How We Would Build a Cannabis App

As of 2021, the cannabis industry has emerged as a lucrative market, offering immense potential for entrepreneurs, investors, and consumers alike. However, this emerging industry comes with its own set of challenges, particularly in terms of compliance with ever-evolving regulations.

Article by
Becky Chase
Article date
June 28, 2023

Why managing AI risk presents new challenges

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The difficult of using AI to improve risk management

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How to bring AI into managing risk

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Pros and cons of using AI to manage risks

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Benefits and opportunities for risk managers applying AI

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The cannabis industry has experienced remarkable growth, with the legalization movement gaining traction across various regions.

Compliance is of paramount importance for maintaining legal operations and ensuring the long-term success of dispensaries and businesses within the cannabis industry. It involves adhering to specific laws, regulations, and guidelines set forth by state and federal authorities, which govern the production, distribution, and sale of cannabis products.

Compliance Challenges and the Need for CannaTech

The Complexities of Compliance in the Cannabis Industry

Navigating compliance requirements in the cannabis industry is a complex endeavor. Each state within the United States has its own unique set of rules and regulations governing cannabis, leading to a patchwork of legal frameworks. As of 2021, a significant portion of states have legalized cannabis for medicinal and/or recreational use, but the specific laws can vary greatly.

For instance, some states have implemented strict limits on the amount of cannabis that can be sold to individuals, whether for recreational or medical use, and in all states where cannabis is legal, only adults aged 21 and above are allowed to purchase cannabis products. These variations in regulations make compliance a challenging task, especially for businesses operating across multiple states or jurisdictions.

Dispensaries and businesses must diligently track and monitor their sales, inventory, and customer information to ensure compliance with state-specific laws. Failure to do so can result in severe consequences, including hefty fines, loss of licenses, and reputational damage. Therefore, it is crucial for cannabis-related businesses to stay up to date with the latest legal rulings and maintain accurate compliance records to ensure sustained operation. However, CannaTech offers a tremendous advantage by simplifying the process of staying updated and compliant.

The Role of CannaTech in Revolutionizing Compliance

Technology is a game-changer, revolutionizing compliance practices within the cannabis industry. Advanced software solutions, collectively known as CannaTech, have been developed to assist dispensaries and businesses in navigating the complexities of compliance and streamlining their operations. The leading compliance software APIs are Metrc and BioTrack. These solutions enable businesses to seamlessly track sales, monitor inventory, and generate accurate reports and send reports to ensure compliance with state and federal laws. By automating tedious compliance tasks, CannaTech software liberates dispensaries from the burden of manual record-keeping, reducing the risk of errors and non-compliance. Metrc (Marijuana Enforcement Tracking Reporting Compliance) is a regulatory compliance software solution used in the cannabis industry. It is designed to track and monitor the movement of cannabis plants and products throughout the supply chain, ensuring compliance with state-specific regulations. Metrc enables businesses to maintain accurate records of cultivation, manufacturing, distribution, and retail activities, providing transparency and accountability in the cannabis market. By utilizing Metrc, regulatory authorities can monitor the movement of cannabis products and enforce compliance, while businesses can streamline their operations and meet the reporting requirements set by their respective states. Metrc is a leading provider of end-to-end supply chain visibility in the cannabis industry. They utilize advanced software and RFID technology to track and trace cannabis from seed to sale. They have been advancing this technology for over 10 years and are now standard in the cannabis industry.

BioTrack is a cannabis seed-to-sale tracking software platform designed to facilitate regulatory compliance and operational efficiency in the cannabis industry. It enables businesses to track and monitor the entire lifecycle of cannabis products, from cultivation and manufacturing to distribution and retail. With BioTrack, cannabis businesses can accurately record and report key data points, such as plant growth, inventory levels, and sales transactions, ensuring compliance with state regulations and providing transparency throughout the supply chain. The software also offers features for inventory management, compliance reporting, and integration with regulatory systems, helping businesses streamline operations, maintain compliance, and meet the unique requirements of the cannabis industry. BioTrack is another experienced seed-to-sale cannabis software provider. They provide services in 38 states and multiple countries around the world, including Canada, Australia, and the Netherlands. BioTrack offers a variety of services, including essential sales, product, inventory, budtender, and customer data to help businesses make data-driven decisions.

Additionally, integrations with verification services or agencies like Sovos, Jumio, and OFAC help dispensaries implement secure identity verification and age restrictions, further enhancing compliance protocols. We will expand further on these technologies later, as they provide the necessary tools to validate customer information, ensuring that sales are made exclusively to eligible individuals and minimizing the potential for underage or illegal purchases.

Benefits of Technology-Driven Compliance

The adoption of technology-driven compliance practices offers several significant benefits to dispensaries and businesses within the cannabis industry. These benefits include:

  • Enhanced Accuracy and Efficiency: Compliance software minimizes the likelihood of errors and streamlines processes, enabling businesses to operate more efficiently and effectively.
  • Time and Cost Savings: Automation of compliance tasks reduces the need for manual labor, saving time and resources for businesses. This allows staff to focus on core operations and strategic initiatives.
  • Real-Time Reporting and Analytics: Software solutions provide real-time access to compliance data, enabling businesses to make informed decisions and identify trends or issues promptly.
  • Adaptability to Changing Regulations: Compliance software can be updated to accommodate evolving regulations, ensuring that businesses remain compliant even as laws change.
  • Unlocking Business Benefits through CannaTech

    Adopting CannaTech software goes beyond ensuring compliance; it offers a range of benefits that positively impact the efficiency and success of cannabis businesses. Improved inventory management enables businesses to track product movement, monitor stock levels, and optimize supply chains. Streamlined operations lead to enhanced productivity, reduced costs, and improved overall business performance.

    Enhancing the customer experience is another advantage of CannaTech software. Through user-friendly interfaces, personalized recommendations, and streamlined payment options, dispensaries can provide customers with a seamless and enjoyable purchasing journey. Currently there are restrictions on sales with banking cards for cannabis related products, since cannabis is illegal on a federal level, banks have chosen not to support these types of sales. If you were to make a purchase, the payments would not be FDIC insured by the bank.

    Streamlining Compliance through Technology

    The ever-changing landscape and varying legal landscapes across different jurisdictions make compliance a challenging task for businesses. However, technology has emerged as a powerful tool to facilitate and streamline compliance practices.

    Compliance Software Solutions

    Compliance APIs offer dispensaries and businesses the means to effectively track sales, monitor inventory, and generate comprehensive reports to ensure compliance with state-specific laws and regulations. By automating manual tasks, such as record-keeping and reporting, compliance software reduces the risk of human error and enhances overall accuracy.

    Integration with Verification Services for the Cannabis Industry

    To address the need for robust identity verification and age restrictions, technology solutions integrate with verification services like Sovos, Jumio, and OFAC. These integrations assist dispensaries in implementing secure identity verification protocols, ensuring that sales are made only to eligible individuals of legal age. By leveraging these technologies, businesses can mitigate the risk of non-compliance and unauthorized sales.

  • OFAC is the Office of Foreign Assets Control, a U.S. Department of the Treasury agency that enforces economic and trade sanctions. They are involved in cannabis sales by implementing and enforcing restrictions on transactions with individuals, entities, or countries that are designated on their specially designated list (SDN List). Compliance with OFAC regulations is crucial for cannabis businesses to avoid engaging in prohibited transactions and facing legal and financial consequences.
  • Jumio is a leading provider of identity verification solutions that assist cannabis businesses in implementing secure identity verification protocols and age restrictions. By integrating Jumio's technology into CannaTech software, dispensaries and businesses can ensure compliance with legal requirements, prevent unauthorized sales to minors or ineligible individuals, and enhance overall security measures. Jumio is a company that integrates facial recognition technology with cannabis vending machines. The process includes an age check, customer onboarding, and biometric liveness detection. After a customer's sign-up is approved or denied, they use a biometric finger vein reader for final verification. Following enrollment, customers are only required to verify their identity with finger vein biometrics. Jumio's technology is used in American Green vending machines selling cannabis and CBD products, as well as beer and liquor.
  • Sovos is a provider of tax compliance software solutions vital for cannabis businesses. Their technology helps dispensaries and companies streamline tax compliance processes specific to the cannabis industry. By integrating Sovos' software into their operations, cannabis businesses can accurately calculate and report taxes, ensuring compliance with tax regulations, minimizing errors, and efficiently meeting their tax obligations.
  • Inventory Management and Tracking for CannaTech

    Another critical aspect of compliance is maintaining accurate inventory records and tracking cannabis products from seed to sale. Software solutions enable businesses to track product movement, monitor stock levels, and generate real-time reports on inventory status. This level of visibility not only ensures compliance but also improves operational efficiency by reducing the risk of stockouts or excess inventory.

    Another critical aspect of compliance is maintaining accurate inventory records and tracking cannabis products from seed to sale. Software solutions provide robust features for tracking product movement, monitoring stock levels, and generating real-time reports on inventory status. This level of visibility not only ensures compliance but also enhances operational efficiency by minimizing the risk of stockouts or excess inventory. By automating these processes, businesses can streamline their operations and make data-driven decisions to optimize inventory management in the cannabis industry.

    Learning from Other Industries

    In the pharmaceutical industry, the implementation of stringent quality control measures and adherence to regulatory guidelines can serve as a valuable example for cannabis businesses. Pharmaceutical companies have developed comprehensive compliance frameworks to ensure product safety, efficacy, and regulatory compliance. This includes rigorous testing protocols, documentation practices, and quality assurance processes.

    Similarly, the alcohol industry has established compliance practices that can provide insights for the cannabis industry. Alcohol producers must comply with regulations related to production, labeling, distribution, and responsible consumption. This includes age verification protocols, labeling requirements, and restrictions on advertising to specific demographics.

    By studying and adopting best practices from these industries, cannabis businesses can gain valuable insights into establishing robust compliance frameworks. They can learn from the processes, systems, and documentation practices that have been successful in ensuring regulatory compliance and consumer safety. Implementing similar compliance practices can help cannabis businesses navigate the evolving regulatory landscape, meet industry standards, and build trust with consumers and regulatory authorities.

    Navigating Marketing Regulations in the Cannabis Industry

    Marketing cannabis products and services requires careful adherence to strict regulations. To avoid potential pitfalls, businesses must refrain from making specific health claims, targeting minors, or advertising in states where products are illegal. In a later blog post, we'll delve into successful cannabis marketing campaigns like: Even Higher Together by WeedMaps and Hemp In History: Abraham Lincoln by Hempfire. These campaigns exemplify creative strategies that effectively promote products or services while maintaining compliance with industry regulations. Moreover, compliant marketing options and targeted advertisement placements help businesses reach their target audience effectively while adhering to stringent industry regulations. You probably already know all of this though.

    Steps for Business Owners in Implementing CannaTech

    Implementing CannaTech software requires a strategic approach. The first step is conducting comprehensive user research to understand the target audience's pain points, preferences, and compliance needs. Identifying reputable software development companies with expertise in the cannabis industry is crucial to ensure successful implementation. Creating detailed requirements and features documentation for the initial iteration allows for clear communication and a solid foundation. After the launch, continuous updates, improvements, and feedback loops ensure that the software remains aligned with evolving compliance requirements.

    User Research and Pain Points for Cannabis Software

    User research is a fundamental step in developing software solutions for the cannabis industry. By understanding the target audience's pain points, businesses can align their software development efforts with the needs of dispensaries, growers, and other cannabis-related businesses. Through surveys, interviews, and data analysis, user research uncovers valuable insights, allowing businesses to build software that addresses specific challenges and delivers meaningful value.

    Understanding pain points related to compliance, inventory management, customer experience, and other operational aspects helps businesses create software solutions that effectively solve industry-specific problems. By incorporating user-centric design principles, businesses can ensure their software aligns with the workflows and requirements of cannabis industry stakeholders.

    Selecting Reputable Software Development Companies

    Choosing a reputable software development company is crucial for successful implementation and deployment of CannaTech solutions. When selecting a development partner, businesses should consider the following factors:

  • Industry Expertise: Look for software development companies with experience in the cannabis industry. Their familiarity with compliance regulations, industry best practices, and specific challenges will streamline the development process and ensure compliance is at the forefront.
  • Reputation and Client Portfolio: Research the reputation and track record of potential software development companies. Examine their past projects, client testimonials, and case studies to evaluate their capabilities and commitment to delivering high-quality software solutions.
  • Collaborative Approach: Seek a development partner that values collaboration and partnership. A strong working relationship between the business and the development team fosters effective communication, transparency, and shared goals, leading to successful outcomes.
  • Thorough Requirements and Features Documentation

    Before starting software development, thorough requirements and features documentation is essential. This documentation acts as a roadmap, ensuring clarity and alignment between the business and the development team. It should include:

  • Functional Requirements: Clearly define the core features and functionalities that the software solution must have. These requirements should address compliance, inventory management, customer experience, and other specific needs identified through user research.
  • Technical Specifications: Outline the technical requirements of the software solution, such as platform compatibility, integrations with other systems, scalability, and data security measures. This ensures the development team understands the technical constraints and can deliver a robust and reliable solution.
  • Milestones and Timeline: Define project milestones and establish a realistic timeline for development, testing, and deployment. This helps manage expectations and keeps the development process on track.
  • The Iterative Process of Software Development

    Software development is an iterative process that involves continuous updates and improvements even after the initial launch. This process allows businesses to respond to evolving compliance regulations, industry trends, and user feedback. By embracing an iterative approach, businesses can:

  • Gather User Feedback: Encourage user feedback to identify areas for improvement and gather insights on user experiences. Feedback can be collected through surveys, user testing sessions, and analytics data.
  • Prioritize Updates and Enhancements: Based on user feedback and changing industry requirements, prioritize updates and enhancements to the software solution. This iterative approach ensures the software remains relevant, compliant, and aligned with user needs.
  • Continuous Training and Support: Provide ongoing training and support to users to ensure they maximize the benefits of the software solution. This helps businesses stay connected with their user base, address any challenges, and continuously improve the user experience.
  • Nexrage Studios X ArtisIQ

    Our team, in collaboration with the Artis team, took into account all the factors mentioned in this article while developing ArtisIQ—a fully compliant and contactless Point of Sales System. This ongoing project showcases our commitment to meeting regulatory requirements and providing innovative solutions. To learn more about ArtisIQ, you can find additional information on Forbes or visit the Artis website. We also invite you to explore our case study for a deeper understanding of our capabilities. If you have any questions regarding cannabis-related software or HealthTech solutions that encompass similar regulations and compliance laws, feel free to reach out to us. We're here to assist you!


    The cannabis industry's journey towards compliance and efficient operations is being transformed by the power of technology and CannaTech solutions. By embracing compliance-focused software, dispensaries and businesses can navigate the complex and ever-changing regulatory landscape while streamlining operations, reducing risks, and driving long-term success. With compliance at the forefront and CannaTech as an enabler, the cannabis industry is poised to thrive in an increasingly regulated and digitized world.