Cannabis has achieved legal status in 21 states for recreational purposes as of January 2023. The sales of recreational marijuana are expected to reach $37 billion U.S. dollars by 2026. Safe to say the industry is thriving.
The booming industry looks great from the outside, but if the companies fail to prepare well for the increasing demand, they'll face the consequences. So, it’s high time we discuss how high-growth cannabis companies can employ technology to come up with an unbreakable risk management plan.
By leveraging technology, high-growth cannabis companies can automate and streamline risk management tasks and work towards improving accuracy, efficiency and risk reduction.
Below are the top five high-risk areas that every company should focus on, along with technological solutions that help with a strong risk management plan.
A flourishing industry like cannabis opens the door for a high volume of new startups. In this ever-changing field, compliance is one of the most critical areas where startups and seasoned businesses must focus.
Technology helps automate compliance tasks, monitor regulatory changes, and avoid costly penalties for all businesses.
Following are a few areas where technology can help with staying compliant;
Owing to the high-value products and cash-only environment in the cannabis industry, they are seen as an ideal target for theft and fraud. Companies must employ technological solutions to ensure their assets and employees are safe.
Following are a few areas where technology can help with security measures:
Did you know thousands of employees working in the Massachusetts cannabis industry faced a significant data breach? Sensitive information was made public, which caused panic in the industry.
Apart from improving data security, a key takeaway from events like this is having specialized insurance coverage for unforeseen incidents to help with consequences like the loss of reputation/credibility and any financial losses.
Having inventory management systems is a huge green flag for startups funded by VCs. It shows commitment to quality control, regardless of the size of your business.
Inventory management systems are an efficient solution against overstocking, which can lead to waste and increased costs.
A few areas where technology can help with managing inventory are:
Companies can leverage technological solutions to ensure their products are safe, effective, and meet regulatory requirements. Quality control systems reduce the risk of human errors and improve product consistency and quality.
Following areas can benefit from automated quality control;
Last but not least, ensuring that your supply chain includes recent technological advancements can deliver promising outcomes. By using supply chain management software, companies can minimize delays and improve their supply chain resilience and visibility.
A few areas where technology can help with supply chain management are;
The growing cannabis industry is a prime target of cyber attacks, and the widespread cash-only environment makes it vulnerable to fraud resulting in adverse financial losses. The best solution for all high-growth cannabis companies regarding risk management is to include savvy technology in their plans.
Staying compliant, ensuring safety and quality, and managing the supply chain are areas prone to errors. These common threats can be tackled by incorporating various technological systems, significantly minimizing the risk of financial or reputational losses.
While it's true that technology reduces the risks associated with human errors, no business is entirely safe. According to the National Cyber Security Alliance, 60% of companies that suffer data breaches go out of business within six months. Reasons could include both the high average cost of a data breach and the lack of a retailer’s credibility that restricts customers.
These numbers call for a backup plan, an insurance policy tailored to your business's individual needs to mitigate cyber, reputational, and financial risks. It's best to look for an insurance company specializing in the cannabis industry to ensure that your risk management plan has no loopholes!