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Why Your Profit Margins are Going Down (and What to Do About It)

Not so long ago, running a profitable cannabis company meant getting your business launched and welcoming customers in the door. In early 2016, nearly 70 percent of retailers, wholesale cultivators and infused product manufacturers reported to the Marijuana Business Fact Book that they had reached the break-even point or profitability within a year. But cut to 2017, and only 55 percent said the same.

Profit Margin Down
Profit Margin Down-1

What’s going on?

Market forces are a big reason. A rush of new, well-funded players into the industry means customers have many more options.

Regulatory oversight is another: as more states take the path to legalization, so too their governments are putting more complex rules in place, driving up the cost of compliance.

Finally, as companies grow, the more cumbersome the cash-only model becomes. The cost of collecting, tracking and most steeply, guarding greenbacks can reach 10- 15 percent of sales. Scale up in terms of size, and this problem becomes harder and harder to manage.

Alt Thirty Six’s digital platform leverages blockchain technology to provide a simple, trustworthy solution for cash only businesses. It ushers in a new era: a proper alternative to cash for industries shut out of traditional banks due to federal laws.

Working with DASH, a decentralized, transparent mechanism, Alt Thirty Six can process transactions via InstantSend, through which they are fully confirmed and irreversible in four seconds. At minimum inconvenience to customers, retailers can now conduct sales in a way that greatly reduces the burden of cash-only operations.

Beyond representing a boon to a retailer’s bottom line by bypassing cash, the transparent and immutable transactions conducted at on-site POS machines are tracked meticulously and represent a strong reporting mechanism for interactions with regulators and tax authorities. And both customers and staff can go about their business in a much safer environment. It all adds up to a more efficient, compliant and secure business.

In an increasingly crowded field, the competitive advantage represented by the Alt Thirty Six platform can have a long-term impact on profitability. As the Executive Summary in the Marijuana Business Fact Book 2017 states, “market forces are unavoidable, and they’ll continue forcing marijuana businesses to adapt and improve in order to succeed.”

We invite you to take part in this revolution. For more information, click here.

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