The Administrative Burden of Regulatory Compliance in the Cannabis Industry

 

In the last post on cannabis business compliance, we talked about regulatory compliance and how challenging it is to keep up with the one, right version of “The Truth” when it comes to laws and regulations. We shared some of the ways that our cannabis ERP solution, TigHC, was specifically designed with that in mind. In this article, we are going to focus on the administrative burden of compliance. 

Even if a business were completely and constantly aware of all regulations, being compliant with them is a nightmare. Anyone in the cannabis industry – and probably anyone who works at any agriculture or building department currently wrestling with cannabis regulations – knows this.

Every state where cannabis is legal to purchase requires businesses to use seed-to-sale tracking software to stay compliant with local and state regulations. Due to the legality of cannabis at a federal level, states require all growers to report strict figures on their sales, their growing process, and their inventory levels. Regardless of your state, all U.S cannabis business owners need to be compliant in all local, state, and federal rules and regulations. The software they use needs to be able to produce the required numbers and reports to always remain compliant and meet the standards of all governing bodies. 

To illustrate the burden of compliance, let’s examine what’s happening in Colorado, which legalized medical marijuana in 2000.

Cannabis Compliance Changes in Colorado

Colorado’s move toward legalization in 2000 was so new and so murky that for nearly a decade, medical marijuana “caregivers,” as they were called then, still operated mostly underground. In order to operate legally, caregivers could not supply medical marijuana to more than five patients, which – unsurprisingly – was not a financially viable business model.

In 2007, a new ruling in Colorado eliminated the five-patient limit, which opened up the market to physical dispensaries, with a whole lot of rules of operation. Three years later, the fledgling market was bombarded with new regulations that dictated operating hours, security requirements, and monitoring procedures, and required dispensaries to produce at least 70 percent of their product. It’s a rare person who can farm AND sell, so smaller operations were disproportionately impacted (as they always are).

At the same time, the Medical Marijuana Enforcement Division was created, funded by dispensary license and application fees. To operate legally, businesses had to get one of two licenses: as a medical-marijuana center or as a medical-marijuana infused product manufacturer. There was no option to get a license to cultivate independently; to grow pot, you had to have a cultivation license AND be a retailer. The new regulations were burdensome to say the least. And, just one year later, a new bill was passed by the Colorado legislature: it added some restrictions and loosened others.

When recreational marijuana was made legal in 2012, legal operations had to adapt yet again, as the new laws impacted long-existing medical marijuana businesses in a myriad of ways. For example:

  • In 2016, new laws were enacted that required all medical marijuana to be tested in certified facilities; these facilities had been created to test recreational marijuana, and a later law decreed that all medical marijuana had to be tested at those same facilities. This required a whole new process for medical marijuana businesses, including tracking and traceability.
  • In 2019, medical and recreational codes of law were merged. Most people in the industry were all for the changes as they were ultimately a way to simplify what had become a dueling set of overcomplicated and conflicting laws, but that merger still required yet another round of adapting the way businesses maintained their compliance.

It won’t surprise anyone to learn that since legalizing recreational marijuana, Colorado’s medical marijuana market has plummeted. Many medical marijuana businesses have been able to pivot to serve both markets – something that is supported by the 2019 law merger – but the constant changes to the way they had to be compliant over the 21 years since medical marijuana became legal was nothing short of an administrative hellscape.  

Many businesses didn’t make it. The ones that did, and the ones that will continue to succeed in what we all know is a landscape built on shifting sands, are the ones that have smart, adaptive software solutions to handle the administrative workload.  

How TigHC Navigates the Shifting Sands of Regulatory Compliance 

TigHC didn’t exist for those early medical marijuana businesses in 2000, but luckily it exists for forward-thinking cannabis businesses today.  

Choosing the wrong software to manage your cannabis operations can have a devastating effect on the growth and success of your business. Tigunia knows what it takes to successfully implement, adopt, and reap the benefits of great software, and built TigHC to meet the unique needs of the cannabis industry. With over 30 years helping customers of all backgrounds and budgets with their technology stack, we know we can help you and your business thrive. 

Everyone has different needs, so Tigunia customizes every TigHC implementation and can work with whatever budget your business has available. Simple, straightforward implementations can take as little as a few weeks and are very affordable. Complex, custom systems take longer and cost more, but for businesses with highly specialized needs, a customized solution is worth its weight in green. It doesn’t have to be an all-or-nothing approach, either; Tigunia staff are always available to help clients with any request, and it’s easy to reach a real person in real time. Yes, you heard that right. Incredibly experienced and knowledgeable IT staff familiar with your business are available via phone and email 24 hours a day. 

The ability to track your plants and products from start to finish is essential to compliance in the cannabis industry. State regulators want to monitor every step in the supply chain, including where your products are planted, harvested, processed, and sold. Most small and mid-size cannabis companies use multiple systems like QuickBooks and Excel that don’t integrate to other systems and don’t fully meet their needs. These systems are frustrating and require hours spent replicating data into local and state regulatory databases. Even the most diligent people worry they will miss something, and no one wants to spend hours in an office just to lay awake at night anxious about whether the work was done correctly or sufficiently to satisfy the bureaucrat responsible for review.

Built on Microsoft Dynamics 365 Business Central, TigHC simplifies tracking and reporting in a single, configurable, easy-to-use platform. By bringing together all of your data and critical business processes in one place, TigHC automates adherence to regulatory requirements in product change tracking, tracing, labeling, and quality control testing.

Real-time, self-service financial and operational reporting capabilities will not only help you maintain compliance with state and federal rules and regulations, but it will also help you analyze performance, optimize resources, and make timely, actionable decisions that will impact your growth and profitability. To learn more about how it works, here is short overview video of TigHC:

Book a TigHC Demo

Small businesses in the cannabis industry can and should thrive in the ever-growing legal marketplace, and one of the major hurdles to doing so is the burden of regulatory compliance. TigHC helps cannabis businesses compete at a higher level with less work and less stress. It’s high time to throw away those spreadsheets you’ve been hunched over, relax about the reporting process knowing you’re in good hands, and enjoy the business you’ve worked so hard to grow.

Connect with one of our cannabis business advisors today and book a personalized demo of TigHC. We can show you exactly how it can fit into your operations and answer any questions you have about managed hosting, data security, and reporting.

 

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