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Cannabis businesses face complex regulatory requirements that vary across states, creating significant compliance challenges. During a recent Qredible Live Broadcast, Jeff Wise, Managing Director at Newbold Advisors, shared valuable insights on how cannabis compliance technology is changing risk management in regulated industries. This discussion highlighted the critical importance of shifting from reactive to proactive compliance approaches to ensure long-term business success.
Most cannabis businesses still rely on outdated methods for managing compliance. According to data shared during the broadcast, approximately 70% of retail organizations continue to use paper checklists for regulatory compliance tracking. This manual approach creates unnecessary risks in an industry with constantly changing regulations.
"There's a lot of legacy workflows in this industry, and those workflows have to change all the time because the regulations are changing," noted Jeff Wise during the discussion. He further pointed out that "83 different variations in packaging laws exist across US states," illustrating the complexity that cannabis businesses must address.
Despite available solutions, many cannabis companies have not invested in compliance technology. The broadcast revealed that only 30% of companies use enterprise management systems for certificates of analysis, with the majority relying on basic tools like Google Docs and Google Sheets to manage critical lab reports.
Jeff Wise observed that while companies focus technology spending on cultivation and extraction, "60% of cannabis businesses lack integrated ERP systems," creating significant operational risks and potential compliance failures.
The key theme throughout the discussion was the need to move from what Wise called "fire-fighting mode" to "fire-prevention mode." This shift requires implementing systems that allow for continuous monitoring rather than after-the-fact audits.
"The ability to manage your compliance risk on a proactive measure gives you real-time monitoring, data accuracy, and automation," said Wise. "This approach provides much greater coverage compared to where it used to be a few years ago."
Several technologies are helping cannabis businesses improve their compliance posture:
"When I think about technology on the compliance side, the two benefits you get are really improved coverage and reduced cost," explained Wise. "I'm not just talking about the potential cost of fines based on regulatory findings—I'm talking about the cost of actually doing the work."
Wise emphasized that technology alone cannot solve compliance problems. The first step should be an assessment to identify process gaps, followed by creating a remediation plan.
"If you have process gaps, compliance gaps, or control gaps, and you invest in technology, that's not going to solve your problems," Wise cautioned. "What will is identifying your key gaps, putting an appropriate road map and remediation plan in place, then determining if technology can help address these issues."
The discussion highlighted how bringing in expertise from more established regulated industries can benefit cannabis companies. According to Wise, while the specifics of cannabis regulations differ from other industries, the fundamental approach to compliance remains consistent.
"Have you identified all your risks? Do you have appropriate controls in place? How are you monitoring those? How are you addressing issues from a remediation standpoint to make sure they don't happen again?" These questions, Wise noted, apply across all regulated industries.
Cannabis businesses that implement effective compliance technology will gain significant competitive advantages in their operations. By adopting proactive compliance systems, companies can respond more efficiently to regulatory changes and minimize the risk of violations that lead to costly penalties and operational disruptions.
As Jeff Wise concluded, "Having an assessment done to determine what impact technology could make and what the ROI is, I think is huge." Cannabis businesses looking to stay competitive should evaluate their current compliance approach and consider how technology might help them move from reactive to proactive risk management.
To learn more about cannabis compliance technology solutions for your high-risk business, contact the Qredible team today.
