By Andrew Wells
It’s no secret today that automation advances business operations, especially in cannabis. Today, there are automated machines that package cannabis products, roll joints, and even coat joints in various concentrates. But just a few years ago, innovations like these were scarce.
As more cannabis companies and business leaders come to recognize and experience the value automation brings operations, more technology is coming to market. This is creating a network effect. When cannabis automation technology becomes more mainstream and its value is proven through successful customers, interest in automation becomes more widespread. It’s common for brands to observe a competitor’s success with automation and ask, “If they’re using it, why aren’t we?”
And that’s a great question! Many cannabis brands with a vision to scale will struggle to do so without automation.
Strategic Implementation of Automation Leads to Significant Improvements for Cannabis Businesses
In certain cannabis markets, there’s a major labor shortage. This creates two main issues: finding a capable workforce and ensuring their efficiency once hired. Problems like lateness and unreliability have historically plagued cannabis production and this phenomenon still rings true today. Yet automation solves this issue.
For example, say you have five workers on your production line. Automation could allow you to reassign three of them to roles in sales and marketing, flower trimming and bucking, or final packaging. The remaining two employees, who understand and can operate the machines best, can be leveraged to more effectively utilize the technology. This shift will enhance overall efficiency and productivity, as automation can spin up a greater number of output than manual labor.
Now, let’s get into the three steps necessary to unlock value through automation.
1. Know the Key Criteria to Consider When Planning to Invest in Automation
The first step to uncover areas where automation could benefit your cannabis operations is to identify key criteria for the initial investment. The first question you should ask yourself and your team is, “are we ready for automation?”
For instance, producing 10,000 to 20,000 pre-rolls a month might seem substantial, but you won’t see significant value from automation at that level. Knowing when to automate is crucial, and production throughput is a key factor.
2. Determine Whether an Existing Process is Best Suited for Automation
Not sure which processes in your operations would best be automated? Think of it this way: any area in production with a high number of touchpoints is ripe for automation. These areas quickly yield a return on investment (ROI) when automated. So, which processes are slowing down your production?
3. Evaluate the Costs
I would be remiss not to mention the importance of analyzing your numbers thoroughly to determine if automation is best for your cannabis operations. Start by examining your labor expenses, loss rates, and throughput. If any of these metrics seem off or extreme, it’s a sign that something might need attention.
For instance, you might find that while three employees excel at a task, the other three are inconsistent. By looking at your output and the financial implications, you can evaluate if automation makes sense.
Here’s how to approach it:
Evaluate Costs and Output: Calculate how much you’re spending each month to produce a specific SKU. Consider Automation Benefits: Assess how automation could reduce labor costs and increase production efficiency. Financial Analysis: At the CFO or controller level, perform a detailed financial analysis to see the impact of automation. Collaborate with Production: Discuss with the head of production to identify potential savings and efficiency gains through automation.The Cannabis Industry is Aging Like Fine Wine
It seems the cannabis industry will follow a similar trajectory to the wine industry, which transitioned from highly manual processes in the 1950s and 60s to today’s blend of automation and tradition. Wine production is expensive, with costly inputs, but it has successfully integrated various levels of automation without losing its artisanal appeal.
In the next five to ten years, we’ll likely see cannabis facilities that are highly automated and almost turnkey, where inputs go in and finished goods come out with minimal employee intervention. Additionally, there will also be boutique, artisanal producers who use automation selectively to enhance their craft.
For example, when it comes to wine production, grapes might be manually picked but then sorted using highly automated optical fruit scanning and air cannons. In cannabis, operators will likely mimic the wine industry’s blend of automation and craftsmanship. This means there will be large-scale producers focusing on reducing their cost of goods through extensive automation, alongside smaller, artisanal producers who integrate modular automation solutions incrementally.
Plus, with federal legalization becoming a possible reality in the next decade or so, who knows where else automation can propel the cannabis industry to? We will have to wait and see…