How ERP Solutions Support Accountability in Cannabis Businesses: Page 2 of 3

June 14, 2019

In an effort to promote quality standards and processes, many cannabis companies have implemented CGMPs, prerequisite programs (foundation of hazard analysis critical control points [HACCP]), global food safety initiative (GFSI) certified practices and food safety guidelines that mainstream food and beverage manufacturers already abide by. Applying best practices regarding formula and recipe management, plus quality and product labeling, enables operations to manage security, revision control and meet label claims, especially in regards to cannabidiol (CBD) and tetrahydrocannabinol (THC) levels. An ERP solution supports following of proper procedures and automating documentation to efficiently address food safety concerns.

ERP Solutions Provide Accountability

With an ERP system, every transaction is fully integrated with real-time visibility across all departments of a business—a reality not possible with disparate systems or paper spreadsheets. Automation, recording and streamlining of critical business functions such as cultivation, purchasing, production, quality, inventory, costing, sales, financials and reporting provide the accountability needed in order to improve operations and meet regulatory requirements. A fully integrated ERP solution is adaptable and scalable in order to handle business growth, including addition of product lines and locations, legislative changes and market trends—providing a comprehensive set of tools with the ability to incorporate additional features as needed.

In this emerging industry, software providers with in-depth experience regarding regulatory processes and audit procedures are enabling businesses to maintain oversight and adapt to trends that will inevitably develop in the future. A vendor with an experienced background in dietary supplement and food and beverage manufacturing or other similarly regulated industries employs a breadth of knowledge and a solid foundation for cannabis ERP software without the need to reinvent the wheel. Building on this experience, cannabis ERP providers tailor the platform to meet the needs of the constantly growing cannabis industry.

The absence of readily available financial institutional resources for this industry has placed emphasis on utilizing sound accounting solutions integrated in ERP systems to provide detailed and transparent bookkeeping for an often cash-only operation. With full accounting and general ledger control, companies have a handle on every transaction with proper documentation to avoid legal and regulatory penalties. Comprehensive reporting and analytics functionality provides interactive visualization in key areas of business. With the ability to automate cost control, budgeting and forecasting, the real-time information available in the financial reporting tools gives cannabis companies the information needed to handle the complex reality of the industry and improve their bottom line.


How ERP Solutions Support Accountability in Cannabis Businesses

Traceability and Compliance

Addressing regulatory and compliance issues is a primary concern in the industry, as more U.S. states are legalizing medical and recreational marijuana while Canada’s federally legal cannabis market continues to grow. With each jurisdiction employing its own guidelines and rules, the potential for confusion and law interpretation differences is a strong possibility. Preparation and planning to ensure compliance with new and evolving regulations are a necessity to avoid fines, product recalls, product seizures and other penalties.

The emphasis on traceability is attributed to the Cole Memo which was drafted by former U.S. Deputy Attorney General James Cole, providing guidance for municipalities that have legalized medicinal and recreational marijuana. The memo directs federal legal resources away from prosecution of operations that are in compliance with the local jurisdictions for which it has been legalized. It encourages companies to implement strict inventory control and transparent tracking documentation to avoid enforcement of federal law. In early 2018, then-U.S. Attorney General Jeff Sessions rescinded the memo, and little has changed in regards to companies following its guidelines in the areas of traceability and compliance.

ERP solutions with cultivation management and other supporting functionality provide a centralized framework for forward and backward lot traceability and unique plant ID tracking of marijuana and its derivatives. No matter the stage of the marijuana plant or byproduct, best practices are utilized to provide an audit trail for all greenhouse activities, encompassing tracking, measuring, documenting and reporting from seed-to-sale. Similar to other manufacturing industries, product recall capabilities within an industry-specific ERP solution are essential to keep consumers safe from inconsistent, unsafe or contaminated products. An ERP system streamlines the maintenance of key requirements, traceability, waste disposal, tax payments, customer and product tracking, packaging, labeling and transportation to address the multiple and competing compliance demands as well as jurisdictional changes.