On October 28, Rootstock Software announced that it completed the implementation of Cloud ERP (Enterprise Resource Planning) software on the Salesforce Cloud Platform for Aphria (APHA). Rootstock expects Aphria to optimize its production, marketing, and distribution functions with the help of this ERP solution. Further, the press release highlighted Aphria’s implementation of ComplianceQuest’s EQMS (Enterprise Quality Management System).
Aphria may report several operational benefits of ERP
According to the press release, Rootstock Cloud ERP could prove useful for Aphria to determine optimal production targets. The software would consider factors such as demand projections and the company’s manufacturing capacity. It would also consider constraints posed by suppliers of various raw materials.
Aphria plans to use this solution to improve the traceability of the product from “seed to sale.” Further, the company plans to use this ERP for managing inventory and optimizing costs. The company also anticipates benefits such as waste elimination and reduction in variability. Further, improvements in adherence to timelines can reduce cycle times and ultimately improve Aphria’s profitability.
According to the press release, Rootstock Cloud ERP would play a pivotal role in ensuring Aphria’s regulatory compliance with GMP (Good Manufacturing Practices) and GPP (Good Production Practices). Its ERP solution may further reduce the company’s compliance costs. Aphria can also realize other benefits of integrated business management software such as interoperability with ComplianceQuest as well as easy document and data access.
Investments are increasing in the marijuana software industry
According to Fortune, investors are increasingly allocating their funds to the marijuana software industry. Pitchbook’s data indicates that there were 39 venture capital deals in the marijuana software industry in 2018. These deals were worth more than $178 million.
Pitchbook data also shows that there were 35 completed venture capital deals by mid-October, which were worth $146.8 million. For 2019, Pitchbook expects investment in the marijuana software industry to be almost flat on a year-over-year basis.
However, Fortune reported that CBInsights analyst Marissa Schlueter has a contrary opinion about the investment trends in the marijuana software industry. Schlueter pointed out a drop in funding from $204 million in 2017 to $89 million by mid-October 2019 in the cannabis-related enterprise software solutions business.
Cannabis software market trends
In its “Opportunities In Vertical Software v3.0” report, Bowery Capital highlighted cannabis software as a small but rapidly growing market. The consulting firm expects this market to be highly competitive while being full of growth opportunities.
The potential federal legalization of cannabis in the US may open up a vast number of opportunities. The industry would have to develop products similar to those used by mature agriculture technology companies. However, cannabis software products would also need to consider the unique legal and regulatory requirements imposed on the cannabis industry. According to Bowery Capital, US-based companies such as Leaflink, Flowhub, Simplifya, and Green Bits may emerge as key players in the cannabis software industry.
Legal cannabis market trends
The fast expansion of the legal cannabis market could be the key growth driver for the cannabis software sector. According to Grand View Research, the global legal marijuana market could be worth $66.3 billion by the end of 2025. ResearchAndMarkets has estimated a larger size for the global legal cannabis market by 2025—more than $75.6 billion.
In “State of Legal Cannabis Markets 7th Edition,” Arcview Market Research and BDS Analytics estimated the size of the legal US cannabis industry to be $12.8 billion in 2019. The market research firms also expect this market to be worth $30.1 billion in 2024.
Peers are also implementing ERP solutions
Tilray implemented an Acumatica cloud ERP solution to handle its production and manufacturing activities. This ERP solution would also help manage its dealings across multiple currencies. In May, cannabinoid wellness player Nuleaf Naturals selected Rootstock ERP. The company anticipates the completion of its ERP implementation this month.