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California Will Need New IT Systems to Regulate Medical Marijuana Industry

A legislative package designed to regulate California’s medical marijuana industry would, according to The Los Angeles Times, “together establish a system to license, test and track medical marijuana from ‘seed to sale.’” As the newspaper noted, the Brown administration helped craft the trio of bills. One of the key components would be the creation of a Bureau of Medical Marijuana Regulation.

A legislative package designed to regulate California’s medical marijuana industry would, according to The Los Angeles Times, “together establish a system to license, test and track medical marijuana from ‘seed to sale.’” As the newspaper noted, the Brown administration helped craft the trio of bills.

One of the key components would be the creation of a Bureau of Medical Marijuana Regulation under the supervision of the Department of Consumer Affairs. The Department of Public Health and other agencies also would be involved in the regulatory effort.

As Techwire reported last month, the Board of Equalization already is considering the ramifications of the legislation, which would require BOE and Food and Agriculture to develop together a system for “reporting the movement of commercial cannabis and cannabis products through the distribution chain,” in part to enforce taxes.

But it would likely not be the only technology system that’s created or bolstered. For example, the Bureau of Medical Marijuana Regulation would be in charge of state licensing of dispensaries, distributors and transporters of medical cannabis. Perhaps the licensing system would go through the Department of Consumer Affairs’ BrEZe licensing system — whose problems have been well publicized — or something else entirely. Also, the Department of Public Health would govern licensing of cannabis testing laboratories, which would be required under the legislation.

One need only look to Colorado, where recreational use of marijuana was made legal in 2012, to see the kind of regulatory systems and databases that might be needed in California — as well as the growing pains one might expect to occur. Colorado’s Medical Enforcement Division administers both a medical marijuana vendor registration system and business licenses for retail marijuana.

In Colorado, all licensed medical and retail cannabis vendors must also have an account in the enforcement division’s Marijuana Inventory Tracking System “and have all inventory and plants associated with an RFID tag prior to their first transfer or sale of marijuana or marijuana product inventory.”

Colorado appears to be using a system called Metrc, which touts itself as the “first all regulatory solution for cannabis.” The vendor’s website says Colorado’s Marijuana Enforcement Division began using the system in December 2013 and has registered more than 11,000 users, 3 million plants and 2 million packages.

There have been challenges along the way, from a technology standpoint, for Colorado’s regulatory effort. The Denver Post reported in 2013 that “technology allowing regulators to connect to the Internet and monitor businesses' surveillance cameras around the clock never materialized, independent testing of products allowed by state statute has yet to happen, and a team of auditors that was to sift data and identify potential problem businesses was disbanded.”

An audit two years ago of Colorado’s medical marijuana regulatory system also found that the “My License Office (MyLO)” information system didn’t capture all the data that was needed to effectively monitor licensees.

From an industry perspective, Forbes recently reported that vendors see a business opportunity in all this activity. They’re developing new software to help government agencies track and regulate the marijuana industry.

“Since each state is unique in its regulations, there isn’t a one-size-fits-all software program on the market. Plus, the most unique challenge that faced many software designers was the seed to sale tracking that several states require,” Forbes reported.

Matt Williams was Managing Editor of Techwire from June 2014 through May 2017.