Key Cannabis Licensing System Priorities

The landscape of cannabis legalization in the United States has evolved rapidly in recent years. Various government agencies, including agencies and departments of Commerce, Health, Revenue, and Agriculture, not to mention the new cannabis regulatory agencies have all been tasked with the complex responsibility of regulating the cannabis industry. From granting licenses and permits, promulgating regulations, enforcement and inspections, and data analytics of the legal cannabis industry the regulatory agencies need robust solutions to meet their needs. As cannabis legalization transitions from an abstract idea to a tangible reality, it is crucial for these agencies to establish a comprehensive cannabis licensing system.

Why a Cannabis Licensing System Matters

A well-structured cannabis licensing system serves a vital regulatory function by distinguishing between legal and illegal cannabis markets. This differentiation is crucial for ensuring compliance with laws, monitoring product quality, and preventing the sale of illicit products. In the interest of public health and related concerns, the National Institutes of Health suggests a strong licensing system encompass every aspect of the cannabis supply chain from cultivation to retail. Such a system must integrate with existing agency systems, support secure application programming interface (API) connections with third-party systems, and manage secure payment card industry (PCI) compliant payments while offering system benefits beyond just the lifecycle management of a license or permit. The ability to trace all businesses and products, maintain quality standards required by law, and monitor supply and demand effectively is vital to a successful state cannabis program.

The Importance of Implementation

Dr. John Hudak, a respected authority on legal cannabis, emphasizes that successful implementation of cannabis legalization policies is paramount. The way these policies are put into practice can significantly impact their success or failure. Early implementation decisions often shape the future development of a state cannabis program and influence public and political support. Selecting the right licensing system means choosing a system that can be configured to meet the policies implemented and must be flexible to evolve as the policies evolve. When the implementation of a licensing system is not in sync with the policies and not flexible enough to support the investable evolution of the state program and polices, the end result can be costly, create uncertainty in the market, and lead to administrative and political challenges.

Manage Evolving Cannabis Regulation

Tyler's Cannabis Licensing solution is configurable, user-friendly, and ensures government agencies can stay in compliance with changing legislation.

Elements of Successful Implementation

A successful implementation is one that effectively meets the current requirements of the law with an eye on forthcoming change. The cannabis industry is evolving, regulations and legislation will change, the go-it-alone state regulations will be impacted by the coming federal regulations. The licensing system selected needs to be able to support these changes. During implementation and operations of a state program and system it is imperative to establish formal legal and regulatory systems that blend regulations and how the chosen technology works in concert to support each other. Licensing and industry oversight is critical to the success of an implementation. Equally important is the attention given to the underlying infrastructure that shapes the legal cannabis industry's development and differentiates it from the illicit or illegal market. To paraphrase Pflueger et al. (2019), cannabis businesses accurately accounted for in a government licensing and permitting system are legal, while everything else is illegal. Centralizing data within the licensing system empowers state authorities to regulate and enforce compliance effectively.

Getting Started: A Checklist

If you’re a government agency embarking on the journey of setting up a cannabis licensing system, here’s a checklist to guide you:

1. Select a Proven Cannabis-Specific Licensing System: Choose a system specifically designed to meet the unique needs of the cannabis industry, covering licensing, permitting, registration, and certifications. Verify that the chosen system has a track record and implementation success with similar state programs.
2. Hire Vendors With Cannabis Regulation Experience: Collaborate with experienced vendors that understand the intricacies of cannabis regulation. Seek references from past and current clients to ensure you're working with experts.
3. Go Online With Applications and Payments: Streamline the licensing process by shifting to online applications and payment collection. This not only improves accessibility and efficiency but also ensures equitable access for all applicants. Select a vendor that has vast experience in government payments as well as regulatory licensing.
4. Build in Flexibility: Recognize that cannabis regulations are continually evolving. Choose a system that can adapt to legislative changes and stay up to date with the latest rules and regulations.
5. Be Transparent: Share information openly with stakeholders and applicants. Utilize data-driven decision-making, dashboards, and reports to keep everyone informed and minimize potential issues down the road.
6. API First: Prioritize API integration to connect with supply chain tracking, law enforcement, demographic reporting, and other state systems. This ensures seamless data exchange and efficient oversight.

Setting up a cannabis licensing system is a multifaceted task that requires careful planning and attention to detail. By prioritizing these key considerations and adhering to best practices, government agencies can establish a robust and effective framework for regulating the legal cannabis industry, ensuring compliance with the law, and safeguarding public health and safety.

References

Hudak, J. (n.d.). Colorado’s rollout of legal marijuana is succeeding A report on the state’s implementation of legalization. Case Western Reserve University School of Law Scholarly Commons. https://scholarlycommons.law.case.edu/caselrev/vol65/iss3/8/

Pacula, R. L., Kilmer, B., Wagenaar, A. C., Chaloupka, F. J., & Caulkins, J. P. (2014, June). Developing public health regulations for marijuana: Lessons from alcohol and tobacco. American journal of public health. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4062005/

Pflueger, D., Palermo, T., Martinez, D., & Parks, C. (2019, August 22). Invisible infrastructure for visible markets: Metrc and the legal markets for cannabis in Colorado. CBS Research Portal. https://research.cbs.dk/en/publications/invisible-infrastructure-for-visible-markets-metrc-and-the-legal-