The past several days have produced two recent pieces of cannabis tech news that could create substantial direct and possible indirect effects on the cannabis industry, operators, and consumers.
Dutchie’s 4/20 Outages
4/20, the cannabis community’s high holy day and industry cash cow, didn’t go as smoothly as many retailers had hoped. Across Canada and various U.S. states, including Illinois, Maryland, Massachusetts, Michigan, Missouri, New Jersey, and New Mexico, operators spent prolonged periods unable to complete transactions.
A significant headache came when the point-of-sale software brand Dutchie experienced widespread system outages, leaving approximately 6,000 U.S. and Canadian retailers unable to process in-store or online orders. As such, retailers spent hours turning customers away, affecting holiday sales totals and shopper perceptions in untold sums.
The Oregon headquartered tech leader, who raised $200 million and acquired two tech companies last month, responded by flipping the news. In a statement to MJBiz Daily, CTO Chris Ostrowski highlighted the more than 2 million completed purchases that day, totaling a 50% increase in holiday spending, totaling $165 million.
Ostrowski did acknowledge the outages, stating that the “serious issues” impacted retailers “local to a specific instance” within the POS system. The latest marks Dutchie’s second year of 4/20 tech issues.
In 2023, sales were affected by elevated error rates and down periods between April 18 and April 20. In response, CEO Tim Barash stated it would pay clients an amount equivalent to Dutchie’s estimation of lost profits.
TikTok Ban?
Wednesday saw a less direct impact on the industry, with a long believed hot button ban finally becoming law.
After passing Congress, President Biden signed off on a bill that forces TikTok’s Chinese parent company, ByteDance, to divest from its U.S. entity. If the company fails to do so, the popular tech app is expected to be banned from U.S. app stores.
The ruling stems from concerns that U.S. users’ data is being shared with the Chinese government, per the country’s business data laws. ByteDance claims U.S. data is not shared and remains firewalled through a data partnership with Oracle.
The bill and possible ban have polarized much of the nation, with talking points ranging from freedom of speech to customer data protection to the potential adverse effects on users, particularly minors.
ByteDance has stated it will fight the ruling. If unsuccessful, the company has nine months to sell to an approved bidder. Per President Biden’s approval, the period could be extended an additional 90 days, giving the company one year to find a seller.
How the Recent News Could Impact Cannabis
The two recent tech developments are undoubtedly impacting a small but significant sector of the cannabis space.
Dutchie’s outages affect thousands of operators across numerous U.S. and Canadian markets. Those impacted this time around may see compensation. Still, the second year of outages drives home the fact that retailers still face significant hurdles, many of which are out of their control.
Dutchie’s tech overload shows massive upward momentum for the market. Still, the stores and customers impacted will likely have a lasting impression in their minds for some time.
Businesses have a couple alternatives to Dutchie. On the other hand, most consumers affected likely have a few nearby store alternatives. This situation could create a potentially long-lasting ripple effect for retailers if they lose business.
What, if any, impact the latest TikTok ruling will have remains to be seen. With the app’s U.S. future facing numerous possible outcomes, it’s too early to assume this is the end of the popular platform stateside.
Despite TikTok’s reputation as one of the more cannabis-restrictive social networks, the platform has no doubt helped many pot brands grow. Many brands and personalities have found ways to grow their audience via TikTok, often resharing the content across other social media channels for additional growth.
A loss of TikTok won’t be as detrimental to the cannabis space as to content creators. Still, plenty of pot-friendly creators may feel the effects via lost audiences and revenue potential.
Could these developments cause brands to pivot their strategy?
Will retailers ditch Dutchie for another P-O-S, perhaps one that won’t leave them looking like another kind of POS in shoppers’ minds?
Might content creators and brands double down or move away from TikTok?
It all remains to be seen, but the past few days have raised plenty for brands to consider.
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