July 10, 2019 MJ Shareholders
July 10th, 2019
App, Exclusive, News, Top Story
As we know, a growing number of states have legalized medical and adult-use cannabis, creating a robust industry worth billions of dollars per year. The problem is that cannabis remains illegal on a federal level, which has left states to create a patchwork of ever changing regulations. These regulations can be challenging to any cannabis business, much less multi-state operators (MSO’s) that must adhere to different state laws and taxation environments.
Let’s take a closer look at these compliance challenges and how companies, like FinCanna Capital Corp.’s (CSE: CALI) (OTCQB: FNNZF) portfolio company, ezGreen Compliance, is simplifying the process of compliance. These are technology experts from the medical, data and security fields that have 18 years experience in heavily regulated medical arenas.
California Pioneers Seed-to-Sale
California is by far the largest state to legalize medical and adult-use cannabis, which means that many other states look to them for guidance. That’s why the state’s decision to use the Marijuana Enforcement Tracking Reporting Compliance software METRC as its seed-to-sale tracking system to trace movements across the cannabis supply chain has been widely watched and mirrored across twelve states.
Several months after the new regulations took effect, the Associated Press announced that out of the state’s 627 licensed cannabis dispensaries, only nine were entering data into the state’s track-and-trace system as required by law. Less than 10% of the state’s licensed marijuana manufacturers were using the system, and less than 7% of the state’s cultivators could be found on it.
The METRC system assigns each plant with an RFID tag that includes an identification number, application identifier (medical or recreational), tag order date, license number and facility name. These tags must be placed on every product, including cuttings, seedlings and clones. The METRC database records all interaction with these tags throughout the entire process, including employee activities, room changes, repackaging and sales, as well as waste records and inventory volumes.
With many dispensaries selling more than half a million dollars of product per month, manually recording each of these events can quickly become a logistical nightmare. The failure to record any of these events, however, can trigger an automatic red flag for government auditors. Non-compliant businesses could face the risk of heavy fines, or even worse, the loss or a hold on their license. This means that compliance is absolutely required by cannabis retailers across the supply chain.
Compliance & POS Technologies
The good news is that new technologies are becoming available to automate the compliance process by integrating with METRC and other state-by-state frameworks.
FinCanna Capital’s portfolio company ezGreen Compliance, an enterprise compliance and point-of-sale solution for the cannabis industry, recently completed its integration with METRC in California, Colorado, Maryland, Massachusetts, Montana and Oregon, making it the first POS solution designed by medical, data and security professionals to be sanctioned by the Cannabis Control Commission (CCC) in six states with applications for certification pending in the remaining states that use the METRC system.
“Cannabis industry data standards are increasingly mirroring the pharmaceutical industry’s patient data security protocols,” said Mike Coner, President of ezGreen. “Our POS solution is proven from 18 years of experience in pharmaceutical dispensing and it delivers strong data security as well as integrates with any technology platform which supports operators in streamlining their operations and lowering costs related to double data entry. ezGreen also provides fully customized reporting and real time data analytics enabling businesses to make more effective decisions. With our recent integration with METRC we are now able to deliver a complete compliance and data management solution.”
In addition to automating data entry into METRC, ezGreen Compliance’s software automatically identifies product-related discrepancies at the point of sale to simplify management’s ability to immediately identify and resolve any store-to-state inventory reporting issues. The seamless data exchange between ezGreen and METRC ensures that businesses are 100% compliant with state regulations. In states without METRC, the software can still generate or request custom reports as required. ezGreen Compliance POS solution also supports HIPAA, the Health Insurance Portability and Accountability Act which is focused on ensuring secure customer data storage.
The issue of HIPAA violations and remaining compliant with governing laws is one that is prominent for many cannabis dispensaries and business that collect confidential patient information. This is because fines arising from violations of HIPAA can be significant, and depending on the dispensary’s level of negligence, can be as high as US$50,000 per violation for a maximum penalty of US$1.50 million.
- ezGreen generates revenues via fees charged to clients for the use of their ezGreen software platform. The business model is based on the Software-as-a-Service (“SAAS”) model with revenues derived from both subscriptions and/or on a per transaction basis.
FinCanna Capital Corp.’s (CSE: CALI) (OTCQB: FNNZF) ezGreen Compliance is well positioned to help cannabis retailers meet METRC reporting requirements without manual data entry. As the only CCC-certified solution with a presence in six states, the company could expand its market share, particularly among multi-state operators that need to meet reporting requirements across state lines.
In addition to METRC compliance, the platform also includes a business intelligence dashboard that delivers a comprehensive taxation feature to automate essential revenue reporting functionality. Rather than keying in financial data, critical information is captured at the point of sale and seamlessly organized for complex municipal and state tax reporting.
For more information regarding ezGreen Compliance, visit the company’s website at www.ezgreencompliance.com.
For additional details on FinCanna’s disclaimer and Forward Looking Statements please visit:
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About Ryan Allway
Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.
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