Technology problems that cannabis producers and retailers ("licensees") care about aren’t that complicated. Anyone that has so much as worked at a store may already be familiar with the fundamentals. That is, moving and keeping track of inventory from a seller to a buyer. Assets must get tracked somehow. On top of this, different governments have different requirements that impact cannabis licensees in many unique ways.
So why aren't we seeing more technology innovation in this space? If the problems aren't hard, why is innovation hard to come by?
At WeedTraQR we engage with and deploy business solutions for cannabis licensees on a daily basis. We are very familiar with the challenges business stakeholders are having in the cannabis industry. Because of those issues, innovation and diversity are being held back from their true potential in this space.
The goal of this post is to confront and reduce the barriers of entry to making innovative technology in the cannabis space. Without getting lost on each state’s regulatory and business requirements, we'll start with where things stand.
Cannabis licensees have 4 primary missions: selling their commodity, tracking inventory, tracking money, and tracking payroll. None of these problems are unique to cannabis, they are the bureaucratic drivers of a business.
For a lot of different reasons, many states that have legalized cannabis under medical or adult-use programs have mandated a gradient of requirements on the inventory management problem.
These requirements can range from requiring that the licensee simply own some inventory management system, up to submitting its movement through physical and logical zones. In some cases, unique and expensive RFID tags and used to associate the production lifecycle of batches of inventory. Each state also has Quality Assurance requirements on cannabis commodities, too, but there is no singular golden standard that distinguishes good QA and safe product.
If we ignore what some folks call traceability or “seed-to-sale” tracking, that still leaves your average entrepreneur with a lot of problems to solve. Businesses still have to complete their other missions and have other unique technology needs that will keep many unbalanced engineers in their offices late.
Yet, traceability is exactly the thing holding participants in the cannabis industry from being able to invest in many of these solutions. There’s only a couple of reasons for this, but they are hard problems.
I have this out-of-body like experience when I'm reporting traceability issues on Twitter. Other open-source maintainers have been in a similar position that being at OpenTHC put me in. But, oftentimes I feel I'm only coming across as a hater on some other small business for an outage. Or, something equally simple because Things Go Wrong™.
The reality is, many of the businesses we serve at WeedTraQR are mandated by their state's requirements to maintain certain levels of tracking in the state's central inventory system. Not simply report where it is. The reasoning from the state's perspective, is that they want transparency. They get to know exactly when money trades hands for their tax purposes, they maintain a repository of quality assurance records relevant to the public health, and they can stay in compliance with the Cole memo's stipulations. Or whatever comes next from Uncle Sam.
There are several ways this distinction blocks business operations. In cases ranging from normal operating conditions to catastrophic downtime, licensees are often blocked from trading their product because the central system cannot accept inventory transfers.
Unexpected modification to licensee inventory data is the most frequent blocking case WeedTraQR encounters in Washington state. We have seen businesses forced to adopt new inventory tracking strategies overnight, just to stay within state compliance. Licensees face the enormous business risk of government agencies destroying inventory and hefty fines when non-compliance is discovered.
The most appalling breaking case I’ve personally worked on have been bad mutations to laboratory results by the state’s vendor. This has caused a total loss of faith in what is supposed to be a trusted system for housing data relevant to public health in both businesses and consumers. Additionally, his side-effect has compounded problems related to inventory from transferred to another licensee under some conditions; i.e. when passing inventory is wrongly changed to failing.
The “workarounds” that licensees get forced into, go far beyond the operations they do in WeedTraQR, or with any other integrator. They are being forced to make seemingly arbitrary changes to their fundamental mission.
Last month we saw people missing payroll because Washington state’s system continued to flounder after a highly anticipated and well-delayed update. I personally spent a lot of time on the phone with bleeding businesses instead of building features for them. With no real visibility or transparency into the mandated system, integrators only have their unit tests, heuristics, and weekly integrators meetings to interface with their primary upstream vendor.
OpenTHC, WeedTraQR, and others are removing gatekeeper-ish competing interfaces with a community-developed standard. We’re basing our work on licensee experience, government needs, and our experience in the industry. We continue to work with all industry stakeholders to discover the right solution.
Having integrated with three closed-source vendors to provide the same value to all of our customers across state lines was an extremely challenging effort. There are even greater challenges to overcome when this industry introduces interstate commerce.
This barrier only prevents more innovation in this new industry. Its tolerated existence will also present continuing diversity challenges.
We believe in order to invite the next level of innovation in the cannabis industry is to create the base level that anyone can start from. But we must start by empowering the core stakeholders with the resiliency they need to grow.
We are proposing the adoption of the OpenTHC API Specifications.