In the face of global shutdowns, shelter-in-place orders, loss of jobs and the ever-present threat of illness, cannabis sales skyrocketed in 2020. A study conducted by Leafly, using state tax and revenue data, showed cannabis sales were up 71% compared to 2019 — a $7.6 billion increase to hit $18.3 billion in total sales.
But marijuana’s continued status as a Schedule I drug at the federal level certainly doesn’t make it an easy landscape for newcomers to navigate. Limited bank options make it mostly a cash-only business, which can be dangerous. And whether you already operate a facility or you’re hoping to open a dispensary, processing or grow operation, there are many regulations to keep in mind — most of which include electronic and physical security requirements.
Like any business operation, cannabis requires certain licenses, approvals and audits before you can open your doors. While every state’s regulations and security requirements differ, almost all of them require some form of electronic alarm and surveillance system, with audit trails that must be archived.
Every state, and in some cases, even individual cities or municipalities, has stringent licensing requirements that must be met before any cannabis business can open. While these regulations may be different for each sector of the industry, in almost all cases, it includes having an acceptable security plan in place. These security plans are often heavily weighted as part of the licensing application process. If the security plan is found to be lacking, you lose points. If your overall grade/number fails to meet the threshold, you won’t be issued a license. This puts the pressure on the prospective operation itself to have an effective, well thought-out security plan in place, describing the overall system architecture, including alarm, video and, in some cases, access control that allows the integration of other solutions. In addition, cannabis retailers also need an audit trail working in conjunction with seed-to-sale compliance software, which ensures cannabis operations are compliant with regulations.
While the specifics vary from state to state, nearly all states require 24/7 video surveillance throughout the entire facility. For example, the average dispensary might have up to 25 to 40 cameras to cover the entire store. A large-scale grow operation could have dozens or more to ensure proper surveillance of the product and harvesting process.
No matter the business function, the perimeter needs to be protected and there can be no “dead zones,” where a camera’s field of view is obstructed. All potential physical security threats (customers, employees, delivery people, packages, etc.) entering the premise must be tracked using the video system, along with any human or product movement that occurs within the facility.
To have a compliant security system, operators must have archived video footage in the event of an audit by compliance officers. It’s common for states to require video retention times of 45, 90 or even 120 days. For the owner of a business, this means everything you do is recorded — from the transfer of product to individual product sales and storage, requiring a robust video solution to archive the footage.
The benefits of a video management system (VMS) go beyond possible sanctions. For example, if a grow operation moves plants from one end of the facility to another, but doesn’t have video footage of the move, it could be red flag for auditors. Constant video surveillance can also show when crimes are committed, such as employee theft. Using video systems, operators will be able to quickly reconcile product and determine if there are any discrepancies, such as if the documented weight of a product doesn’t match what it’s estimated to be.
Seed-to-sale is the process of tagging every cannabis plant with a barcode or radio-frequency identification (RFID) that allows each plant to be tracked throughout its lifecycle and the final sale. For cannabis customers, anything they buy has a batch number, complete with the lot and date — allowing the state to identify the lifecycle and harvest date of the product.
Using a video system with a seed-to-sale tracking integration can drastically reduce the burden of compliance and mandatory data tracking on grow operators and dispensaries, as the camera can record an image of a plant’s barcode as it passes by on its way to processing. The image is scanned and tracked with a barcode reader.
While this information is also captured in the seed-to-sale software, video images provide a valuable individual record of each of these transactions that can be easily retrieved when needed for a compliance audit or investigation.
Cannabis retailers faced some of the same challenges from COVID-19 as other retail markets did, including long, socially distanced lines and decreased occupancy levels. Video analytics can improve operations by using people counting to speed up queue lines and assist management in ensuring the facility is properly staffed. Video analytics can also be used to monitor the entire facility, inside and out, ensuring the secured space is in fact, secure.
Additionally, integrations with point-of-sale and traceability systems assist dispensaries with proper reporting software. For example, if a customer buys several products, it will be tracked in the sales and tracking software, and the facility can use a surveillance system that captures the metadata to ensure compliance, complete with an event-stamped audit trail, should the need arise.
Remote access to systems is in high demand across all sectors of the cannabis space. Even when they are not physically on site, cannabis operators can have instant visibility into their facilities using the surveillance system. With today’s technology, they can have access to video from individual sites in a variety of ways — a local client workstation onsite at the retail facility or in the company’s main headquarters, or from anywhere via a mobile device. They will be able to see if someone has accessed the site after-hours and if there’s an incident that triggers an alarm, access control or surveillance system. This gives operators the ability to decide whether or not to engage internal or external resources to deal with the issue. Additionally, where facility size and location are factors, having access to any security or surveillance system, regardless of their location, will assist cannabis operators in having a finger on the pulse of their operations.
It’s no secret that cash management is a major challenge for cannabis business operators. As cannabis is still federally illegal, most banking institutions are hesitant to venture into the market. As such, cannabis is still largely cash-only, which presents some obvious security risks. Having large amounts of cash onsite should be a further incentive to ensure a comprehensive security system and video surveillance solution is in place.
Dispensaries must constantly capture sales data and the entire point of purchase scene, including the buyer, to ensure each transaction is archived on video. Additionally, the VMS, coupled with analytics, can notify local or remote personnel of any suspicious behavior and detect weapons and other objects that might indicate a potential threat. They can also monitor and record the movement of all cash and product through the entire facility.
Consult a professional
Security challenges and regulatory issues existed long before the COVID-19 pandemic and are likely to continue into the foreseeable future, as more states begin to legalize recreational cannabis. An influx of sales caused by the pandemic means even more pressure to ensure security and regulatory compliance.
Navigating the strict security regulations imposed on cannabis businesses requires a well-thought-out plan and a flexible solution that can provide enterprise-level surveillance features and scalability. No matter what state the operation is located in, a security system with the capacity to store video footage and remote monitoring capabilities are a must.
Operators looking to open or update a facility should consider seeking guidance from a security consultant or systems integrator well-versed in the cannabis space and familiar with the regulations and procedures of each municipality. The selection of a solutions provider that offers a flexible and open architecture approach to security can help to ensure compliance from seed to sale.