The cannabis industry is always moving at lighting speed. Whether it’s the darling of the stock market one week or the terrible investment bubble the next, the global development of international cannabinoid business never stops. As big tobacco, alcohol and eventually pharmaceuticals move in to acquire or invest in the space, data has become the measuring stick of success.
No longer relegated to that “friend-of-a-friend” who can hook you up, the cannabis industry has seen a massive upheaval in the last five years, with companies like Canopy Growth Corp. and Aurora Cannabis growing from microcap fledgling businesses in 2015 to giant billion-dollar behemoths within just 36 months, capable of shifting power in politics, distribution and technology. What started with master growers working with a narrow field of genetic clones has multiplied to teams of PhDs producing, cultivating and maximizing a spectrum of cannabinoids for use in a myriad of products ranging from skin-care goods to lollipops.
As organizations move to maximize production, protect their intellectual property, and navigate the extraordinarily complex domestic and international regulatory hurdles, they have turned to information technology, including radio frequency identification, as the driving differentiator in their business development. Advanced data programs and analytics systems are now omnipresent in almost all areas of cannabis production, including:
- Seed-to-Sale and Logistic Tracking: Regulatory inventory-management software, as well as distribution and anti-counterfeiting control, through the use of RFID, genetic taggants and blockchain distributed ledgers
- Tissue Culture: Reducing genetic drift from traditional cuttings and clones using micropropagation under sterile conditions to increase production and protect genetics
- Advanced Fertigation: Aeroponic, hydroponic or traditional methods using Internet of Things (IoT)-based nutrient dosing methods, lighting, carbon dioxide control and monitoring
The most prominent and well-known area of information management in cannabis is the seed-to-sale tracking required for any legal cannabis business. Starting with California’s legalization of medical cannabis in 1996, through Colorado and Washington State’s opening of recreational sales in 2012 or Canada’s federal government fully legalizing cannabis in 2018, the requirement has been that businesses must provide auditable record-keeping of all cannabis produced, inventoried, converted, sold or destroyed.
Early adopters used spreadsheets and more traditional enterprise resource planning (ERP) systems to manage this, not unlike any traditional agricultural product. However, as government and regulators feared, large amounts of grey- and black-market materials were still entering the legal supply channels. For the industry to continue, cannabis tracking technology would need to grow with it.
In recreational markets, the tetrahydrocannabinol (THC) content, strain and terpene profile (sometimes called full spectrum, halo or entourage effect) will often dictate price, whereas in health and wellness markets, the cannabidiol (CBD), cannabinol (CBN) and cannabigerol (CBG) cannabinoids determine value. From a business perspective, managing this is by design and horticultural expertise; from the regulatory side, every ounce, every plant and even who has had access to the plants needs to be trackable.
Some second-generation seed-to-sale cannabis-tracking systems moved to physical tagging of plants with printed barcodes. Connecting printed physical markers to plants and logging their movements within facilities provided some assurance that legal cannabis could be tracked to market. Cannabis production, however, is incredibly complex, and a single plant in one facility may produce 10 times the THC or even 50 times the yield of another facility. Worse still, when moving to distillates, extracting the product down to an oil or isolates, as well as removing all compounds down to the individual cannabinoid, is nearly impossible to be certain of the source of material used with these tracking systems. Human fallibility and culpability also presents an issue, as physical codes can be logged incorrectly, or be counterfeited or removed at any point, thereby corrupting the data set.
As U.S. states continue to struggle in managing this problem, some—including California, Nevada, Michigan and Alaska—have moved to state-directed RFID-based tracking systems. The cannabis-tracking system Metrc, which is used in more than 10 states, is an RFID-based cannabis-tracking solution that produces and issues unique RFID tags to licensed producers for individual plants, then later provisions packaging tags to connect harvests to packages, transport and distribution logistics.
When combined with a framework of state monitoring software, the unique RFID tags allow for the tracking of isolated events like a recall, or macro-trends in production, supply or testing. This latest-generation inventory-tracking system, integrated with real-time government monitoring, is ideal for vertical businesses that produce, extract, package and ship to market. The challenge forever with cannabis, unlike in the pharmaceutical, cosmetics or alcohol industries, is that a network of small, medium and large players have been growing and selling the product illegally for hundreds of years. With every level of expansion to the cannabis industry, they also evolve to meet it.
The current trickle of international cannabinoid shipments will require a move beyond the existing vertically integrated control of domestic markets as both financial technical restraints and global chain of custody on materials present businesses with new challenges. As the global cannabinoid market expands, brands need to have complete control over their technical nutrients grown or purchased from multiple locations, formulated in third-party labs and manufactured into final products at factories around the world. The existing seed-to-sale infrastructure designed to give state or individual country regulators a level of control to limit black-market product entering the legal supply chain is not intended to manage the data required to operate at this scale.
The future of this opportunity is to connect plant-level RFID data together using unique molecular-based trackers. Molecular “barcodes” associated to each specific production node or company, that can survive undetected and stable on the flower, distillate, isolate, finished product or even packaging, will be required to connect the dots and truly move cannabis and cannabinoids into the global mainstream. Molecular tracking technology is already in use in numerous high-value markets, like the leather goods and amalgam sectors, in which lower-quality or illegal materials may be substituted into a matrix, such as cotton or nutraceuticals (pharmaceutical alternatives, largely unregulated, that claim to offer physiological benefits).
Ideal for cannabis since it is safe, non-GMO and already in use in the pharmaceutical and agricultural sectors, this multi-layered approach to connecting RFID inventory management, real-time event tracking and macro-licence data to molecular tracking security allows the expansion of this system to any large multinational entity in pharma, CPG or cosmetics. Such a solution is safe and transparent, and it adapts the best technologies from proven industries. The future of cannabis has always been in the information it can prove.
Jason Warnock is a cannabis advisor at Applied DNA Sciences. He is a strategic thinker specializing in international market development, brand advocacy and integrated communications. Jason has worked with high-profile brands for more than 20 years to articulate sustainable, resonant campaigns in architecture and design, energy and the cannabis market. He has spent his career as a marketing and business-consulting lead, building companies and brands while working on M&As through his advisory practice.