The cannabis industry remains fixated on compliance, but not in the right way. Heavy regulations and looming financial consequences have created a paradoxically cost-avoidant approach to compliance: invest capital to protect against more significant loss. It’s a zero-sum-game– read growth-regressive standard –reinforced across all industry verticals. It needs to change immediately. I’d wager compliance data is the key to this problem.
Compliance Impacts Entire Cannabis Industry
The problems with cannabis compliance start within individual maintenance but quickly snowball into issues that impact entire state markets. It comes as no surprise that cannabis compliance standards are often barriers to entry for small business owners. California cultivators experienced these failures firsthand. In light of this, the resurgence of traditional markets across the state seems an entirely plausible conclusion.
For cannabis supply networks– which were pressure-tested in an unprecedented way sat the start of the pandemic– compliance becomes a systemic headache, over-concentrating custodial requirements on wholesale, distribution, and MRBs with zero accountability towards market retention or growth. State infrastructure responds to chains of command in place of quality, exerting top-down control to follow regulations over product diversity, value, and consistency.
What are the issues with compliance? For individual business owners; constant investment with no return and only partial protection against more loss. For state industries; lack of entrepreneurial diversity within markets unprepared to scale demand and create consistent, high-quality products for consumers. The current zero-sum-game of compliance has broader implications than we think. So, why use data to change that?
Understanding Compliance Data as A Viable Solution
Licensed cannabis businesses are responsible for reporting compliance data to state regulators. For example, in METRC, this involves entering all pertinent information about inventory and how it’s transported across facilities. Data entry on METRC involves identifying package tags and transfer tags.
While supply chains must collaborate to ensure continuity of products from seed-to-sale (for state regulators to see), the maintenance and visibility into data is strictly individual. Under current compliance maintenance models, licensed operators input highly relevant data from their business and supply partners into a state tracking system whose framework solely connects these data points for regulators to see. What if businesses had the same access?
Let’s continue with METRC as an example. In re-thinking the value of the software’s data frameworks to offer a competitive advantage to license holders, we begin to see growth opportunities. Operators and networks can now leverage compliance inventory data. This generativity of METRC’s compliance data becomes realized through a patchwork of software solutions that reconnects initial compliance data for operators to access. It’s important to acknowledge here that METRC alone is not a tool for business management and development given its lack of strong reporting and analytic native tools. The compiled information–submitted by cannabis businesses–offers immense gain and needs to be repurposed.
Modeling Compliance Data Visibility
Applying the value of compliance data into a new model starts with addressing the entry’s current format. Licensed businesses and supply networks ensure data entry of all relevant information on inventory and movement from seed-to-sale. However, reporting is completed individually.
METRC’s framework keeps compliance inventory data unconnected for both individual businesses and larger schemes of supply partners. The current mode predominantly serves regulators by providing them exclusive access to connected representations of compliance data. The format does little to help operators in the context of accessing their data altogether.
Caption: The current model compliance data entry into METRC. All data is pushed individually with visibility retained by regulators.
Returning to the idea of patchwork, a new model uses addended technology to connect compliance data after entry into METRC frameworks, but for individual businesses and supply partners to access. It addresses state regulators’ requirements to document the chain of command while simultaneously providing insight into relevant events and inventory. Without proceeding too far beyond the immediate value of patchwork, we begin to see individual and collaborative growth opportunities.
Caption: Our proposed compliance data entry into METRC. Operators push data individually, and then it is returned for individual and shared stakeholder access via patchwork.
Licensed operators can leverage visibility into inventory updated alongside state compliance data frameworks. Supply chain compliance data becomes a tool for collaboration between partners, rather than solely pushed to the state. From individual businesses to entire state markets, leveraging this data addresses many compliance failures in the first place.
No Longer A Zero-Sum-Game
What is compliance now? Looming audits, fines and fees, a barrier to entry for small business owners, and an inhibitor of state market growth and legal cannabis economies at large. This isn’t how following regulations should look. It’s time for a change, and compliance data is where we must start.
The inventory data entered by businesses into METRC offers immense value to markets regarding visibility and collaboration. With the right software integrations, we can transform current compliance data frameworks into tools for licensed operators and supply networks to leverage in the market. Using this data turns the zero-sum-game of compliance into a vehicle for individual success and tremendous industry growth.