Expertise Beyond the Numbers

Best Practices for Cannabusinesses: Selecting and Implementing an Inventory Management Technology Solution


In the midst of a rapidly evolving cannabis industry in Maryland, cultivators, processors, and dispensaries must select and implement an inventory management technology solution that will help lay the foundation for long-term efficiency, compliance, and operational success. The following SC&H Group blog post discusses four best practices related to connectivity, security, reporting, and enhanced functionality for cannabusinesses to consider when selecting and implementing an inventory management technology solution.

Maryland’s medical cannabis industry is rapidly changing. Late last year, the Maryland Medical Cannabis Commission announced Franwell’s Metrc system as the state-run regulatory solution for cannabusinesses. On April 24, registration for patients and caregivers began. And now, the state General Assembly is considering calling lawmakers back to Annapolis for a special session to further expand the medical cannabis industry.

Considering the industry’s pace of change, it is critical that cultivators, processors, and dispensaries select and implement an inventory management solution to comply with regulations and ensure efficient operations once medical cannabis becomes available to the public. Following are four best practices to consider when evaluating software options.

  1. Ensure Your Software Connects to Metrc

According to a notice of proposed action under Subtitle 62 of the Natalie Laprade Medical Cannabis Commission, a licensee must use an approved inventory management solution that provides tracking and tracing of marijuana plants and products from seed to sale.

To comply with these requirements, cultivators, processors, and dispensaries must have a  solution that delivers data about their inventory and connects with Metrc. In addition, to gain operational efficiencies, the solution must effectively integrate barcoding and/or Radio Frequency Identification (RFID) tags, which reduces the administrative burden of tracking cannabis.

Metrc is available for commercial use, so cannabusinesses may adopt it as their technology solution. However, many cannabusinesses in other states, such as Colorado and Oregon, have found that other solutions offer greater scalability, including a more preferred level of reporting functionality. Therefore, we recommend considering one of the many alternative inventory management technology solutions now available.

  1. Focus on Security

Cannabis compliance software providers are frequently targeted by cybercrime, as evidenced by the recent hack of databases and backups at MJ Freeway. The breach affected 1,000 marijuana retailers in 23 states, and caused many retailers to close until service was returned.

Therefore, it is important that cultivators, processors, and dispensaries ensure that they select technology solutions and providers that can protect their data. Cannabusinesses should inquire as to how frequently the provider tests their systems, whether they have sufficient business continuity and disaster recovery plans in place, and if they offer service level agreements that guarantee at least 99.9% availability.

Cannabusinesses should also consider whether they want their solution to be cloud-based or on-premise. For some businesses, an on-premise solution may be preferable, as it may present less risk related to federal regulations. For instance, since cannabis is still considered an illegal substance by the federal government, there is a chance that the internet service provider could be pressured to restrict service to a cannabusiness cloud solution.

However, on-premise solutions require security resources, proper storage and backup procedures, and a technology resource to manage the solution. Also, more cloud-based solutions are currently available.

  1. Consider Other Value-Added Features

While some software solutions focus on serving one function, many have numerous capabilities to help cannabusinesses improve management of their business. These value-added features should be considered in addition to the solution’s core inventory management functions.

For example, many offer automated reporting, which can be set up for regulators and auditors to ensure ease of compliance. Others provide patient management, which hosts patient profiles and allows easy access to patient history. While this is not a state requirement, it can be a valuable benefit to customers.

Finally, cannabusinesses should consider solutions that offer portability. Whether working on the ground floor, moving cannabis through production, or selling final products, software with mobile features, including scanners, can reduce risk and help staff move more easily and efficiently through processes.

  1. Don’t Stop at Inventory Management

While cultivators, processors, and dispensaries are required to have an inventory management solution, many other software solutions should be considered.

For instance, to help mitigate the risk of handling large cash quantities, cannabusinesses should consider cash management solutions such as banking kiosks or smart safes. Some banking kiosks offer cash-free mobile payments, integration with accounting software, and real-time reporting on transaction data. Meanwhile, smart safes can be kept under the cash register to upload and download cash as needed.

Cannabusinesses should also consider HRIS management solutions, allowing them to more efficiently perform background checks, as well as automate and manage W-2 and I-9 forms, new hire documentation, and tax compliance.

Ultimately, it is critical that Maryland cannabusinesses select an inventory management technology solution that connects with Metrc, provides comprehensive data security, and incorporates value-added reporting, patient management, and mobile features. By combining this solution with key cash management and HRIS management solutions, cannabusinesses can lay the foundation for long-term efficiency, compliance, and operational success.

To learn more about selecting and implementing the right software solutions for your cannabusiness, contact SC&H Group’s Medical Cannabis Advisory Services practice here.