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People, Process, and Innovative Technology = Cannabis Compliance

The cannabis industry is maturing at a rapid pace. Successful companies will require knowledgeable people, a complete set of standard operating procedures, and integrated technology infrastructure to comply with federal and state regulations. Until federal laws are approved and implemented over time, cannabis operators must comply with state-by-state regulations. This fragmentation makes it challenging, especially for multistate operators.

A cannabis company is like any other company; it must have all the correct functional groups and resources that are experts at that function and how to apply it to the cannabis world. The cannabis industry, in many ways, is still a clean canvas waiting for new and creative product ideas. We already see many of them in today's market — from the farm to the processor, manufacturer, distribution, and retail dispensary — that are underpinned by technology infrastructure.

Embracing innovative technologies is a way to establish a solid foundation to build your cannabis company and bridge the various regulations. Unfortunately, there is no silver bullet technology that will solve all requirements. It will take an ecosystem of technology platforms that are best of breed and seamlessly integrated. However, these technologies exist, and the ecosystem of partners is coming together to allow cannabis companies to implement a solution stack that fits their operational goals and adheres to state regulations.

Let's review a day in the life of such a technology ecosystem coming together and the potential benefits.

Hiring the right people: HR systems for cannabis, and their benefits

We are experiencing explosive growth in cannabis jobs. In 2019, there were 34,000 legal cannabis workers added in the United States. In 2020, that number increased to 77,000, a 32 percent year-over-year growth. Managing the recruiting, onboarding, and screening of employees while ensuring HR compliance will be challenging. A robust HR technology platform will help streamline the hiring process and handle many of the onboarding functions. Innovative technologies with additional features, such as video interview tech and post-hire training platforms, will also help cannabis companies manage the explosive hiring expected to take place for the next several years.

Standard operating procedures (SOPs): How compliance starts with standards

SOPs are controlled documents that allocate a comprehensive list of tasks, procedures, and policies, aiding companies in complying with internal and external policies and regulations. In the legal cannabis industry, SOPs are required across all verticals, from seed to sale. SOPs are critical to business continuity and creating a competitive advantage and are also a critical factor in profitability. In a tightly regulated environment, it is suggested to have an internal quality assurance team or contract an independent QA team. Key components of an SOP should include risk assessment of the policies and procedures, having verification checkpoints across the process, and working with compliance experts.

Implementing smart packaging: Protecting your products and brand from counterfeits

As the industry matures, packaging solutions —specifically, smart packaging technology — are evolving in tandem. Smart packaging technology is vital in helping regulated cannabis companies combat the illicit market. Smart packaging technology incorporating QR codes and NFC tags into packaging. Consumers can retrieve any information provided by scanning a QR code or reviewing the tags for authenticity. Regulatory requirements already take up packaging real estate, so smart packaging technology helps cannabis companies combat counterfeiting, transform the supply chain (e.g., shelf-life monitoring, tracking and tracing a product from origin to distribution), strengthen brand messaging, and share certificates of analysis (COAs). COAs are required by regulatory bodies and assist consumers in their purchasing decisions. Smart technologies also protect consumers from counterfeiters, as unique codes can be inserted into the packaging, legitimizing the brand/product. Last, as cannabis brands face challenges in advertising, technology can differentiate a brand with ongoing messaging, incentives, education, and customer experience.

Secure transactions with blockchain: Transaction visibility

Because cannabis is a federally illegal Schedule 1 drug, cannabis operators face many obstacles. While smart packaging technology provides solutions to compliance and messaging and advertising, blockchain technology can assist the cannabis industry with supply chain management, payments, and transaction tracking. The supply chain continues to be challenged by the illicit or unregulated market. Counterfeiters of brands and illegal growers supplying their products continue to exist even as nearly forty states have either an existing medical or recreational program. Limited access to banking and payment processes plagues many startups and maturing companies. Blockchain, as a transparent ledger, can record secure transactions on a "block" by issuing cryptocurrency. Cannabis operators can use blockchain to handle payments, record transactions, and enable companies to track products from seed to sale, ensuring the product is legal and compliant. Secured transactions with blockchain are another example of how legal cannabis businesses can comply, remain operational, and compete with the illegal market with innovative technology.

Physical tagging products: Tracking and transparency

In parallel with blockchain, many tagging platforms complement one another, such as seed to sale using RFID and barcodes to molecular tagging solutions, which feature the physical tagging of cannabis products using a unique molecular tag to represent the brand and product.

This tag is then tested at key nodes within a domestic or international supply chain, with authentication and chain-of-custody data securely captured and written into the blockchain.

This tag can be applied to cannabis plants, oils, lotions, tablets, edibles, and packaging to serve as an immutable indicator of authenticity, origin, and provenance and a system to forensically audit products in the market.

Consumer benefits: Quality and trusted products

Many people around the globe are pro-cannabis. They are getting their products through legacy providers or the newly legal medical or adult-use channels. In addition, newcomers to cannabis are using it as a wellness approach for pain and stress management. Consumers want to buy products from safe and reputable sources. They must be able to quickly validate and authenticate with scientific proof that the products are legitimate. This brings us back to the title of this article, "People, Process, and Innovative Technology = Cannabis Compliance." If cannabis companies implement and execute these three critical areas, they can provide consumers with transparency, traceability, and authentic products.

By John Shearman, Applied DNA Sciences, with contribution from Cannabis & Hemp Networking Association NY members 3A Ventures, Frank Manganella, Brian Ried, GreenHaus, David Mederrick and Mike Hewitt.

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