5 Things to Know About Cannabis Licensing Systems

The cannabis industry has grown at a rapid pace, and today 38 states have legalized medical cannabis and 23 states have legalized adult-use (recreational) cannabis. Of course, standing up a cannabis program is impossible without the use of technology, and over the last several years, many solutions have emerged to help regulators efficiently and effectively oversee cannabis markets. First and foremost, each state must determine how it intends to facilitate the licensing and registration process. If you’re a new regulator looking for the right government cannabis licensing solution, read on!

1. Flexibility and configurability are critical.

Because cannabis remains illegal at the federal level, each state is tasked with establishing its own cannabis regulatory framework, and as a result, no two cannabis markets are exactly the same. Differences range from simple nomenclature (cannabis vs. marijuana) to complex licensing structures (tiered cultivation sites, non-delivery transport, etc.). Given the diversity of regulatory models, it is critical to select a platform capable of accommodating unique configuration models without sacrificing system performance and capabilities.

2. It takes time to do right.

While it is very common for legislators to include aggressive implementation timelines for cannabis programs, it’s important to remember that any enterprise technology implementation takes time, especially considering the high degree of configuration that’s required. To the extent that you have opportunities to help educate lawmakers and policymakers, it never hurts to remind them that thoughtful and well-executed technology implementations take time. In our experience, 6-12 months is the sweet spot. It is certainly possible to move more rapidly, but shorter timelines leave less room for the kinds of configurations contemplated above.

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3. You'll be flying the plane as you build it.

For the uninitiated, the magnitude and frequency of cannabis policy changes can be overwhelming. In fact, every cannabis program in the nation has been subject to legislative changes after initial program implementation is complete. Furthermore, given the aggressive deadlines we’ve already discussed, it is not uncommon to configure the licensing system in parallel with rule promulgation. Said another way, it’s entirely possible you’ll be forced to define system configurations before the rules that inform those configurations are finalized. Most technology companies are not equipped for these challenges, especially those who lack cannabis industry experience. Be sure to select a vendor who is open and flexible when it comes to these often-disruptive shifts in policy.

4. Cloud native is the way of today and the future.

While this might go without saying for many of our readers, cloud-hosted platforms have become the industry norm for enterprise technology solutions. If you’re speaking with a vendor that’s asking about the state data center or otherwise represents their solution is not cloud-hosted, run for the hills! Not only are on-premises solutions quickly being replaced by cloud solutions, they’re often not properly equipped to support the unique cannabis industry. For those solutions that are cloud-hosted, be sure to ask about solution hosting. At the end of the day, a cloud-hosted licensing platform is only as good as its cloud service provider, so don’t be shy about asking these questions!

5. Cannabis expertise is required, not “nice to have.”

The cannabis industry presents regulators with a whole host of challenges fundamentally absent in other established industries. That said, much has changed since California first legalized medical cannabis in 1996, and you don’t need to go at it alone. All too often, we see brand-new cannabis regulatory agencies hire vendors who don’t have any cannabis experience. It is important to contract with vendors who have done this before and have a proven track record of success. The right vendor team will bring critical knowledge of best practices, common pitfalls, and lessons learned.