Data privacy and the cannabis industry. The growing intersection of the two is yet another sign that cannabis has come a long way from the black market. As more states legalize cannabis for medical and recreational purposes, and the industry faces greater regulation and tracking, data privacy becomes increasingly important in the cannabis world.
The cannabis industry is the fastest-growing industry in America. By 2020, legal cannabis sales are expected to exceed $21 billion. So it should come as no surprise that technology companies are now staking claim to the action. A number of software developers from small shops to Microsoft are developing various compliance and other software tools to keep up with the ever-shifting landscape of state-by-state marijuana regulations and related federal policy changes. And with such heavy regulation and tracking comes the collection and storage of personally identifiable information (PII) and other sensitive information.
Flowhub, a Denver-based start-up founded in 2015, for instance, offers a mobile device for scanning RFID plant tags, a point-of-sale (POS) system for dispensaries, and a cloud-based software-as-a-service (SaaS) platform. Its POS system automatically reports to states’ compliance tracking systems using application programming interfaces (APIs). All daily sales data can be uploaded automatically into the state’s database in one step. Dispensaries can have their customers’ ID’s scanned for birth date and state of residency, checking them into the system, and confirming what they can buy based on state-specific regulations that have been entered into the system. In essence, the goal is to track every plant, product, and person associated with the production and sale of marijuana, all the while maintaining legal compliance. A veritable PII hot spot.
Tech-giant Microsoft has also announced that it is working with Los Angeles-based start-up Kind Financial on software that will help state governments track the legal marijuana business and ensure compliance. Microsoft has offered up its Azure cloud platform, a suite of cloud services designed to meet the stringent security requirements of government agencies, including the U.S. Department of Defense. Microsoft’s heavily publicized move into the cannabis industry no doubt signals a trend towards cloud operations for the cannabis industry, implicating data privacy and security issues for years to come.
As the cannabis business keeps booming, and tech meets cannabis in still other areas—e-commerce, mobile and on-demand, advertising technology—data privacy will play a starring role. Cannabis businesses should consider implementing privacy policies if they have not already done so. They should also ensure that they have proper, up-to-date security measures in place, including data-breach response plans in the event of a cyberattack and adequate employee training about the importance of security. The cannabis industry has a long, promising road ahead, and for better or worse, data privacy is along for the ride.