Government Cannabis Tracking Models
Guest post by Pranav Sood, CEO of Trellis
Working across Canada and the United States, we’ve seen our fair share of tracking frameworks. For the most part, tracking is a compliance requirement, so that regulators can control the production and distribution of cannabis products. Software providers should focus on suppliers of cannabis products by developing tools that streamline operations and provide business intelligence – the compliance part is a given.
Cannabis Tracking Frameworks
Most regulatory tracking frameworks will follow one of three models, all of which can work, however, choosing the most efficient and effective method of regulating the cannabis industry depends on the scale of the individual market. This is a discussion of these models for consideration by regulators as emerging regulations are formed across the globe.
1) State Model
The state model is a centralized tracking system that both the regulators and suppliers use to maintain records. The entire market needs to use a single system that is generally selected through an RFP process. It is fairly uncommon to see this model applied in practice. The appeal for regulators is clear having a consistent and streamlined system, but forcing tools onto industry has never been a successful approach. There are now a few service providers that have focused on serving this niche regulator segment, including Metrc who operates in Colorado and Oregon.
2) Supplier Model
In the supplier model, the regulatory body does not maintain a central database and suppliers are responsible for maintaining reports using the tools of their choice, like Trellis. Reports are submitted to the regulatory body regularly either electronically or physical copies. The combination of regular reporting and inspections has proven to be an effective model in jurisdictions like Canada, however, we believe this model can be costly and difficult to manage especially in larger scale markets with a higher volume of fragmented suppliers.
3) Hybrid Model
The hybrid model encompasses aspects of both the state and supplier frameworks, where the regulatory body maintains a central database, but makes an API available to third party service providers that can integrate their systems to flow data into the central reporting system. This allows the regulatory body to manage a large amount of data, but also enables suppliers to use the tools of their choice. Most software providers catering to regulators do have an API, including Metrc, SICPA and BioTrackTHC, but it’s up to the regulatory body to make the API available.
What Model Should Regulators Use
There seems to be a bifurcation of cannabis markets where licenses for production are either managed by a few large enterprise grows or a fragmented market with hundreds or even thousands of small medium sized grows.
The most efficient model for a given market depends on its scale. Generally markets with a small number of suppliers is best managed through the supplier model to keep regulatory overhead low, but still maintain a high degree of control through stringent reporting requirements. As markets grow to have a larger number of fragmented grows, the hybrid model helps regulators manage the amount of data through a centralized database, but still allows suppliers to manage their operations using the tools that they see fit.
Why Choosing a Tracking Model is Important
In working with regulators across several markets, we have realized the importance for regulators to understand the options available to them and choose a model that best fits the market. The industry is in a position where technology can facilitate efficiency and effective regulatory oversight, but too often do we see rushed irrational decisions. The cannabis industry is a driving force for both economic and social change. We encourage government to leverage technology to maximize its potential.
About the author:
Pranav Sood is the CEO of Trellis (formerly CannSoft), a track & trace software platform for regulated cannabis growers and dispensaries. Pranav is a serial entrepreneur with extensive experience in startups and growing B2B companies. His passion for writing and curating varying perspectives led to the development of thought leadership pieces in cannabis and technology. Originally from Toronto, Canada, Pranav now resides in California. Connect with Pranav on LinkedIn.
Are you a cannabis industry thought leader and want to be heard? Let us know your story.