Cannabis Regulations Always Changing
blog post img

Cannabis Regulations: They Are Always Changing

Aug 30, 2018

How to keep up when the only constant is change "Cannabis"

By Leslie Titus Bryant

In the Cannabis market, California is in the midst of a landmark regulatory shift. Legal cannabis companies must:

  • Sell only products that have passed full compliance
  • Ensure all products are properly packaged and labeled
  • Comply with all potency limits
Small marijuana plants on wall shelves

Though few companies oppose the regulation, the problem cannabis companies face is massive–with so few labs to test product and such a short time to ensure full compliance there is bound to be millions in product that can’t be sold wrapped in red tape. Inventory that just sits is profit lost. Inventory not in compliance means it can’t be legally sold. Moreover, being found out of compliance can bring crippling fines anywhere from $8,000 to as high as $250,000. The problem often leaves businesses at a cash flow stand-off, so what is a company to do? How can the rest of the country, whether legal or working on it, ensure they won't be caught off guard when shifts in the regulatory landscape happen?

Pharma and medical device might hold some valuable lessons:

  • Establish and maintain your pipeline–this means you should find the right suppliers, distributors, and labs, but more importantly ensure you have an open dialogue with them so when regulatory changes come your companies can move together. Keeping strong supply relationships can make or break a company.
  • Ensure your company is following a supply and inventory strategy that fits. You might not need to go full Toyota Lean, but it is important to understand the different types of inventory strategies used to keep inventory to a minimum, ensuring that if a regulation does change you won't be stuck with unusable product. Spend some time researching Just-in-Time (JIT) inventory management, Economic Order Quantity (EOQ), and Material Requirements Planning (MRP) inventory strategies. You don't have to have an MBA to ensure you have the best supply chain, but small changes could have an enormous impact on your profits.
  • Bring what you can control in-house–something as simple as a label printer could mean the difference between sales today, and having to wait weeks for custom order labels. Costs might be a bit higher on the front end, but if regulations shift something simple as font, content or even color, can derail supply chains for weeks as everyone scrambles to order new labels.
  • Keep an eye on the laws–the most obvious of course, but it is easy to get mired down in the day to day of running a business and get blindsided by a change that could have been planned for weeks, or months in advance. This could be as simple as reading the latest news, or becoming a part of a local or national cannabis organization, and still save you both time and money.

These are just a few short tips that could help, but in such a volatile market it is important always to be exploring ways to improve your business. There are many strategies out there that are easily integrated into your cannabis business structure. Growers, processors, distributors, or any combination of the three can seriously benefit from planning ahead and taking a look outside your market to see what has worked for others.

The right equipment can help you future-proof your processes and workflow saving valuable time and money.  Saving money in your seed-2-sale process is as simple as finding the right solution.

Works Cited

  • Leslie Titus Bryant

Share this Post

Recent Posts