Running a cannabis dispensary isn’t like running any other type of business. You don’t only have the stress of inventory, expenses, a demanding customer base, and sales to worry about, but also incredibly stringent state, county, and city laws. State compliance is at the core of keeping your storefront running, but automating reporting with software can alleviate some of the stress associated with compliance.
Selecting a cannabis software that fits your business model is crucial to scaling your business. Here are five essential things to look for in an efficient dispensary POS system and how they will benefit your cannabis operation.
Improving Customer Experience
Customer retention will make or break your business. Building a base of happy customers is imperative for your dispensary to survive and thrive. There are lots of ways to create a memorable and positive experience for your customers. Seamless transactions, loyalty rewards, and employees that understand buying habits make it enjoyable for customers to shop. A premier dispensary POS system will give you control over all of these. Checking out customers quickly and efficiently, while utilizing a rewards program to incentivize them to come back is what customers expect and not all POS systems deliver on these expectations.
Another sign that a POS system is worthy of your business is one that has a strong user base and an active support team. Frequent engagement with their users and regular help center articles are a good indication that the POS provider is actively working with their community to solve issues and create a better experience.
Furthermore, the software provider should provide multiple training sessions when you come on board. This gives you, your staff, and management team the knowledge and know-how to use the software proficiently. A good POS provider will also help you develop standard operating procedures that best work for your business and their software. Implementing your software in tandem with best practices will maximize the efficiency of your dispensary. After all, POS systems aren’t always cheap, so you should expect a “white glove” approach by their team.
Optimizing Cannabis Inventory
There is very little room for mistakes in the cannabis industry. Inadequate cannabis ERP systems can cause issues with inventory discrepancies which can easily lead to compliance fines, penalties, and even your license being revoked. A reliable POS system provides accurate, real-time data that seamlessly allows you to manage your stock and improves customer shopping experience.
Better inventory management also helps in team day-to-day operations. When your staff can easily audit inventory and use reports to see what is selling, they can make informed decisions when purchasing stock to keep your customers coming back. This results in high customer satisfaction, repeat business, and more sales. You want to optimize your inventory ordering so you can have enough of the right products at the right times to meet demand and offer a superior customer experience.
Automating State Compliance
Compliance is the x-factor for cannabis businesses. Few other industries deal with regulatory restrictions as stringent as the cannabis industry. That’s why it is so important to have cannabis POS software that is integrated with track-and-trace programs selected by the state. Metrc and BioTrack are the most commonly used track and trace systems. You’ll want to make sure you dispensary ERP automates compliance reporting to avoid any risk of human error.
Real-time compliance integrations with Metrc and BioTrack will report sales accurately as they happen. There are no shortcuts when it comes to compliance so your cannabis POS needs to factor in all the required taxes as well. Additionally, it should enforce customer purchase limits and verify age. These are two regulatory rules that can quickly cause easily get your shop shut down if not strictly followed.
Useful and Seamless POS Integrations
Be wary of POS systems claiming to be all-in-one solutions. These tend to be masters of none. A great POS will integrate with other leading softwares to bring you a well-rounded platform. Look for one with a wide range of integrations that help with things like marketing, e-commerce, loyalty, analytics, etc. Finding a dispensary POS that supports your current tech stack will save you time and headaches.
It’s also useful to do research on software review sites to see how these integrations hold up. Just having integrations isn’t enough. These integrations need to work seamlessly with your POS system and be as easy to utilize as the platform itself.
Cannabis Software That Scales
The last thing you should look for in a POS system is one that has the ability to handle your business as it scales into multiple locations or a delivery fleet. Not all dispensary software can support a multi-storefront or delivery. It really comes down to the features and functionality. Is there a master inventory catalog that can categorize inventory across multiple stores?
Does your dispensary POS also offer built-in dispatch and delivery functionality? Evaluate which software can serve you best long-term versus a short-term fix. Look for one that broadcasts its new features, integrations, bug fixes, and improvements. This will give you a good idea of how the POS is keeping up with the pace of new industry advancements.
How to Decide on a Dispensary POS
Looking for these five things will give you a solid understanding of what your POS platform should have and steer you in the right direction when it’s time to buy. There are a few additional ways to evaluate potential cannabis software providers. It never hurts to come prepared with specific questions during a demo that are relevant to the workflows utilized in your dispensary. This will give you a clear understanding if the dispensary POS system can seamlessly integrate with your current SOPs or if you’ll need to adapt your internal procedures.
Before making the big decision, inquire about the migration plan, the onboarding process, and any additional hardware that might be needed. These are important factors to consider so you can avoid future roadblocks. Lastly, call their customer support line just to test their response time. Waiting to be connected to a support agent can be frustrating if something does go wrong. It’ll give you more confidence in your decision if you know that the support team is easy to contact and capable of resolving issues quickly.
Steven Lynn, a California resident since 2011, has dedicated his career to destigmatizing and legitimizing the cannabis industry through technology. Steven started his career in cannabis as the Director of Marketing at IndicaOnline in 2017. He now serves as the Director of Marketing at BLAZE® responsible for driving all marketing strategy, brand development, and lead generation programs. His professional background in early-stage B2B cannabis SaaS startups has made him adept at executing scalable, impactful, and sustainable strategies to achieve exponential growth. Steven received his BA in Communications from the College of Charleston in 2006 and is a seasoned marketing professional with over 10 years of experience working in both the entertainment and canna-tech industries.
Founded in 2017, BLAZE, a VC-backed California technology company, offers unified seed-to-sale software and apps for the cannabis supply chain. Developed by tech entrepreneurs and former cannabis company operators, BLAZE makes tech simple with an easy-to-use frontend powered by an enterprise backend for dispensaries, delivery services, distributors, and cultivators. Customers can be more profitable and productive while creating a better user experience for end customers and employees. The company’s software ensures compliance with local laws and taxes. BLAZE offers full APIs and integrates seamlessly with over 40 technology vendors in the cannabis industry.
Member Blog: Want to Open A Dispensary In Oklahoma? Here’s What You Need to Know.
In Oklahoma, the cannabis business is thriving. Yes, the controversial plant that users were prosecuted for using so very recently, is on a roll. You could even say, there is a cannabis rush.
In this article, we will cover how you can go about opening a dispensary, including how to acquire a license, and some laws you should be aware of. And we will also touch on how to set up your dispensary operations and software! Let’s dig in!
What do you need to open a dispensary in Oklahoma?
The process of opening a dispensary should go smoothly if you fill out an application form and follow the Oklahoma Medical Marijuana Authority’s guidelines. Although the costs of opening a cannabis dispensary in Oklahoma are significantly lower than elsewhere, it is critical to have accurate information and to review some of the most relevant regulatory constraints.
Let’s start at the beginning, if you intend to learn how to open a dispensary in Oklahoma for commercial purposes, you must be at least 25 years old before proceeding. You must also make the following items available:
Proof of Oklahoma residency
A tax ID number, as well as a general business license
Valid identification documents
You’ll need to assess your commitment after you’ve got everything in place. Not only must you be informed of current cannabis production and sales regulations, but also of proposed legislation and revisions that may shortly come into force.
Now that you’re certain you’re ready to make this big move, it’s time to proceed to the next step: finding a suitable property.
You should check the following:
Rent cost
Cost of license
Licensing application fee
Employee salary
Transportation and storage of product
Security
How to get a dispensary license In Oklahoma.
Licenses for growers in Oklahoma come in the form of a certificate and are issued through the OMMA website. The charge to producers, processors, and dispensaries for applying for a license is $2,500. You must provide the following to apply:
A business plan
A financial plan
An inventory control plan
Patient education
Record keeping
Security plans
There are distinct rules in every state in the United States about opening dispensaries. Each state sets its own standards. You will need to study the rules that apply in Oklahoma.
The general requirement for opening a dispensary in Oklahoma is that you undergo marijuana dispensing training and acquire a license.
How to keep your dispensary compliant in Oklahoma.
You must abide by all of Oklahoma’s strict marijuana regulations to keep your dispensary compliant. These include:
Marijuana dispensaries in Oklahoma are prohibited from selling more than the following amounts in a single transaction:
Three ounces of cannabis
Concentrate of one ounce
72 ounces of cannabis
Oklahoma dispensary owners, like any other legitimate business, must pay taxes and ensure that they give the following information:
All cannabis-related information with other permitted firms
Details of batch numbers that show the weight of cannabis acquired at wholesale
The number of plants that have been approved for relocation to other locations
Batch numbers showing the weight of cannabis sold
Record of all items that have become obsolete
Substantial fines are imposed for noncompliance. There is a $5,000 punishment for a first infraction while a second offense will result in license revocation. Because of this, you are going to need the assistance of technology to automatically update you if the OMMA cannabis rules change.
Understanding Metrc in Oklahoma.
Metrc is an integrated system for tracking and tracing marijuana products in real-time. Every plant and its wholesale shipment has a unique tag attached by licensees. To uniquely identify each plant, these tags use readable text, barcodes, and radio frequency identification (RFID) chips for easy identification.
Metrc is already being used in Oklahoma following the state’s legalization of marijuana. The OMMA can only see and track inventory once it has been entered into Metrc by a commercial licensee.
To get started with Metrc in Oklahoma you should:
Watching their training videos and schedule training.
Request online access and complete the New Business System Metrc training with your dedicated Metrc Account Manager.
Connect all of your employees with Metrc and make sure they have the permissions they need for their jobs.
Request Metrc plant tags, package tags, and other UID tags and document the physical receipt of requested Metrc UID tags.
Assign UID tags to your cannabis items.
Access the Beginning Inventory Guide in Metrc for proper guidelines and references to other important factors.
What are the dispensary laws in Oklahoma?
Cannabis laws in Oklahoma are the guidelines that every cannabis dispenser must heed while dispensing medical marijuana. Every prospective cannabis retailer will be guided by these same rules, and it is one of the first things you discover when learning how to operate a dispensary in Oklahoma.
Some of these rules include:
To legally sell cannabis, you’ll need a state-issued license, but CBD oil made from industrial hemp is permitted without one.
Patients must first obtain an authorized medical marijuana card to acquire and consume medicinal cannabis.
Possession of paraphernalia is a misdemeanor that carries a maximum sentence of one year in prison and a fine of $1,000.=
Individuals under the age of 18 are only allowed to enter a dispensary with an adult who has a valid medical card.
The sale of fewer than 25 pounds of marijuana is a felony punishable by a two-year prison sentence and a $20,000 fine.
Who can your dispensary sell to in Oklahoma?
Only medical cannabis patients (or their caregivers) with valid patient licenses can shop at an Oklahoma dispensary. Medical cannabis is available to Oklahoma residents over the age of 18 who have a physician’s recommendation.
A physical medical marijuana ID card or the state’s database can be used to verify a patient or caregiver. Out-of-state persons or companies are not permitted to purchase medical marijuana from licensed dispensaries. Licensed processors can sell to other licensed processors and licensed dispensaries.
Oklahoma dispensary market size and opportunity.
Despite its accomplishments, the cannabis industry in Oklahoma is still in its infancy, and the environment is rapidly changing. Marijuana laws in the state are continually changing to make it more accessible.
Another feature that distinguishes Oklahoma from other states is that it allows cannabis smoking and vaping anywhere that tobacco can be lawfully consumed, such as on the sidewalk or in a bar that allows smoking. As a result, Oklahoma has morphed into an industrial cannabis state with a variety of dispensary options.
There are only a few challenges to overcome. Any sort of cannabis — from raw flowers to topical lotions, from oils and gels to vaporization and patches — can be sold by anybody who pays $2,500 for a dispensary license.
Cannabis legalization has resulted in a significant expansion in legal cannabis cultivation and distribution, as well as an explosion of related service providers in many states. Cannabis has become a lucrative business prospect for many inhabitants in the state.
What cannabis software do I need to run a dispensary?
To run a compliant dispensary in Oklahoma, you will need the following business software:
One of the most important technologies in a dispensary is a point-of-sale system. A compliant POS system will make sales transactions easier for your dispensary’s staff and provide the greatest payment options for customers. A POS can help run the following tasks:
Regulate inventory control and legal compliance
Manage customer check-in and ensure that your customers follow the daily sales tracking guidelines
Assists you in automatically rejecting transactions for people who are not authorized to buy.
Integrate with the Metrc system, and keep you compliant.
Integrate with yourscheduling softwareand provide labor forecasts for scheduling.
Produce all sales and customer reports for the approval of cannabis authorities.
Dispensary payroll software.
Integrated dispensary payroll software will assist you in managing your employees’ pay. It manages all expenses and interfaces with other systems such as personnel administration and payroll tax deductions. It makes direct contributions to the IRS and compensates employees via direct deposit. Another benefit of using an integrated payroll system is that you can integrate your company’s payroll with the rest of your workforce management suite; performing tasks like approving clocked hours to payroll, and running payroll in the click of a button. Dispensaries who used this type of system report saving 5 hours per week on running dispensary payroll.
Scheduling and time tracking software.
Also known as workforce management software, integrated scheduling and time tracking software makes creating staff schedules, and managing staff hours very hands off. With this type of software, you are able to create schedules remotely, and staff can request shift swaps or time off. With time tracking, staff can sign into work using facial recognition technology, and staff-approved hours can be streamlined to payroll – so staff who clock into their shifts, get paid with the click of a button.
Dispensary HR software.
Recruiting, hiring, interviewing and onboarding can take up a lot of time. Especially when staff have important documents they need to sign, and criminal record checks that need to be completed. With dispensary HR software you can automate recruiting, and onboarding, by having staff onboard themselves and sign digitized documents.
A Security system.
A good security software system with cameras to monitor what goes on inside and outside your dispensary should be paramount to ensure your dispensary remains compliant. You will need a system where you can monitor all the affairs of your dispensaries at one glance without being in different places at the same time.
Inventory management software.
You require some software to help you manage your inventory, and the process of placing orders and confirming inventory counts from your vendors. You’ll also need a system that will remind you when new orders are needed when it detects product shortages.
Website.
If you are in a state that allows e-commerce for dispensaries, a website should be a top priority for competing for top rankings in today’s market. Because of technological advancements, you may now open an e-store where customers can buy cannabis online and have it delivered to their doorsteps.
Your website should be able to collect KYC information from your consumers to verify their identities and eligibility to acquire cannabis products, so you can be confident you’re following the cannabis serving guidelines. If you deliver a cannabis product to someone who isn’t eligible for it, you’ll be breaking the rules guiding cannabis consumption, and this might be a huge risk for your new business.
Metrc.
Metrc, also known as Marijuana Enforcement Tracking Reporting Compliance is a regulatory compliance system and was built to keep track of cannabis cultivation, preparation, and packaging. Basically, Metrc is a database for tracking cannabis from seed to sale, and identifying it using RFID tags. In Oklahoma, you must submit data to Metrc to run a compliant dispensary. Reporting to Metrc can be done manually, however cannabis-specific POS systems are offering a Metrc integration, meaning it is done automatically for you as you sell your product.
What else do I need to know?
Now that we have covered all the technical and operational bases, the rest is up to you.
Other key parts of opening a dispensary include considering where your store might be located, what your brand value and vibe will be, and how your product and store will look.
Marketing should also be a consideration, as well as staff training, and company culture.
Many new cannabis entrepreneurs hire consultants to help them navigate these areas.
For now, we hope this has been a helpful way to get you started.
Tommy Truong is the Director of Partnerships at KayaPush; the cannabis software helping dispensary owners manage their HR, scheduling and payroll all from one easy to use platform. KayaPush also integrates with leading dispensary POS systems, giving you an end-to-end solution. Tommy loves hot sauce, fried chicken, and running with his Boston terriers.
Committee Blog: Re-Thinking Cannabis Track and Trace Models – How State-Mandated Track and Trace Integration Capability is Failing the Cannabis Industry
This is the second in a three-part blog series. The first part can be read here.
Highly regulated industries typically require key information to be readily available to regulators related to the production, movement, and sale of products, which is the case in the cannabis industry. The two main reasons for “seed-to-sale” record keeping are (1) to reduce the diversion of cannabis products to the unregulated market and (2) to protect consumer health with an efficient track and recall product method.
However, cannabis operators are facing many challenges with the state-mandated track-and-trace requirements, causing their business operations to suffer inefficiencies, delays, and sometimes even interruptions, which can ultimately impact consumers and patients. This is the second blog in a series highlighting the issues that cannabis operators and regulators are facing with the current centralized state-mandated track-and-trace model from NCIA’s State Regulations Committee, Technology and Compliance Sub-Committee.
The point of frustration begins with the method in which the track-and-trace requirements are implemented. Most U.S. states with some form of legal cannabis sales (medical and/or adult-use) have selected a single mandated technology platform that all operators must use to track and trace their cannabis seeds, plants, and products. The track-and-trace system selected by the state is independently configured to match the adopted cannabis regulations for that region. Because each state has adopted different cannabis regulations, there are variations in what can and cannot be accomplished within the selected track-and-trace systems, even within the states that have selected the same technology provider.
What is an API?
While the definition of an API may seem complex, at its most basic level, the API is the communication pathway between two systems. API stands for “application programming interface,” which means that it is a software intermediary that allows two systems to “talk” to each other, meaning communicating and sending or receiving information. The communication pathway is intended to be two-way, with third-party business management software being able to retrieve (“GET”) information in the track-and-trace system, as well as send (“PUT”) updated information back into the system.
Let’s turn to an everyday example of an API integration that most consumers would be familiar with: travel booking applications that aggregate flight information. Let’s say you are planning a flight for a summer vacation and you have two options: go directly to each airline website to search for and compare flight options, or use a third-party travel booking application to simultaneously access all flights across all airlines within your search parameters. The ability to search and review all the available flights, across many airlines, is because of the airlines’ and applications’ APIs. When you use the travel booking application, it sends the search parameters to the airlines it is connected with via the API. The airline API then sends available flights, seats, and prices to the travel booking application. In the more sophisticated travel booking applications, you can also purchase the ticket for your flight through the travel booking application, which then also utilizes other APIs for your secure banking/payment information. If all of the APIs are open to send and receive data between the systems, then the transaction is seamless, and all of the required information (identity verification, payment method, etc.) is shared with the airline for your booking.
Understanding API Limitations in Cannabis
State regulators intend for the cannabis track-and-trace technology to serve as a way to accurately collect and record information about the flow of goods in the cannabis industry from seed to sale. What is consistent across all states, regardless of the track-and-trace technology selected, is the acknowledgment from regulators that the mandated systems are not intended to serve as an operator’s compliance solution or business management software system. The state-mandated track-and-trace systems are not built in a way that would allow a business operator to manage day-to-day operations and transactions between operators and retailers to consumers.
This acknowledgment of the business management limitations within the track-and-trace systems and the need for interoperability with operators’ own software is often stated outright by regulators and policymakers and/or codified in regulations, such as in California’s Business and Professions Code (Clauses (b) and (c)). Instead of directly managing operations within the track-and-trace systems, cannabis businesses utilize third-party software that has been vetted and certified to connect with and communicate important transaction details to the state systems. Cannabis operators are then relying heavily on third-party software and API integrations for the communication and transmittal of that important information and data.
State-Mandated Software Providers Set Regulators And Operators Up To Fail
Now let’s think about how cannabis businesses utilize APIs on a regular basis: for example, point-of-sale (POS) software. Regulations require that the cannabis retailer record all sales in the central, state-mandated track-and-trace system, but the actual on-site transaction is conducted through POS software at checkout. The retailer is therefore encouraged to use POS software that provides the necessary sales tools and controls that make running the business manageable for all employees, while also providing API integration with state-mandated track-and-trace systems.
Without the API integration, a retailer would be forced to manually enter all of the details of all of the POS transactions into the track-and-trace system on a daily basis. Hundreds of daily sales without an API integration means many hours of data entry and countless opportunities for human errors in the track-and-trace system. Opportunities abound for inaccurate reporting in the track-and-trace systems with manual entry. Regulators rely on the track-and-trace system they selected to ensure compliance and consumer safety, although operators are essentially utilizing third-party software to communicate with the track-and-trace system. This is exactly why it is important that the cannabis industry has an open and operating track-and-trace system API at all times. Any time the track-and-trace API malfunctions (limited in communication pathways, delayed in responding to POS requests for information, or just completely down), the cannabis retailer operations are severely impacted, if not altogether halted.
In current situations where the state has mandated a specific software provider, the vendor approves specific POS and other software vendors, but the agreements the vendor has with the state does not allow for direct support to the approved vendors. This causes challenges as a licensee’s POS vendor cannot talk directly to the vendor to get API issues resolved. There is also no direct line of communication to the approved vendors about changes happening in the state-mandated software provider’s system that affects the API. These types of issues can cause the licensee (cannabis operator) to be out of compliance without even knowing it.
From The Operator’s Perspective
Imagine that you are a budtender trained on your employer’s POS software, compliance and track-and-trace requirements. Very rarely will you access the statewide system directly because the POS is fully integrated with the track-and-trace API. You are working during your daily shift processing retail transactions through the POS, but unfortunately, the track-and-trace API is experiencing high call volumes from all of the other retailers in the state, and the API is not responding to your POS requests. You cannot complete the transaction in the POS as usual, so you are forced to complete and track the transaction manually. Later on, you have to spend hours manually entering which unit of product came from which box in the back storeroom, along with all of the customer’s information and time stamps. This takes hours of labor and could lead to mistakes (hey, we’re human!). As we stated, manual records and entry invite human error. Now the inventory listed in your POS software does not match the statewide track-and-trace system. You spend many more hours trying to find and correct this mistake. The circle of conducting sales transactions, recording and tracking it manually, and fixing errors, widens, all putting your cannabis business at risk.
Because cannabis businesses at every point of the supply chain (i.e., cultivation, manufacturing, distribution, and retail) rely on third-party software to manage their operations effectively and efficiently, a hiccup in the track-and-trace API has ramifications for an entire statewide industry at once. While this sounds like a “perfect storm” scenario that only happens every once in a long while, in reality, track-and-trace API performance issues happen on a regular basis.
In California, a group of third-party software integrators reviewed track-and-trace API performance over a period of six months (April 2020 through October 2020) and found that the API was generally up and fully responsive approximately 91 to 98 percent of the time. While an API performance ranking in the high nineties may seem acceptable, the technology industry considers 99.999% uptime as the standard for high availability. An availability of 94 to 98 percent means 2-6% downtime, which is effectively 3 to 8 hours of downtime per week.More recently, the California Metrc API (CCTT-Metrc) experienced consistent outages for approximately 17 consecutive days (February 16, 2021 – March 5, 2021). This extensive outage caused all third-party software integrators serious Metrc-sync issues for packages, transfers, and more. Operators were forced to keep their staff on extensive overtime for more than two weeks in order to manually enter and/or correct information that was entered into the system while sync issues were occurring. As a result, cannabis businesses suffered as operations were interrupted, additional labor was required, and additional costs were incurred that had to be absorbed by the business.
From The Regulators’ Perspective
Cannabis is a highly regulated industry and regulators are very concerned about the path from a cannabis seed to final sale to a consumer. The perceived public safety concerns are immense, which is what prompted the implementation of, and requirements, around track-and-trace. Put simply, regulators rely on the track-and-trace system they selected and the system is only as good as its uptime.
Many regulators focus on the track-and-trace server uptime reporting from their technology providers as an indication of how well things are running. If the server is up, then an operator can still access and update the track-and-trace system manually, and that is where most regulators stop in their understanding of the issues. API connectivity and performance is just as critical as track-and-trace server uptime in order to ensure business continuity and accurate data; and accurate data is the entire intent of the state’s mandated technology platforms. It is important that regulators assign key technical leads with the sole responsibility of reviewing track-and-trace API limitations and performance issues for their regulated industry.
Without skilled technical staff on the state’s side, when the track-and-trace API has issues, no one is aware of the problem besides technical teams at third-party software providers. The onus is on the software providers to notify all operators and inform the regulators. This leads to a delayed and fragmented flow of information to operators who are scrambling because their third-party business platforms are shut down. The responsibility of transparent notification around API performance should be on the state-mandated system provider, and no one else. The current lack of transparency on API performance and downtimes also leads to complete blind spots for the regulators, having also not been timely notified that cannabis operations in their state have halted due to API connectivity. The operators and the state should know the health of their track-and-trace systems at all times so that they can attempt to mitigate the amount of damage an outage inflicts on businesses. As with many other online platforms with APIs (i.e., SAP, Twitter, Intercom, etc.), this is typically done through the establishment of an API status page. At this time, there are no current API status pages for key track and trace vendors and, as stated above, performance issues are largely tracked and reported to regulators by the operators. In California, there are currently no performance reports required of Metrc for their system’s API availability (not including general server/equipment uptime).
Conclusion
The performance deficiencies of track-and-trace API’s are burdensome to the entire legal cannabis industry because it can cause third-party inventory management applications to collapse. Then operators are forced to duplicate and/or correct entries directly in the track-and-trace system. This amounts to countless hours lost and perpetuates inaccuracies of the data being entered into the system. Ultimately, the effectiveness of the track-and-trace system diminishes with any amount of downtime. Unfortunately, downtime and interruptions are all too common and the cannabis industry’s needs as a highly regulated industry demand a much higher success rate for its systems.
In our next blog in this series, we will compare the current centralized state-mandated track and trace model with the alternative distributed model.
Interested in joining us in establishing an effective and scalable track and trace framework for regulators and operators in the legal cannabis space? Click here to stay updated on the State Regulations Committee, and the efforts that its Technology and Compliance Subcommittee are taking to improve and advance track and trace nationally. Let’s close the information gap between operators and regulators, and help the entire industry move forward together.
Stay tuned for the next blog post in our multi-part series!
Equity Member Spotlight: iFlyWellness – David Rodrigues, CEO
This month, NCIA’s editorial department is reviving the monthly Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
Tell us a bit about you, your background, and why you launched your company?
I have been using cannabis for 20 years, and got into the industry in 2011, before METRC was implemented, and before adult-use legalization. I was working in cultivation, budtending, purchasing, and managing. At the time, I was seeing firsthand the products dispensaries were providing, and began developing a vision of what the San Jose community needed versus what was out there. Stepping back from my position at a successful dispensary, I made a choice to go all in on my visions and build a delivery service and lifestyle brand in San Jose. I created iFlyWellness for the people.
iFlyWellness delivery service will connect the legendary Humboldt County to the Bay Area. Offering a unique flower menu from Humboldt County to Indoor exotic flower, iFlyWellness will cater to the everyday smoker/user, specifically the people of San Jose. There are over 1.1 million people in San Jose, with a high percentage of cannabis users. Connecting the “farm to blunt” is the method behind iFlyWellness. Patients are currently buying jars at ninety dollars an eighth. The everyday consumer has struggles affording such medicine. The logic is to figure out a way for patients to consume top-tier flower at an affordable price.
What unique value does your company offer to the cannabis industry?
I know quite a few cannabis growers and will go straight to the source. This is the “farm to blunt” experience. The indoor cultivation side and the Humboldt side both make a supply chain connection from the Emerald triangle all the way to the Bay Area. This is really good medicine for the people.
What is your goal for the greater good of cannabis?
It’s about getting on the ground. Talking directly to the people in the community that you want to make a social impact with. I am working with Daniel Montero and Javier Armas of BALCA (Bay Area Latino Cannabis Alliance), and I am connected directly with Humboldt farmers and legacy growers.
Our vision is for the patient to feel a direct connection with the flower they are smoking. Big corporations in this industry fail to recognize that this industry has been here for over 100 years. They are looking at the industry as a money grab. You can make it as a small business owner, but it comes with many more challenges. Forming alliances among us and going directly to the people helps us face these challenges.
What kind of challenges do you face in the industry and what solutions would you like to see?
Capital is big and can dominate the industry. I am working right now with Javier Armas of BALCA to acquire a building and license in Oakland, CA. With the minimal amount of licenses the city of San Jose has to offer, if you don’t have deep pockets, it can be challenging applying for the same license that a multi-million dollar corporation is applying for.
Why did you join NCIA? What’s the best or most important part about being a member?
I joined NCIA through the DEI Scholarship Program to learn and network, as the cannabis industry is constantly changing and I need to stay up to date. When I was working for dispensaries in San Jose, I was networking a lot but representing someone else’s company, not representing my vision and dreams of connecting and catering to the everyday cannabis consumers. It’s time now to build my vision and with the strength of great associations like NCIA and BALCA, I’m confident it will happen.
Member Blog: How Cannabis Dispensaries Can Navigate The METRC System
Cannabis dispensary owners must bear in mind that this industry operates under strict laws and regulations that set their business apart from conventional retail operations. State governments must balance public health and safety with the business needs of the regulated community, and that requires complete tracking of all marijuana products from seed to sale. Most states have already switched to METRC, the largest traceability system helping dispensaries from coast to coast stay compliant with the law. The goal of METRC is to easily retrace the steps from sale to seed and facilitate transparency in the legal cannabis industry. This post will help you understand better why METRC is required, how it benefits everyone, and how can you navigate the system while using the right technology to stay compliant.
What is METRC & Why it is Needed?
Marijuana Enforcement Tracking Reporting Compliance (METRC) is a cloud-based, state-mandated platform used by 15 states in the U.S. It facilitates real-time tracking and tracing of cannabis plants and products from seed to sale. METRC was first adopted by Colorado and early reports in 2014 indicated that this regulatory monitoring technology allowed for accurate quality control and ensured that the safety of the end consumer was prioritized.
In all METRC states, cannabis stores and dispensaries must use the system either directly or integrate it with their POS. All data about your dispensary is safely stored in the cloud and is only accessible by you or the state regulatory authority. State regulatory authorities use data inconsistencies in METRC to detect any diversions from the mandated regulations and if they find any discrepancies, they could conduct an investigation and impose hefty fines.
How to Prepare for METRC?
To gain access to the METRC system, all employees working at your dispensary must get certified. The process involves training, studying the terminology and workflows, and then taking a 40 questions multiple-choice test. METRC uses RFID tags as unique identifiers to recognize and monitor all transactions, these are not reusable and must be purchased in batches or bulk by dispensaries.
Every dispensary must incorporate its own solution to work with METRC. One can navigate the system manually but it is a risky and time-consuming process, as it involves countless hours of data entry, auditing, and reconciling processes to deal with the errors that inevitably pop up. The most convenient way to implement METRC is to automate as much of the process as possible. Investing in a robust point-of-sale solution that integrates seamlessly with METRC will ensure complete compliance with state regulations.
What are the Daily Obligations?
METRC’s cloud-based software requires only an internet connection and computer or tablet to access and use it, and an advanced POS system can automate the whole process for you. METRC tracks all plants and products with Radio Identification Tags. The plant tag is used to track each plant from its immature phase through to the harvest, while package tags are available for harvest batches or packages of one kind of product. All these activities must be recorded by dispensaries and reported to state regulatory authorities on time.
METRC charges $0.45 per plant tag and $ 0.25 per package tag. The tags can be ordered directly from METRC’s online software system, and are custom-printed for each dispensary. These can not be returned once the printing process has begun, are non-refundable, and cannot be reintroduced into the supply chain. Recreational cannabis plant tags are blue while medical marijuana plant tags are yellow.
Manual or Automatic Reporting?
METRC is simply a reporting tool – an application that allows you to send data to the state to maintain compliance. In most states, reports about all activities must be submitted to METRC no later than midnight on the day they occurred. A cannabis-specific POS can facilitate reporting to METRC while providing a user-friendly interface. To get the best compliance solutions, look for a POS that offers 2-way integration. This ensures that reports are sent to METRC in real-time, manifest intake is automated, and inventory adjustments are automatically synced with the traceability system.
Manual reporting will require you to log in to your online METRC account at the end of every business day to enter all data from every single transaction and activity that occurred. This is a time-consuming option that can also result in errors, increasing the risk of compliance infractions, fines, or worse, loss of retail license. Automated reporting with a cannabis-specific POS solution will make your life easier as it integrates seamlessly with METRC and automatically sends all your inventory adjustments and sales transactions as they occur in real-time. Also, if there are ever any connectivity issues, all saved data automatically sync once you are back online.
METRC has standard operating procedures in all states, and dispensaries don’t have a choice but to comply with them. But dispensary owners do have the option of selecting the right POS system that can help their employees navigate the METRC system more efficiently. Download your free copy of ‘A Complete Guide to METRC Compliance for Marijuana Dispensaries’ by Cova, to learn in-depth about the different levels of POS integrations with METRC, how to work best with the system, and state-specific METRC differences.
Gary Cohen is the CEO of Cova Software, the fastest growing technology brand in the cannabis industry. Cohen’s focus has been driving the company’s overall strategy, including its vision, go-to-market plan, and strategic development. Since joining the cannabis industry in 2016 and launching Cova commercially in 4q17, Cohen has led Cova to dominate the enterprise sector for dispensary Point of Sale, while forging client relationships with hundreds of single-store retailers across North America.
In solutioning the POS platform, Cohen & the Cova team have met with over 1,900 operators and leveraged expert knowledge to provide retailers the support they need to get a license, pass inspection, launch a store, and improve operations. Cohen leads seminars on retail technology, compliance, business operations, and cannabis banking laws at the industry’s largest events, including the NCIA and MJBizCon. As Cova has become the predominate thought leader for cannabis retail tech, Cohen has established himself as a leading voice educating cannabis entrepreneurs as they build their own successful brands.
Committee Blog: Re-thinking Cannabis Track and Trace Models — A Sustainable and Scalable Approach
by NCIA’s State Regulations Committee Contributing authors Jennifer Gallerani, Tim Gunther, Elise Serbaroli, and Erin Fay
The COVID-19 pandemic and subsequent recession powerfully demonstrated that the cannabis industry is providing essential medicine and products to countless Americans, as well as creating jobs and tax revenue. Retail sales of medical and adult-use cannabis in the United States were on pace to eclipse $15 billion by the end of 2020, and if you include ancillary products and services, the industry is estimated to reach $68.4 billion in 2021. The U.S. cannabis industry is experiencing rapid job growth, boasting an estimated 300,000 full-time jobs in 2020. Those numbers are expected to almost double by 2024. Over the next four years, the industry is expected to add nearly 250,000 full-time equivalent positions. By comparison, roughly 271,000 people currently hold beverage manufacturing jobs. These numbers demonstrate with sureness that the U.S. cannabis industry is on a high-growth trajectory, which makes it imperative that the market operate under a practical regulatory framework that benefits both regulators and operators.
Most states that have approved some form of legal cannabis sales (medical and/or adult-use) have also selected a single, mandated technology platform that all operators must use to track and trace their cannabis seeds, plants, and end products. Some iterations of the current track and trace model — which is primarily centralized approach — sets businesses, employees, and regulators up to fail. Of course, it also further limits the competitiveness of the regulated market with the unregulated market, and the ability for policymakers to be confident that cannabis consumers in their states are obtaining taxed, tested, and regulated products.
Local governments are missing out on tax revenue, and businesses (both large and small) are forced to spend unnecessary resources on a system that is fundamentally flawed. The centralized model, contracting with one specific software provider, and mandating operators to use that software provider in order to stay compliant, is wreaking havoc on the entire U.S. cannabis industry and is not sustainable for a federally-legal and global supply chain.
As a team, the National Cannabis Industry Association’s State Regulations Committee’s Technology and Compliance Subcommittee has spoken to regulators, operators, and international technology providers in the interest of presenting a practical track and trace solution to benefit the industry as a whole. This is the first blog in a series that will highlight the issues that cannabis operators and regulators are facing because of the current centralized state-mandated track and trace model. We propose that the U.S. cannabis industry operate under a more practical framework that has a higher probability of success for regulators and cannabis businesses through slight changes and improvements based on proven best practices.
The History of Track and Trace in the U.S. Cannabis Industry
Track and trace systems serialize assets to identify where assets are (track) and to identify where assets have been (trace). Track and trace is not something new. It is the globally acknowledged standard for product movement and reconciliation in both the Pharmaceuticals and Consumer Packaged Goods (CPG) industries. A secure track and trace system combines material security and information security elements to confirm assets are legitimately produced and sourced, following a pre-defined and auditable path.
As the regulated cannabis markets started to take shape and mature in 2012, one of the driving factors that shaped the need for a track and trace system was the 2013 U.S. Department of Justice Cole Memorandum (Cole Memo). The Cole Memo indicated for the first time that the federal government would only intervene in states that failed to prevent criminal involvement in the market, sales to youths, and illegal diversion to other states.
The first four states to legalize adult-use cannabis were Colorado, Oregon, Washington, and Alaska. All four of these states instituted a market-based licensing system to regulate the commercial activity of cannabis sales. The intentions of the newly instituted policies were two-fold: protect consumer health and minimize diversion, both of which align with the core principles of the Cole Memo. To meet these intentions, the states instituted procedures for inventory control and tracking documentation using a state-mandated centralized model, in an effort to create a transparent and controlled system of oversight within the cannabis industry.
As the industry has developed over the years, most states that have approved some form of legal cannabis sales have selected a single mandated technology platform that all operators must use to track and trace their cannabis seeds, plants, and cannabis products. As shown in Figure 1, the majority of legalized states have chosen METRC as their exclusive contractor of track and trace services.
A Scalable and Sustainable Track and Trace Solution
The legal cannabis market has changed significantly since 1996 and it is important for the industry to re-evaluate the intention and implementation of track and trace. Regulatory bodies contracting with one track and trace technology provider and mandating operators to use that specific provider in order to stay compliant is problematic for many reasons. Time has shown that the current centralized model is fiscally irresponsible and ultimately counterproductive, with significant negative externalities, including ethical concerns such as anti-trust issues. Most recently, an Oklahoma cannabis operator (seeking class-action status) initiated litigation against the state’s Medical Marijuana Authority (OMMA), alleging that the state exceeded its authority by requiring licensees to pay for a state-mandated track and trace program, and that the state’s contract with METRC creates an unlawful monopoly, among other claims.
To provide an analogy, let’s think about how businesses are required to report taxes. The IRS sets out certain rules and every business must report their income and assets according to that framework. Technology providers (such as TurboTax, Tax Slayer, H&R Block, etc.) have built scalable products to support businesses in reporting their taxes. The IRS does not mandate that businesses use one single specified software in order to report their taxes. Doing so would kill competition, introduce a monopoly, and eliminate any incentive for the technology providers to improve their product. By the IRS allowing free competition over the realm of tax preparation and processing software, the public benefits from the technology companies being incentivized to update and improve their software features and benefits.
The centralized model is crippling the entire industry as system failures are occurring on a more frequent basis, and its after-effects are causing a more detrimental and wide-ranging impact as the industry grows at an exponential rate. Most recently, METRC’s integration functionality (how third-party business operations software communicates to the state’s system) was down for more than fourteen days in California, causing significant problems in the nation’s largest cannabis market. One software provider and its tag-producing partners are benefitting, while setting industry regulators and operators up to fail. One software provider cannot meet the current or future needs of regulators and operators, especially not on a national level. Meanwhile, there are many excellent software providers that specialize in track and trace. The free market should determine the most efficient and user-friendly approach to allow businesses to stay compliant and accurately report to the appropriate regulatory authorities.
By leveraging the knowledge and experience the industry has gained over the last 20 years, we can incorporate best practices from other industries’ and other markets’ track and trace systems, and set regulators and operators up for success.
Join us as we dive deeper into the issues surrounding compliance and track and trace in the cannabis industry. Our multi-part blog series provides an in-depth look into the technical shortcomings of the current centralized approach and provides a roadmap for implementing a distributed model approach. Some of the disadvantages we will cover in the subsequent posts include:
Impact of System Failure: The current centralized model provides a single point of failure: if the system goes down, all licensee operations must stop operating entirely. In some cases, operators may manually record activity during a system failure, and then manually enter the activity when the system resumes. This introduces a high risk of human error. No backup system or alternative means of recording through the use of technology exists since the state relies on only one system.
Challenges with Scalability: The history of performance with centralized track and trace systems demonstrates that there are significant challenges in scalability because of multiple system failures and shutdowns. The system would benefit from a more advanced track and trace capability, specifically with its API (Application Programming Interface). Many times it is not the technology of the licensee system, but the technology design of the state-mandated systems.
Fiscal and Environmental Impacts: Licensees are required to purchase plant and product tags from the single state-mandated vendor, which creates a fixed price system that is typically not in favor of a licensee. It is also creating a sustainability issue in the industry, as the plant and product tags are single-use. More operators are speaking up about the waste it is generating in our cannabis industry.
Interested in joining us in establishing an effective and scalable track and trace framework for regulators and operators in the legal cannabis space? Click here to stay updated on the State Regulations Committee, and the efforts that it’s Technology and Compliance Subcommittee are taking to improve and advance track and trace nationally. Let’s close the informational gap between operators and regulators, and help the entire industry move forward together.
Stay tuned for the next two blog posts in our multi-part series!
Member Blog: As Cannabis Sales Rise, So Do Questions About Privacy and Security
Frank Nisemboum, Vice President of ERP Sales at c2b teknologies
Legal cannabis is a big business that handles big data. From personalized data to protected health information to cannabis information that requires regulatory compliance with cybersecurity and data privacy laws–the entire cannabis industry faces data privacy and cybersecurity challenges not faced by other sectors.
But wait, other sectors have to navigate data concerns, too right? Cannabis is different. Aside from adhering to all the typical privacy concerns, cannabis data comes with a layer of complexity for cannabis operators due to industry-specific data collection and mandatory retention requirements surrounding it.
Growing Cannabis Data Collection
A cannabis customer provides a vast amount of personally identifiable information every time they buy legal marijuana products. These individuals present a government-issued ID card to confirm they are at least 21 for adult-use purchases or prove they have a prescription to access medical marijuana. The data collected on each transaction includes customer or patient name, date of birth, address, phone number, driver’s license or medical ID card numbers as well as email addresses and signatures.
Cannabis dispensaries also provide equally large amounts of operations data to METRC (Marijuana Enforcement Tracking Reporting Compliance), used in 13 states and the District of Columbia. METRC is not the only government reporting company used to maintain cannabis compliance. For example, California relies on the CCTT (California Cannabis Track-and-Trace) system to report the inventory and movement of cannabis and cannabis products throughout the cannabis supply chain.
Cannabis legalization is expected to spread across the country to all 50 states now that adult-use cannabis is permitted in 11 states and Washington D.C. and 36 states allow medical marijuana. Many of those states require all cannabis licensees, both annual and provisional, to use METRC to track marijuana products through the entire supply chain.
Cannabis cultivators, manufacturers, retailers, distributors, testing labs, and micro-businesses need to manage and maintain those records for a minimum of seven years. It’s a tremendous amount of valuable data for cannabis companies to track, the precious data cybercriminals and hackers seek out, including combinations of protected personal and health data like social security numbers and diagnoses with supplemental information like addresses, copies of ID cards.
If a cannabis company dispenses medical marijuana to patients or supports one who does, they fall into the regulatory oversight of the Health Insurance Portability and Accountability Act (HIPAA) and the Office of Civil Rights (OCR).
Safeguarding Cannabis Data
Legal cannabis and the data security issues it creates form multi-prong challenges from a legal and technological perspective. The cybersecurity and data privacy requirements don’t come with a roadmap cannabis operators can borrow from other industries due to the massive repositories of personalized data that require regulatory compliance with cybersecurity and data privacy laws.
The collection, storage, and security of all this valuable data raise many privacy and security concerns, especially when guidelines for collecting the information vary by state. For example, Ohio and California must house personal data using third-party software to track inventory and retail point-of-sales, whereas Illinois dispensaries cannot store any personally identifiable information onsite and instead use cloud or other off-location services.
Healthcare companies make attractive targets for hackers and often suffer data breach more often due to their huge storage of protected health information (PHI). Medical dispensaries and supporting companies handle PHI too, but PHI is not all a cybercriminal may want from a cannabis operation.
Employee records often contain background checks and financial data along with personally identifiable information such as name, date of birth, and SSN, all in one nice package. And cannabis data has been breached several times in recent years.
Cannabis Data Breaches Happen
Even as a newly legitimized industry, cannabis organizations have already experienced high-impact data and security breaches. In early 2020, a database breach that impacted almost 30,000 people connected to the marijuana industry resulting from an unsecured Amazon S3 data storage bucket was reported. The data breach included scanned versions of government-issued ID cards, purchase dates, customer history, and purchase quantities.
In 2019, a Canadian cannabis company exposed the electronic medical records of over 34,000 customers.
Between 2016 and 2018, the cannabis-tracking software provider MJ Freeway endured significant data breaches where over 1,000 dispensaries in 23 states were hacked. Less than six months later, hackers stole a portion of MJ Freeway’s source code and posted it publicly to social media.
Prior to that, Nevada’s Medical Marijuana Program database was breached in 2016, exposing sensitive personal data of over 11,000 people involved in the Nevada cannabis industry. This breach included names, social security numbers, race, as well as home and business addresses.
Cannabis Operators Short on Cybersecurity Budgets
Cannabis companies are responsible for securing their data to protect their customers and staff. To prevent data leakage, point-of-sale machines need endpoint protection, encryption, secure backups with proper network segmentation.
Unfortunately, some cannabis organizations fall short of installing appropriate cybersecurity measures that could have far-reaching effects on a cannabis user. Leaked personal data could have negative personal and professional consequences for the cannabis patient whose workplace prohibits cannabis use.
To avoid becoming an easy target, cannabis companies need to focus on data privacy and security just as much marketing and sales. The penalties from having a customer or employee’s personally identifiable information and cannabis-related data exposed can be too expensive to ignore and fail to give confidence that their data is secure.
Vice President of ERP Sales, Frank Nisemboum,is a trusted advisor at c2b teknologies who has guided organizations of all sizes enabling them to establish a technology presence and expand their business through technology. His proven ability to analyze the current and future plans of a company and work with team members to subsequently bring technology solutions to the organization result in improved processes and controls that assure continued growth and profitability.
Frank has worked in the ERP and CRM software selection, sales and consulting industry for almost 25 years. His strong ability to understand, interpret and match the needs of an organization to the right solution make him an asset to all of his clients.
c2b teknologies integration and engineering experts have partnered with leading cannabis industry experts to develop a software solution that provides a complete cannabis operations system. The best-in-class solution not only handles tracking of seed-to-sale activities but encompasses your entire cannabis operations with compliance needs handles along the way. Our passion for solving problems drives us to deliver innovative solutions for everyone we work with. Visit c2btek.com for more information.
Member Blog: Off The Backburner – Compliance During COVID-19
by Mark Slaugh, CEO and Co-Founder of iComply, LLC
Operational cannabis compliance has been a vital but often ignored part of many owners’ guides to success. With the hustle and bustle that is the ever-expanding nature of the cannabis business, most owners and operators want to believe they are compliant 100% of the time.
However, anyone who owns a cannabis business and is honest with themselves knows that to understand the constantly changing regulatory updates is a constant challenge. Often, the needs of the business outweigh the time it takes to assess the best ways to remain compliant. Too often, the distractions of growing the brand, networking, and conferences distract us from what’s happening with staff, procedures, and operations behind the scenes.
This has become alarmingly evident during COVID-19.
The pandemic began affecting how different operators in different States had to adjust various emergency procedures and restrictions on how cannabis could be bought and sold. From there, pandora’s compliance box released a torrent of issues to look at.
In our experience, 95% of the industry has a reactive approach to compliance management and will scramble to take time and pay expensive attorneys fees to dig them out of trouble once they are caught.
And what you resist, persists.
During COVID-19, owners are already making procedural adjustments to remain compliant and are staying at home for a change – which has allowed them and their teams more focus and less distraction by avoiding conferences, travel, and in-person meetings as much as possible.
What they are finding is that the compliance train has been off the tracks for a while.
Naturally, as the industry grows, so does the responsibility of mitigating liability and staying on top of the backburner projects in dealing with compliance. It is not the sexiest or most fun aspect of the industry (if you aren’t compliance nerds like us).
People tend to resist being honest about it, managing it appropriately, or holding others accountable until it’s too late.
COVID has at least provided some breathing room for owners and operators to put on their facemask and dust off their SOPs or untangle the strings around poor inventory management.
Some cannabis companies are asking themselves how they can use the boredom of COVID-19 (to some degree) and the extra time saved from travel, conferences, and meetings to re-examine their operational compliance infrastructure.
We are finding that owners in the cannabis industry are lacking a transparent cannabis compliance plan that can be easily adjusted to stay ahead of regulators, rules, and to mitigate product liability. They lack accurate employee training to specific procedures with accountability and wonder why turnover is so high. They are starting to realize that inventory, books and records, and daily compliance management are creating more risk than is tolerable for a tangible reward.
The word “decimation” comes from the Roman times and was considered a military punishment in which squads of 10 (deci) would draw stones from a bag. One black stone among the white ones meant beating that soldier to death by his fellows. While extreme, the lesson was an important one and is still relevant in the cannabis industry today.
Out of every inspection by the MED, in Colorado, around 10% of licensees were found in violation and administratively punished. Having come from a banking risk management background, it is shocking to see that level of risk be “ok” with most operators.
No other heavily regulated industry tolerates such a high level of risk. Cannabis, in fact, tolerates 10x more risk loss on average than is acceptable in banking (less than 1%).
Some of the biggest backburner projects in compliance coming to the forefront are:
SOPs and Employee Training Manuals
It is crucial to have compliant procedures that are accurate to current operations. One cannot effectively and proactively run a cannabis company without valid and accurate Standard Operating Procedures and related documents. They are essential.
What we find is that most established operators have to dust these SOPs off from whatever shelf they placed them on when they finally come around to looking at them.
Inventory and METRC
Another big problem area is inventory inaccuracies which require regular reconciliation and clean up. As we all know, once the snowball effect of inaccuracy happens, it simply gets more entangled and difficult over time.
During COVID-19, regulators are doing fewer in-person visits and are relying more on their ability to look at seed to sale tracking systems to identify potential non-compliance to conduct their inspections and request specific information from operators.
Books and Records
Most cannabis companies think SOPs, audits, and inventory are compliance management in a nutshell. The detailed accountability over files, logs, and forms often escapes their mind as soon as the file is saved or placed into the file cabinet.
Like dusting off SOPs, opening the file cabinet to ensure the accuracy of these documents can be best done during COVID-19 as well. Insight to this helps improve procedures and ensure accountability of staff members from visitor logs, to pesticide applications, incident reports, and manifests.
Staff Knowledge
For many of our medium to large clients, COVID-19 has affected their staff members. When one person is infected, many others may not want to come to work, and companies are forced to hire in additional labor to meet operational demand. If this hasn’t happened, consider you might want to be prepared for it as it takes away employees for a minimum of 2 to 4 weeks.
COVID-19 is causing a wide gap due to faster training requirements and creating more risk for non-compliance, product liability, and workplace safety without proper education, knowledge and accountability for staff.
Challenges like COVID-19, rule changes, and human nature are greatly mitigated and proactively managed when cannabis companies commit to taking compliance off the backburner and putting it at the forefront. Taking the time now to do so may be better than any other time for experienced operators to better prepare for “normalcy” when it returns.
An ounce of prevention is literally worth pounds of cure. And, during COVID-19, cannabis companies would do well to prevent the “decimation” of their very valuable licenses and operations by taking advantage of the extra time and energy to do the heavy lifting necessary to take compliance off the backburner.
Mark Slaugh, CEO and owner of iComply, works in the specialist sector of compliance for the medical, retail, and hemp industries and has over 12 years’ experience in cannabis industry development, consulting, and operational compliance and over 21 years’ experience in regulations and risk management.
Due to his extensive background and education, Mark knows what it takes to move markets forward at political, policy, and operational levels. He has developed small and large startups, improved existing operations, and has protected some of the top companies in the field.
iComply provides operational compliance services and validation of over 200 cultivation, manufacturing and processing, and dispensing facilities since 2011 and iComply consults for a variety of communities, organizations, and governments. Engaging in legacy projects over the long-term, iComply builds trusted relationships to ensure industry integrity, standards, regulations, and best practices are implemented and adhered to within organizations.
Member Blog: Best Practices In Cannabis Cultivation For 2020
As with any industry experiencing unparalleled growth, the cannabis industry is going through a few growing pains in these early years of legalization. Cultivators especially are feeling the pinch as long-standing business practices no longer achieve the competitive edge in a crowded playing field.
Commercial operations look much different today than they did even a decade ago. It’s no longer about experienced growers nor about high tech solutions—the best practices for cannabis cultivation in 2020 come down to the math.
As we head into 2020, how do you increase yields, shave down production costs, and use metrics to manage future harvests? Start with the numbers and drill down.
Labor Considerations
Despite the advances in automation, cannabis still requires a human touch. From California to Ohio to Florida, labor is consistently a producer’s most significant business expenditure. As the largest monthly expense, labor is always a top priority when working on the bottom line. No matter how skilled or educated, human labor is still prone to inefficiencies, wasted time and costly mistakes. Keeping employees on task, consistently trained and accountable can go a long way towards reducing sky-high labor costs.
The best practices on labor in cannabis cultivation aren’t just about hiring the most talented person or operating with the leanest workforce, it’s about running a tight ship. Reduce costs through automated team management or digitally track to-do lists to assign the perfect employee to the most appropriate task. By focusing on improving the efficiency and value of each team member, you’ll create a measurable reduction of labor costs.
Analyze Past Performance for Better Forecasting
Unsurprisingly, cultivators can no longer rely on intuition and handsome experience as a means to producea premium product. Detailed analysis of past crop performance is the only way to outperform the competition and predict future profits.
Accurate and detailed crop analysis creates consistency between harvests (which translates into consistent sales). It can also help improve the crop with minute adjustments during the growth cycle. These tiny tweaks are not feasible if your crop management is based on whiteboards and notepads.
We are working with a grow that will harvest 30,000 plants this year. If they were able to increase their average grams per plant by just one (1) gram, they would see additional sales of $385,000, at nearly zero additional dollars to grow that single gram. Crunching the data from past crops will help grow more profitable future harvests.
The Growing Demands of Metrc
The wrath of the regulator is increasingly prevalent within established markets. With 11 states and counting adopting Metrc (Marijuana Enforcement Tracking Reporting Compliance), it’s become a non-negotiator. Metrc is a mandatory requirement placed on all players in the industry to track, trace and stay compliant.
In many regions, Metrc is required by the state. As a cultivator, making Metrc a priority reduces risk and establishes your product in the market. If you can consistently master the rigorous requirements of Metrc, it’s setting the business up for long-term success.
Data is King, So Lean into the Numbers
Again, cultivation experience is only one piece of the equation these days. Data analysis is an increasingly necessary path towards larger harvests and to keep the costs-per-pound in check. Cannabis cultivation management systems (CCMS) facilitate the move off of whiteboards and spreadsheets into an automated, algorithmic analysis.
Without crunching hard numbers, it’s impossible to determine which strains are the most profitable. It’s equally as painful to decide which employees are the most efficient at which tasks. While spreadsheets can capture massive amounts of data, few companies have an experienced data analyst capable of performing the analysis. It’s why a CCMP is no longer a luxury, it’s become a best practice within commercial operations.
Controlling the Costs of Cultivation
The margin matters in the cannabis industry in ways it never has before. Beyond labor, how does the cost-per-pound break out? Spend the time (and the money) for a deep dive into your largest expenditures directly related to the grow. Examine the costs associated with standard utilities, nutrient procurement, pest management and waste management services to identify areas suitable for cost-cutting measures.
Which services are best farmed out to third-party contractors? What automation can be implemented to cut the cost of the process? Would an upfront investment into more efficient lighting or an on-site biomass cleaning facility make long-term sense? All are important questions to consider during this analysis.
The best practices in cannabis cultivation in 2020 are all about drilling down on the numbers. This is where a CCMP comes into play. It’s about saving on labor without cutting capacity. It’s about assessing the statistics of past harvests to develop a better product.
Cultivators need to have a solid grasp on the minute details contained within their cost-per-pound to shave pennies from utilities, pest control or waste management. At the scale of most commercial grows, pennies per pound transform into significant annual increases in profitability.
Brett Strauss is President of FolioGrow, a cannabis cultivation management system developed with the express purpose of using math and algorithms to help improve yields and profits for cannabis and hemp growers. Get a free 30-day trial or follow the company on LinkedIn, Instagram or Facebook.
WEBINAR: METRC – How to Stay Ahead & Maximize Efficiency
Everyone has METRC on the mind. Find out how METRC will impact your retail operations, what you’ll need to consider when it comes to compliance reporting, and how to maximize efficiencies to ensure being METRC certified doesn’t cost you precious time better spent running your business. Watch the webinar recording here.
SPEAKERS:
Jocelyn Sheltraw
Director of Regional Strategy, Headset
Brett C. Hartmann-Payan
Compliance Officer, Dosist
Anne Forkutza
VP Strategic Partnerships, Cova
Member Blog: New Data Reveals Market Share Changes for Cannabis POS Software Providers
by Ed Keating, Co-founder and Chief Data Officer of Cannabiz Media
Point of sale software providers are a critical part of the cannabis economy, and as the industry grows, a shift is happening.
In the first half of 2019, the dominant POS providers of 2018 held onto their positions as market leaders. Others merged or were acquired, and new providers launched. Even big brands like NCR, NetSuite, and SalesForce entered the market joining Quicken and Square in an attempt to gain a piece of what they hope will be a lucrative market.
Cannabiz Media conducted a research study to identify POS software providers and market shares in mid-2019 and compared the data to findings compiled in a similar year-end 2018 report. The full report is available for free download here, and the results may surprise you.
Key Findings for Mid-Year 2019:
There are 68 unique POS software providers in the U.S. cannabis industry (up 58% from 43 in December 2018).
BioTrack is the market share leader overall.
BioTrack is the market share leader in states with medical-only cannabis programs.
Green Bits is the market share leader in states with adult-use cannabis programs.
Green Bits is the market share leader in METRC states.
Cannabis POS Market Share Shifts in the First Half of 2019
In mid-2019, the top five POS providers account for 68% of the overall cannabis market, and the top 10 account for 84% of the market. Part of this change can be attributed to active California licenses expiring and revisions to the survey methodology.
Compare those numbers to how things looked at year-end 2018 when the top 5 POS providers made up 80% of market share, and the top 10 were responsible for 93% of the market.
In addition, the number of POS vendors servicing cannabis businesses increased by 58% from 43 in December 2018 to 68 by July 2019.
In other words, while the market is still highly concentrated, the market leaders have given up some market share, and new companies continue to enter the space.
The same shifts are happening in medical-only and adult-use states.
In mid-2019, 34 POS providers were active in medical-only states (up from 15 in December 2018), and 53 were active in adult-use states (up from 40 in December 2018).
At year-end 2018, the top five POS vendors accounted for 94% of the market in medical-only states, but in July 2019, they only account for 70.4% of the market.
In adult-use states, the top five vendors accounted for 78% of the market in December 2018 but only account for 71% of the market in mid-2019.
Top Cannabis POS Software Providers in Mid-2019
According to Cannabiz Media’s research, the top five cannabis POS software providers overall in mid-2019 are:
BioTrack
Green Bits
Flowhub
MJ Freeway
Indica Online
In medical-only states, the top POS software providers in mid-2019 are:
BioTrack
MJ Freeway
Indica Online
Flowhub
COVA
In adult-use states, the market share leaders in mid-2019 are:
Green Bits
BioTrack
Flowhub
Adilas
MMJ Menu
In METRC states, the top five POS software providers in mid-2019 are:
Green Bits
BioTrack
Flowhub
Adilas
MJ Freeway
Key Takeaways
While the POS market leaders have lost some market share in recent months, the biggest battle appears to be among the top two companies, which have approximately twice as much market share as the company ranked in third place in the overall market as well as in adult-use states and METRC states. In the meantime, the other 66 POS providers that service the cannabis industry are slowly chipping away at that share.
Get the Free Report with Detailed Data, Charts, and Commentary
Visit https://cannabiz.media/pos-report-2/ to download Cannabiz Media’s complete “Point of Sale Software in the Cannabis Industry: 2019 Mid-Year Report” for free to view all of the detailed market share data, the full list of POS vendors in the cannabis industry, 2018 vs. 2019 comparisons, and specific data about POS providers in the California and Oklahoma markets.
Ed Keating is a co-founder of Cannabiz Media and oversees our data research and government relations efforts. He has spent his whole career working with and advising information companies in the compliance space. Ed has overseen complex multijurisdictional product lines in the securities, corporate, UCC, safety, environmental and human resource markets and focuses on workflow products. Ed has spent the last twenty five years in the information industry. During that time he has worked for both startup and established information companies where he has led marketing, product management and sales organizations. These companies include Wolters Kluwer/Commerce Clearing House, CT Corporation, EDGAR Online and Business & Legal Reports. At Cannabiz Media, Ed enjoys the challenge of working with regulators across the country as he and his team gather corporate, financial, and license information to track the people, products and businesses in the cannabis economy. Ed graduated from Hamilton College and received his MBA from the Kellogg School at Northwestern University. He has been active with the Software & Information Industry Association for his whole career and managed the Content Division for six years. He’s was recently a Trustee at the Country School in Madison CT and a Little League Coach for seven years.
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Steven Lynn, a California resident since 2011, has dedicated his career to destigmatizing and legitimizing the cannabis industry through technology. Steven started his career in cannabis as the Director of Marketing at IndicaOnline in 2017. He now serves as the Director of Marketing at BLAZE® responsible for driving all marketing strategy, brand development, and lead generation programs. His professional background in early-stage B2B cannabis SaaS startups has made him adept at executing scalable, impactful, and sustainable strategies to achieve exponential growth. Steven received his BA in Communications from the College of Charleston in 2006 and is a seasoned marketing professional with over 10 years of experience working in both the entertainment and canna-tech industries.
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