work orders to be updated on extraction, trimming, edibles, packaging, and all other operations;
- It keeps precise plant tracking with the help of RFID and bar-coded plant tags automatically compares their readings with inventory and sends reports to governmental institutions.
- It controls delivery, transportation, selling, and other information;
- It records quality assurance data;
- It saves time and reduces costs and possible errors;
- It tracks the cost of goods sold (COGS) for all possible reportings, including Federal Tax Code 280E;
- It ensures a complete set of business analytics and KPIs for a total view of all operations.
How FiduciaSoft helped ISV to build Acumatica ERP for cannabis companies
Our cooperation started with FiduciaSoft putting together an engineering team to develop and implement customizations of Acumatica on the specific end-user site. We carefully chose software developers who’d become team members for this project. These individuals would be responsible for the entirety of the development process:
- Design, coding, testing, and implementation of new functionality;
- Integration of third-party services via API;
- Further adjustments and customizations for the client’s end-users;
- Updating customizations for new releases of Acumatica.
In the beginning, we had to dedicate more time and attention to the general Acumatica functionality specific to this industry. In time, though, we began to dedicate more and more of our efforts on the custom requirements for the individual end-users of the product. On this project such processes as testing, analytics, as well as team management take place on the side of our client. We communicate through Slack and Jira and the tasks are mainly set by the owner of the company with some random tasks coming from sales-specialists.
What advantage did it bring to the client?
The advantage of this collaboration for the client was the ability of ISV to change the composition of the team depending on the tasks. It can be one developer or more. For example, when we updated the customization for Acumatica 2020 R1, the team consisted of three developers. At the moment, there is only one developer who is working on customizations specific to the end-users.
You can add any number of developers, testers, project managers and business analysts. Even form your own Acumatica team that will work exclusively for you. That will allow you to concentrate on work with your clients. Fiduciasoft is ready to take care of all the organizational nuances.
You can read more about our experience of customizations for Acumatica in the «cases» section on our website. And if you have similar projects, let’s discuss them and find the best solutions for the cooperation!