Cannabis licensing in the cloud
- By Stephanie Kanowitz
- Jun 27, 2019
To help state and local governments navigate licensing for marijuana growers, business and users, NIC, a provider of cloud-based digital government services, has acquired a platform provider that specializes cannabis and hemp licensing technology.
Announced last month, the acquisition of Complia positions NIC to offer customizable licensing services that meet the widely varying requirements that state and city governments are putting in place as the legalization of marijuana use spreads nationwide.
The speed at which state and local agencies must codify those regulations and incorporate them into the licensing platforms they already support, “has put a higher burden on the solutions that they are choosing," said Doug Rogers, senior vice president of NIC’s national business development team. Licensing platforms must not only support "a wide range of capabilities, but to be able to deliver and align with their requirements at a very, very fast pace,” he said.
Such highly regulated industries inherently bring complex licensing requirements, but the cannabis and hemp market is especially tricky.
“Each state operates almost like its own little country,” said Alex Valvassori, a Complia cofounder and NIC Licensing Solutions general manager. “There’s no interstate commerce, and as a result, everywhere these businesses want to operate… they’re playing by a different set of rules.”
The solution’s cloud-based platform tackles three primary aspects of cannabis regulation: business licensing, patient and caregiver registration as well as employee credentialing. Each state may have a different number of license types covering areas such as cultivation, processing, transportation and delivery. For instance, California has three licensing authorities that regulate different aspects of the cannabis industry, while Illinois has three license types, Valvassori said. NIC’s licensing solution is highly configurable, providing a form that can be changed in real time depending on what is needed for each type of license.
It also offers employee credentialing, which tracks authorized workers as they usher the product through the cultivation, marketing and dispensing processes.
Patients and caregivers make up the highest volume of cannabis registrants, Valvassori said. For instance, Oklahoma alone as more than 100,000 registered users of medical marijuana. The platform can speed the process for issuing cards that patients need to get their doses.
What’s more, the platform integrates with NIC’s payment processing solution so that the experience is seamless to users but secure and transparent to state agencies, Rogers said.
“Every agency should be cognizant of both the technology and how adaptable it is to their processes and their requirements,” he said. “They certainly need to be very comfortable with the level of security that is provided not only by the solution itself but by the organization that is supporting the solution, and then they need to completely understand what the impact on the constituent is.”
Something else complicating licensing for the industry is how quickly some states require licensing to begin once legislation passes. For instance, a ballot initiative that passed in Oklahoma last year allowing cannabis for medical use stated that a medical marijuana license application must be available on the Oklahoma Department of Health’s website within 30 days of the measure’s passage and that a regulatory office to receive applications for medical marijuana licenses must be operating within 60 days.
After contracting with Complia last July, the state had the system in place in 42 days – within the company’s typical 30- to 45-day time frame for implementation, Valvassori said.
Although Valvassori expects federal regulations to take root eventually and provide uniformity, right now states are largely on their own. They also vary widely in their technical know-how for licensing in this area, he added. For instance, when he was the chief compliance offer at a marijuana business, Valvassori had to complete licensing paperwork by hand and have it reviewed by armed law enforcement officers.
“We really had to build a highly configurable and scalable platform,” he said.
About 33 states have legalized medical marijuana, including 10 and Washington, D.C., that also legalized recreational marijuana. Facilitating this, the 2018 Farm Bill legalized hemp as an agriculture commodity and removed it from the list of federally controlled substances. However, it still requires a state license to cultivate or process.
Editor's note: This article was updated June 28 to clarify that the licensing platform is now an NIC solution.
Stephanie Kanowitz is a freelance writer based in northern Virginia.