Read original article here.

Cannabis is now in 11 U.S. states, plus D.C., and that number continues to grow. Consumers 21 and older can now order cannabis products directly online and have them delivered right to their front door. It’s a dream come true for cannabis consumers, but there has been some controversy over age verification compliance during online transactions.

This new, highly controversial industry already endures scrutiny when cannabis and paraphernalia end up in the hands of underage consumers. As online sales increase, vendors must be able to confidently determine that an individual's digital identity matches the real-world person making the purchase (and that the customer is of legal age).

In fact, among persons aged 18 or older who reported lifetime marijuana use, almost 53 percent report first using marijuana between ages 12 and 17. About 2 percent report that they first used marijuana before age 12. Unfortunately, most identity and age verification methods fall short of that ask. 

Traditional Age Verification Methods Are Failing

Traditional methods of age verification depend on whether the product is being purchased online or within a dispensary. In online channels, companies rely solely on self-reporting, where the consumer simply interacts with a pop-up screen that asks for their date of birth. If the date of birth provided exceeds the minimum age requirement, the consumer can access the website and make online purchases. If the date doesn’t match, they’re denied access to the website.

On the other hand, the process for an in-store buyer is different and a bit more rigorous.

When a new user walks into a dispensary, they are often greeted by a “budtender” who will ask to see the customer’s driver’s license or other government-issued ID. They inspect the ID document, usually take a copy of it for their records, and sometimes ping a third-party database to verify the age and ensure the ID is legitimate. After the customer has been vetted and their age verified, they are usually asked to scan in their ID document on subsequent visits. The newly scanned ID is compared to the ID document on file to confirm it’s a match, and the user can then enter the dispensary and make cannabis purchases.

There are risks associated with either channel.

With the online channel, self-reported information provides virtually no actual proof of age and is unlikely to withstand any type of regulatory scrutiny. The in-store channel is a bit stronger because of the visual inspection of the ID document, but this avenue still lacks definitive proof because these documents can be so easily manipulated or even purchased off the dark web.

If someone provides an ID purporting to be John Smith at 123 Main Street and 21 years of age, how does the budtender know the ID is authentic? Unfortunately, there are so many security features embedded within today’s driver’s licenses, ID cards and passports, that it’s virtually impossible for untrained people to delineate between legitimate and fake IDs.

What Are The Implications Of Mismanaged Age Verification?

There are a number of potential repercussions of mismanaged age verification in the cannabis industry, all of which could hinder the growth of its legalization. Consider the current wave of legislation impacting the e-cigarette and vaping industry. As of September 2019, electronic cigarette users in New York are no longer able to buy such flavors as cotton candy under a new state ban approved by the Department of Health.

On a broader scale, Trump administration officials, alarmed by new data showing a huge jump in vaping by young people, are moving to ban most flavored e-cigarettes, a major development that could result in sweeping changes in the sprawling market. The cannabis industry should absolutely be shaking in its boots.

While many e-cigarette and vaping companies seemingly market their products to younger consumers, the cannabis industry is likely to be embroiled in a similar controversy. The repercussions for mismanaged age verification include hefty fines and brand damage (if local media get a hold of the story). If there’s enough bad press, then many jurisdictions may be forced to outlaw the sale of cannabis within their city or township.

What Can Be Done To Ensure Cannabis Consumers Are The Age They Claim To Be?

Thankfully, our ever-evolving technology market can offer an incredibly accurate and safe means of age verification to not only protect suppliers from scrutiny, but the industry altogether. For example, face-based biometric verification can offer a viable alternative to current methods of age verification.

When combined with advanced technologies, like artificial intelligence and certified liveness detection, these methods can provide powerful disincentive for underage customers using a parent’s ID or a fake ID. In order to assess the validity of the ID, these types of solutions can capture ID documents, extract the data to assess their authenticity, and then use computer vision, machine learning and AI together to verify IDs in real time.
This type of methodology provides a much more comprehensive means validating a consumer’s age and goes further than just your general check box or quick glance at a government-issued ID. This is just one example of a potential solution to a sweeping issue in the industry and a giant step up from the methods being used currently. Many highly-regulated industries — like banking and online gaming — are also resorting to face-based authentication to meet intense regulatory demands, so the cannabis industry is not alone in its struggles.

It’s clearly time to evolve beyond self-reported age verification. This is integral for online sales, but also vitally important at in-store dispensaries, as most budtenders are not fully equipped to identify fake IDs. Dispensaries need to pay attention to the current e-cigarette and vaping climate, and take every measure to stay above the fray, and this starts with reliable age verification. The good news is there are already proven methods, used by other industries, that can provide a much higher level of age verification assurance that can better withstand regulatory and jurisdictional scrutiny.

Cannabis is all the rage these days. In fact, Grand View Research reports that the global legal marijuana market is expected to hit USD $146.4 billion by 2025, meaning your CannaBusiness is either at the forefront of this ever-changing industry, or will be left behind when those projected sales numbers hit.

To avoid getting smoked by the competition, let alone implode due to problems such as lack of traditional credit line access, cannabis start-ups must future-proof their position, evading the exigencies of this growing, yet capricious, market. 

One person who knows this well is Sara Branch. As the director of Technossus, a company renowned for accelerating businesses around tech, she helps advise organizations on how to implement emerging tools like AI.

Drawing on her extensive tech background, as well as experiences advising CannaBusinesses on their go-to market strategy, Branch offers three tips for brands looking to ride the wild weed wave to lasting profitability.

Automate Compliance

Automation is a big AI buzzword, but it also has implications for the cannabis space. Flying by the seat of your pants — or relying on a more analog, human-centric model for statute conformity — is dangerous, especially since rules change with locale. That’s why Branch has this simple advice for maximum adherence: “Don’t risk it. Take a page out of the AI playbook and mechanize processes to stay out of trouble.” 

Trying to be aware of, not to mention being compliant with, so many restrictions without the aid of automation isn’t just financially foolish, but it can lead to other deleterious consequences as well.

According to The Weed Initiate, incurred penalties can outstrip mere financial repercussions. “… You could also face full criminal liability, increased risk of federal prosecution, and expulsion from the cannabis industry.”

“When it comes to compliance software, this can be a make versus buy calculation, similar to a CRM,” says Branch. “Yes, off-the-shelf solutions work well for some companies. Meanwhile, other businesses invest in crafting their own CRM to fit their specific requirements. Neither is right or wrong so long as they serve the organization’s needs.” 

To Branch’s point, a host of software now exists to enable CannaBusinesses’ peace of mind when it comes to activities such as GPS tracking, RFID barcoding, inventory traceability and license management. Whatever form of automated compliance a business elects to use, it’s crucial to integrate it into both the technical and physical environment to garner the best ROI. 

Invest In A Data Infrastructure Around Cash

 Conventional banks don’t lend money to CannaBusiness due to federal restrictions. This poses uncommon problems, but, according to Michael Hawkins, CFO of the Medical Cannabis Innovations Group, “solutions and creative financing work-arounds do exist.”

This is where AI comes in handy, as the more a company can invest in its infrastructure, particularly understanding and tracking its cash on hand, the greater its ability to leverage such data in the future.

To understand how this works in practice, Branch suggests CannaBusinesses construct a roadmap around capital data sets.

“Spend time understanding this guide,” she says. “Not just year one, but years two to three. Make certain the technology you invest in will allow you to collect and mature your data landscape overtime.” 

Not only with this help from a consumer perspective, but also along all supply chain levels. Why? Collecting data about which suppliers are most reliable, as well as which one possess the best product and pricing, will produce patterns allowing for critical insights. Over time, these may lead to additional growth opportunities.

Still unconvinced that the money is in the data? Consider Headset. An analytics service provider, the company offers complex data so that businesses can better track their operations, including point of sale. This is especially helpful in the short-term by preventing out-of-stock debacles. Likewise, as the name suggests, Cannabis Big Data can also serve a useful analytic purpose. This company offers actionable insights stemming from public and proprietary sources to enhance revenue and lower costs.

Create Value Within A Supply Chain

Data analysis is something humans — and now AIs — can do to some extent. However, the real growth opportunity here exists for humans willing to do what they do best — and what AIs may never be to do at all; take action by integrating disparate information sources. Once a company can successfully understand its data, it is in its best interest to identify opportunities to be of help to others, especially along its supply chain.

To aid with this suggestion, senior management should ask itself, “Do we possess analytics we could share with the supply chain for greater insights?” The more (actionable) information a CannaBusiness can offer its supply chain, the more beneficial it will become to its partners, which can lead to greater efficiencies and revenue.

Ultimately, reciprocity goes a long way, especially in cannabis; a growth industry composed of interlocking relationships at every level. The more value a business can bring — not to just its immediate customers, but to its associates — the more poised for success it will be.

“Of all the tips this is the most important because it requires critical thinking,” says Branch. “Too often people misperceive A.I. as an intelligence agent divorced from human interaction. However, the savviest individuals and companies working in AI today realize its greatest benefit is its integration with human activities.”

The more CannaBusinesses begin to view tech as a reliable partner, the better positioned those businesses will be to take advantage of the high times now and in the future.

Companies vying to be the biggest cannabis producer in America or Canada are wasting their time and suffering from a crippling lack of vision. The real play is to make a bid to become the worldwide leader in global cannabis exports — like firms in Jamaica and Lesotho as well as Canada are attempting to do — and the window of time to get in is closing fast, according to one entrepreneur with clear-cut plans to curb that market.

Though recreational cannabis is now available in two countries, medical marijuana is legal in about 50 and not every country produces adequate supply to fulfill domestic demand. Over the long-term, the thinking goes, cannabis will become like any other agricultural commodity and production will shift to the locale where costs are lowest. But so far, the limited export game has been dominated by a few players, most of whom are either occupying a very limited lane or banking on the future.

An example of the former, Bedrocan in the Netherlands, produces cannabis solely for the government authority, which then exports most of it to Germany. Bophelo Bioscience and Wellness, a startup recently acquired by a Canadian-firm and based in tiny Lesotho, the first country in Africa to legalize cannabis, is an example of the latter. Somewhere else is a company like Fotmer Life Sciences in Uruguay, which is hoping to supplant both.

The world’s most popular illicit drug, cannabis boasts at least 263 million users worldwide, according to a New Frontier Data estimate, who in turn consume $340 billion worth annually, most of which is still on the underground market. At the moment, with so few legal companies producing cannabis and even fewer exporting, it’s a seller’s market. That state of play — flux, uncertainty, opportunity — will last only about another five years, said Jordan Lewis, an American entrepreneur who is Fotmer’s CEO.

Fotmer was in the news much last week as the company prepared its first shipment of export cannabis: 22 pounds, headed for medical cannabis patients in Australia. After that, Fotmer hopes to start competing with Bedrocan and begin shipping cannabis flower and oil to Germany, with up to 220 pounds or so per month headed out of the country to global customers, as he told Reuters.

Most of that will go to Europe, which “right now represents the single largest market in the next five years,” Lewis told Supplychainbrain.com.

The window for producers to charge high prices, before a reliable global supply floods the market, is now through 2024, he added, with high THC oils and plants to preserve their value longer than CBD products.

The modest first shipment is a tiny fraction of the company’s capacity. Fotmer currently has government approval to produce up to 10 tons of flower and 5 tons of oil, said Lewis — who added that he’s asking the Uruguayan government to allow him to grow 15 times that, in order to curb that global market. (He’s also shopping for a “large strategic partner” to provide the estimated $60 million of start-up capital needed to grow all that cannabis.)

If Lewis is right and producers in other companies join in, Fotmer may be well positioned to remain competitive, an outlook shared by other analysts. As New Frontier Data noted in a global market analysis released earlier this year, South America is considered a future hub for cannabis production thanks to an agreeable climate and low labor costs.

If countries decide that domestic suppliers are preferable and throw up tariffs, Lewis’s play could disappear. Or perhaps the best praxis is to play off of the incredible hype around the cannabis industry and get acquired. The point is that in a world obsessed with the next big thing, cannabis is very quickly approaching critical mass, and entrepreneurs are slowly catching on.

For those who watch the marijuana stock market, they know that the past few months have not been too kind to investors. All of this could be changing however as new sentiment could begin to go into effect in the near future. With a large amount of research at one’s hand, it becomes much easier to deduce value in the pot stock market. Research seems to be what separates pro-pot stock investors from those who are just starting out.

With so many different pot stocks to watch, it seems as though the industry is just getting started. The amount of value in the pot stock market is high, but the value seems to be hidden at certain times. This again can be found using ample amounts of information which is highly available on most sources. As we continue to traverse the future of the pot stock market, the hopes are high that we can see some more value come into the industry.

A Canadian Pot Stock to Consider

Stillcanna Inc. (STIL Stock Report) (SCNNF Stock Report) is one of the leading Canadian early-stage life sciences companies currently working on CBD extraction in Europe. The company has stated that their intellectual property should allow them to produce higher quantities of CBD and at a lower cost than most other competitors.

Currently, they have stated that they have an initial extraction contract in Europe that allows them to be the exclusive extractor for Dragonfly BioSciences LLC, a U.K. based CBD supplier. The company has also stated that their recent acquisition of Olimax should allow them to move even deeper into the CBD industry in Europe. For this reason among others, they remain a key pot stock to watch moving forward.

The company recently announced that they have signed into a definitive agreement to supply hemp biomass to the company Sequoya Cannabis. Jason Dussault, CEO of Stillcanna stated that “Stillcanna has always been focused on being a large scale manufacturer and supplier to the global CBD industry. Whether the opportunity is isolate, distillate or biomass, we want to be the industry’s bulk supplier.” This initial biomass agreement is in line with the company’s sales strategy. As they continue to move deeper into the European CBD market, they remain an interesting pot stock to watch.

A Play for the Floridian Market

Trulieve Cannabis (TCNNF Stock Report) is one of the largest vertically integrated pot retailers in the state of Florida. The company also works in other states which makes them a multistate operator, one of the key investments in recent times. With its 36th store opened recently in Florida, the company has been working to build its presence in one of the fastest growing markets in the industry.

The company is also already showing profits which is not something many other pot stocks can say. The hopes are that they can continue to expand into the Florida market as well as other states, which should help them to gain a larger grasp on the pot stock market moving forward.