There is a general assumption that the cannabis industry is all about dispensaries. Furthermore, people assume that marijuana businesses only sell edibles and other cannabis products. However, just a small segment of the industry is occupied by these types of businesses.
Only a few dispensary owners have the time, IT capabilities, funds, or staff to organize their advertising, manage their payments, analyze their statistics, prepare their paperwork, file it themselves, and so on. This is where ancillary businesses support the industry.
A large percentage of the cannabis industry falls into the “ancillary” category, which indicates that they play a crucial role in significantly supporting consumers and the sector. Also, assistance is given without needing to touch the marijuana plant. Manufacturers, banks, IT, media, legal counsel, and marketing are frequently involved in this. Let’s understand how to select an ancillary vendor for your cannabis business.
What Is An Ancillary Business?
An enterprise that doesn’t handle the plant but provides goods or services to the cannabis sector is called an ancillary business. The following are some examples of ancillary businesses: IT, lighting, electrical, or construction enterprises, SOP consultants, packaging firms, law firms, security firms, tax services, marketing firms, and more.
With the legalization of cannabis, a segment of the market known as ancillary businesses is rapidly growing. The legal cannabis market expanded by around 40% from 2019 to 2020. Revenue from the cannabis sector was $17 billion in 2020, and by 2025, it is anticipated to increase to $30 billion.
Every licensed cannabis-related business is supported by an average of eight to ten ancillary enterprises. There is a good chance the number of ancillary businesses in your chosen sector of membership has increased if your state has legalized cannabis in any way.
How To Select The Right Ancillary Vendor For Your Cannabis Business?
The following are a few criteria to select the right ancillary vendor for your cannabis business:
Does The Ancillary Vendor Have A Good Reputation?
It just takes one bad deed to ruin a good reputation, according to the wise words of American visionary Benjamin Franklin from the 18th century.
One of the simplest ways to do this is to choose an ancillary vendor based on reputation when narrowing the options for outsourcing some of your company’s tasks.
A good track record is a great differentiator when choosing an ancillary partner for your cannabis business. You can confirm this by approaching company associates and any current or past clients for information, in addition to looking at online reviews.
Does The Ancillary Vendor Possess Market Vertical Experience
Cannabis businesses in various market segments have various financial and operational goals. The various operational and financial goals have a direct impact on the required IT services. Dispensaries need a retail setup, thus their IT infrastructure must be very safe and able to scale up and down quickly. On the other hand, manufacturing or cultivation facilities may choose an IT infrastructure that offers strong performance, reliability, and security, but at a reduced total cost. Ultimately, each market sector has a particular IT infrastructure and services that must be provided.
Is The Ancillary Vendor Adhering to Industry Best Practices?
For instance, if you are looking for an IT vendor for your cannabis business you would want to be sure that they are certified and adhere to industry best practices.
Ask them whether they are adhering to the best practices manual created for the IT service management sector, which focuses on aligning IT services with the demands of the customer or business.
An organization that adheres to these best practices frequently exhibits enhanced customer satisfaction and service delivery, lower costs due to more efficient resource utilization, better visibility of IT expenses and assets, and better management of business risk and service interruption or failure.
Clearly Define Your Requirements
How can you convey your requirements to your provider if you are unsure of what they are? Better yet, how can they meet them?
Specify the requirements, problems, and particular problems you want to be resolved. After that, give them the priority and inform your provider.
SLA- Backed Performance
Your ancillary vendor should be capable of providing you with a service-level agreement that outlines precise performance standards that are measurable. This agreement helps safeguard your company’s assets and reputation by outlining the service it will offer. Your chosen service provider should be more than willing to sign an SLA.
Are They A Culture Fit?
It is essential to establish solid work relationships with the ancillary vendors if you plan to collaborate closely with them on a daily basis. Conflicts in conduct and attitude brought on by a lack of cultural fit will cause friction and delays.
So, you should make a point of evaluating the company culture of your chosen service provider. Ensure that their communication and company cultures align with those of your business.
Pay attention to how you feel while on the phone with your prospective service provider. Is the ancillary services vendor helpful? Are they considerate? Will they meticulously obtain information? Are they upfront about rates? Do they intend to cooperate with you to address the issues?
Will They Assign An Account Manager?
For a successful business partnership, you and your service provider must have a dependable and clear set of transactions. The partner company’s account manager is the key to ensuring a seamless operation and maximizing the value of the services offered.
The ideal ancillary vendor should have strong account management skills. An excellent business ally is a partner who can handle accounts: They can provide information on the industry, serve as an escalator in case of emergency, and continue to offer insightful recommendations regarding the industry or the products.
Finding the ideal ancillary vendor may certainly be challenging. Yet, equipped with this knowledge, you will be able to choose the right fit for your cannabis company.