The cannabis industry is growing quickly — and the need for IT security, cybersecurity and managed IT services for cannabis companies is budding just as fast, as they experience common technology issues.
According to Grand View Research, the legal cannabis market size was valued at $11.3 billion last year, and some analysts project more than 30 percent growth by the end of 2019. But growing as a cannabis company comes with a unique challenge, in that it is classified federally as an illegal Schedule 1 drug, but it is legal (in various degrees) for medical or recreational use in several states. As of right now, 33 states have legalized medical marijuana, with 11 declaring it legal for recreational use.
With regulations differing from state-to-state, there are a number of technological headaches unique to the cannabis industry. There are strict limits to how cannabis products can be marketed, and since the industry is fairly new and growing, it’s become vulnerable to opportunistic data thieves. It’s easy to see that cannabis is now big business, which means all the issues that come with growth apply here, too.
Let’s examine 4 of the most common technological issues facing the burgeoning cannabis industry.
Few industries are under as much scrutiny as cannabis. Regulations can change with each election cycle, and even on a county-to-county basis in legalized states. Trying to simply operate and cultivate a customer base while staying within strict (yet ever-changing) guidelines is hard work enough, so it’s understandable that most cannabis professionals don’t have the tightest grip on IT security or cybersecurity.
Back in 2015, a medical marijuana dispensary in Massachusetts suffered a preventable data breach when an employee sent a group email to 157 patients without putting them on BCC, making all email addresses on the chain visible. Last year in Florida, a dispensary unknowingly had patients’ information available via the search function on their website.
This isn’t just a problem among cannabis-based small business owners. Earlier this year, Canada’s National Health Service was under attack by data thieves — exposing the personal information of roughly 34,000 medical marijuana users. The need for IT services in cannabis industries is a serious issue.
As more dispensaries open seemingly every day, staying within the bounds of the law and ensuring a pleasant customer experience are most likely at the forefront, with cannabis IT security more of an afterthought. As more patient and customer information goes through POS machines and email servers, there’s plenty of opportunity for that information to wind up in the wrong hands.
Doing business online — something that nearly every industry can do with ease — is nearly impossible for cannabis brands. While retailers are able to sell CBD goods (not containing THC, the substance that gets customers “high’) online, the federally illegal status of cannabis means there are still heavy restrictions placed upon e-commerce.
After Colorado legalized marijuana for recreational use in 2016, licensed retailers reported doing nearly $1 billion in sales in the first year. CBD gummies and oils became legal to sell online, following the changes to the latest edition of the Farm Bill.
The legalization push brought a new issue — previously a cash-only payment industry, cannabis companies could now accept digital payments for products that don’t contain THC. The issue is that while marijuana is legal on a varying basis from state to state, banks are federally regulated. Financial institutions (and e-commerce companies) can risk prosecution if they hold profits from marijuana sales.
There are also strict rules against advertising for cannabis brands, especially on major platforms such as Facebook, Instagram or Google, making it harder for brands to gain new customers and grow influence.
E-commerce platforms like Shopify are trying to bridge the gap in Canada, but this still remains a headache for many cannabis-based industries in the U.S. American companies will look to Canada first to see how dispensaries are handling e-commerce.
With traditional banks eschewing cannabis brands to stay in line with federal regulations, many companies have turned to blockchain and virtual currencies like Bitcoin to allow customers to pay for products.
Many industry experts see cryptocurrencies as the solution to cannabis’ legally-fluid status, but blockchain has many problems of its own.
Cryptocurrency allows for easy, fast payment that can then be transferred into physical currency. There are even marijuana-specific virtual currencies like PotCoin and CannabisCoin. However, the major issue is that virtual currencies can vary wildly and values can fluctuate quickly. They’re also not regulated, which is a scary proposition for an industry trying to gain legal footing and offer safe, reliable transactions for a growing consumer base. The lack of standardization within blockchain currencies can hurt, rather than help, the industry.
As the industry grows, the need for automation will grow with it. Gone are the days of individual farmers tending to the plant in their backyard. Now cultivation is a major part of the industry. Last year, the cannabis industry added nearly 65,000 jobs — a 44 percent year-over-year increase, according to Leafly and Whitney Economics. Some experts call it the fastest-growing labor market in the U.S.
The marijuana plant needs constant attention and near-perfect light and water conditions in able to grow well. With so many plants, it’s a nearly impossible task for humans to complete around the clock. Those who can afford it are investing in the Internet of Things (IoT), allowing agriculture tools to control farms for maximum productivity. But as automation is on the rise, many fear that it’s having machinery responsible for so much of the process harms the quality due to lack of personal touch and maintenance.
Some experts also fear that over-reliance on automation could deal a blow to growing workforce, cutting back on the need for human employees as everything from temperature control to actual security is monitored by machines.
As technology promises to revolutionize the rapidly-changing cannabis industry, these are some of the pitfalls to avoid and discussions that need to happen along the way.