Let’s talk about pain and cannabis. No, I’m not talking about medical efficacy, although that’s well proven. I’m referring to the great pains that come with regulatory compliance.

There are so many bureaucratic hoops for a business to jump through, it borders on ridiculous. 

However, there are a number of promising advancements on the cannabis technology front that could ease many of the headaches for licensed cannabis businesses that come with state-mandated tracking systems such as METRC and BioTrackTHC, among others.

(And no, I’m not ragging on these seed-to-sale software platforms. They’ve been a necessity for state regulators to avoid federal crackdowns and ensure tax collection, and they get the job done for the most part.) 

That said, for this industry to continue its upward trajectory, we need to transform compliance from a one-way street of data reporting and rule-following into an avenue that can be more useful to cannabis businesses by helping improve their revenue models, better forecast sales, and lower their overhead. 

The Elegance of Data-Driven Algorithms

What’s really exciting are the emerging advancements with artificial intelligence (AI) and machine learning. Such developments are helping business operators in all areas of the cannabis industry to maintain compliance in a more efficient manner while providing useful, actionable insights into their own internal operations.

As someone who loves the elegance and utility of AI algorithms to piece together myriad data points into revelatory patterns, I couldn’t be more thrilled about this trend and how it’s already helping cultivators, manufacturers and retailers. 

Before I entered the cannabis retail space, I spent a decade developing programs for healthcare networks to help them manage patient data compliantly.

And there are a number of parallels between the algorithms utilized to protect consumer privacy while tracking data required by insurance companies and health services, and those used to compliantly sell cannabis consumers state-tracked production batches of flower, vape carts, edibles, concentrates, topicals and other products. 

AI can address plenty of pain points around cannabis compliance, particularly as it relates to eliminating human error, streamlining reporting processes and serving as a conduit for regulatory updates.

Maximizing Efficiency and Regulatory Clarity 

The powerful capabilities of AI to facilitate compliance while maximizing efficiency start with cannabis production.

Cultivators are using specialized software and sensors to automate their grow cycles, enabling higher levels of precision in plant feeding, irrigation and lighting, thus reducing resource waste.

At the same time, cultivation managers can monitor the overall impact of tweaks to their processes to optimize production time. 

At harvest, cultivation managers can also tap AI to automatically record and input plant weights for compliance tracking—and having that data on their yields helps to further inform their methodologies for maximum output.    

That’s one way to collect data smartly and stay compliant. And it’s happening elsewhere throughout the industry.

One of the other issues for cannabis operators is that regulations seem to change by the minute, especially in emerging markets. It’s a challenge to stay on top of this, especially if you’re a multi-state operator. You could go to every rule-making meeting, but who’s got the time? 

If you’re a product manufacturer, you need to be in the know about any changes to requirements for packaging and product labeling, for example. AI can be utilized to hunt 24/7 for the relevant information you need as it’s developed by state and local regulatory agencies,

and to notify your company’s designated compliance person about upcoming new rules that are relevant to your business so you can get out ahead of them.  

How AI Boosts Retail Compliance—and Sales 

The importance of harnessing AI for compliant cannabis retail became critical this year amid the pandemic-altered purchasing model, with online ordering becoming more prevalent and delivery services playing a much bigger role in some states.   

Lengthy in-person conversations between budtenders and customers aren’t ideal in the era of mandatory mask measures and social distancing, and here’s where AI can really shine in the dispensary setting: By ensuring compliant sales transactions and value-added predictive upselling with minimal interaction and time in store.  

New self-checkout solutions enable customers to place their orders online, or in-store at freestanding order-fulfillment kiosks that are programmed to prevent orders from exceeding established limits and ensure taxes are properly reported.

With some of these in-store kiosks, including a solution my colleagues and I developed called anna, all transactions are double-checked and customer IDs verified by dispensary staff to further ensure compliance.  

The customer data facilitates special cross-promotions and predictive product suggestions. And customer privacy is protected by key algorithmic guardrails around the data that categorize customers into demographic cohorts, not individual purchasers, along with collecting information on general sales trends.

For example, a 28-year-old male customer purchasing flower and concentrate would receive different cross-promotions than a 42-year-old female purchasing edibles. 

AI-powered technologies are reshaping how cannabis companies approach and maintain compliant operations—and this is only the beginning. A vast sea of exciting AI-powered possibilities lies on the near horizon.