Marijuana inventory tracker seeds trust in new ventures
The business of dispensing legal marijuana is in its infancy, where it is likely to stay unless regulators, bankers and newly licensed sellers have technology in place for tracking the sales activity, compliance and the credit worthiness of the new businesses.
Lately, new tools have become available that would allow banks to become more informed about the how licensed marijuana vendors operate, a key to gauging the risk they will take on in supporting the new businesses.
"Currently, banks are not taking cash deposits due to fears of money laundering and the potential illegality of the product," said Steven Siegel, chief executive officer of BioTrackTHC, a marijuana point-of-sale system that can track and synchronize cash flows with supply chain.
Early this year, the Justice and Treasury departments gave banks permission to work with legal marijuana vendors under the condition that information be made available on how well the vendors were following regulations for the new industry.
Under those rules, banks must review state license applications for marijuana-selling clients, understand the types of products to be sold and monitor public sources for any negative information about the business.
“The more information that’s out there, it helps [the banks] know their customers and gives them an opportunity to identify behavior that’s not what they thought it would be,” Scott Jarvis, director of Washington State’s Department of Financial Institutions told the Associated Press.
After Washington, Colorado is the only other state that has made marijuana sales legal. But so far Colorado has not made sales data available online. And right now, tools for ensuring such transparency are not widely available.
However, in the last few weeks, the Washington State Liquor Control Board (WSLCB), which will oversee marijuana sellers in the state, has begun posting information on sales activity of local licensed marijuana businesses, as well as warnings issued to non-compliant businesses, the AP reported.
While the information is available online, the technology for accessing and updating that information has been low tech. Sales activity, for example, is offered via an Excel spreadsheet download from the WSLCB website.
More recently, however, Washington has taken information gathering and compliance monitoring to a new level with the use of BioTrackTHC, a “seed-to-sale traceability” system that lets the state track marijuana sellers’ businesses in detail throughout the supply chain.
BioTrackTHC, developed by Florida-based Bio-Tech Medical Software, tracks every stage of the movement of the product through the seller’s business using a system of bar coding and account tracking, according to the company.
“We can track the sale backwards and prove that each deposit is directly tied to a vetted, registered product; that the money has been appropriately taxed; and that the sale is tied to a registered, licensed business and much more,” said Siegal.
To ensure compliance with Washington State regulations, the traceability system will provide functionality to assist with analysis of information, auditing operations and enforcement, said the WSLCB, which is also offering links to application programming interfaces in JSON and XML.
The system works by tracing the product as it moves from stages of growth through preparations for its sale.
In doing so, barcodes are applied to every plant, which are scanned as the plant moves from grow rooms to retail spaces. The resulting data trail can help vendors streamline their business and help regulators with analysis, auditing and enforcement of the fledgling industry by tracking aspects of the supply chain.
BioTrack's program assigns unique numerical identifiers to each part of the business's operations and inventory movements. The assigned value is extended to cover exact financial denominations made through the sale of each product, which can then be tied to individual bank, credit card or debit transactions.
"The state recognizes this as legal revenues because they are tied to legal inventory," said Moe Afaneh, division project manager of BioTrackTHC. "This reduces the likelihood of both the bank handling laundered money, as well as the bank handling sales of illegal inventory."
Connect with the GCN staff on Twitter @GCNtech.