Cannabis and compliance

Cristina's Compliance Corner

In the last few years, the cannabis industry has spent a lot of time in the media spotlight. Of course, this is due to many different factors, including

  • Decriminalization and legalization of marijuana
  • General education and research-backed studies 
  • The emergence of numerous cannabis business ventures

However, I’ve noticed a general tone shift in the conversation. Where cannabis was once taboo, people now seem eager to learn more, especially from a business perspective.

To keep up with the growing demand, it appears new businesses are popping up left and right. With greater public interest and a greater need to support the ever increasing economic demand, many have sought the awesome opportunities available. However, demand doesn’t always equal success, and many companies have unfortunately struggled to stabilize. 

I sat down with Thoropass’s (formerly Laika) co-CEO, Austin Ogilvie, to discuss the direction he has seen the industry go, the non-negotiables, and his takeaways after speaking at CannaDataCon 2022. 

In short, his greatest takeaway from the conference was the increasing relevance and continued push for compliance. This is especially true since regulation is a moving target for these companies. Holding on to something tangible, like compliance, allows these companies to stand on more solid ground. That is something we, as service providers, can wholeheartedly get behind.

Check out this episode of Cristina’s Compliance Corner to watch the whole discussion.

Commonalities among  regulated industries

Since my earliest days at Thoropass (over 2.5 years ago!), I have only seen the supply and demand of cannabis companies increase. Fintechs, health techs, procurement software— you name it; something exists to serve it. While they all support different corners of the market, they face the same challenges, including struggling to build credibility and trust with partners. 

These companies already inherently face preexisting challenges by operating in a regulated industry. Lucky for them, we understand regulated industries extremely well here at Thoropass. In our eyes, this is no different regarding scrutiny as banking or healthcare institutions. So why not help these customers the same way we help others? 

Change in tune on the cannabis industry

One of the highlights of my conversation with Austin was how excited he was about the future of the cannabis industry. There is so much good to come from it, including

  • Innovation 
  • Advances in medical research
  • Perception from the community.

In particular, he finds so much positivity in the willingness to talk about this “taboo” topic. A couple of years ago, nobody wanted to talk about it, let alone consider it in a business capacity. This old-school way of thinking turned many off from working with or trusting customers in the cannabis industry until recently. 

This is one reason why compliance certifications are so vital for companies in this space. They build trust and show potential buyers, stakeholders, and customers that while there may be fluctuations in the market, there is stability in operational excellence. 

Regulations and compliance in the cannabis industry

We noted in our conversation that cannabis companies face challenges unique to their specific industry. One of these challenges is that the regulations continue to change and vary state by state. With so much change and variation, it can be difficult to have a complete picture of the requirements. 

Austin warns operating in the cannabis industry is certainly not for the faint of heart. He says, “If you just picture these companies, the cannabis laws themselves are changing so frantically the systems to support your adherence and compliance with those rules is essential. It can be a total showstopper if you’re operating a certain way, the rule changes, and all of a sudden, you just have to hit the pause button wholesale across your entire business.” There is a constant need for education and understanding about what is to come from a regulatory perspective. And while you may not be able to control the future, you have complete control over the present. For many, present stability comes from achieving SOC2 compliance.

Companies can benefit from certifications like SOC2 to show off operational excellence, even in a turbulent environment. These reports show consideration and care for data processing, confidentiality, and adherence to best-in-service operational models. Knowing that there is a gold standard level of commitment to operational excellence helps build the necessary confidence with prospects. 

The future of cannabis and compliance 

The tune around cannabis has changed in recent years, and the regulatory requirements have been a moving target. While it’s still managed at the state level, I believe there will be a push eventually to bring it to a federal level. 

A cannabis company touches many players throughout its business journey, many of which are large, regulated, and have strict procurement processes. Stricter requirements mean cannabis companies may have to jump through more hoops to do certain things such as get a bank loan. What happens when you can’t just pick and choose your vendors? 

As companies in every industry debate when—or even whether—to begin their compliance journey, cannabis companies don’t share that same luxury. Not having a compliance certification such as SOC2 already puts them at a disadvantage, which is especially evident as they work through levels of procurement and vendor due diligence. Without a compliance certification to prove they take their responsibilities seriously, they risk losing trust and the ability to scale.

For cannabis companies everywhere, one fact has stood true—the early bird certainly does get smoke the worm. 

Finding consistency with compliance 

It is undeniable the cannabis world faces challenges that are all its own. However, there is an excitement that comes with that too. The newness is the ability to forge your path and own your future. From my point of view, it is also so inspiring that those who have embarked on this cannabis journey will be trailblazers. This is why I love the opportunity to work with customers in this space and advise them on the best path forward. My messaging always tends to stay consistent – when considering growth, consider compliance and consider it early. 

How cannabis companies can take the right step forward

If you are a cannabis company feeling overwhelmed by the constant state of change and want to land somewhere solid with compliance, consider the experts at Thoropass to guide you through the process from beginning to end. With our hands-on support model, efficient certification process, and automated workflow audits, Thoropass makes staying within compliance as straightforward as possible. Speak to a member of our team today to learn more.

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