Cannabis and Tech — The Digital Rules and Regulations
By: Univers Labs
Tags: Tech, Website Development, Cannabis, Apps, Digital

Heavily Regulated

While the use of medicinal and recreational marijuana is legal across several states in America, it is still illegal under federal law. These grey areas of legality means the industry is heavily regulated. These heavy regulations make it particularly challenging for companies to sell and market their cannabis products. There are a number of areas regulators must address throughout the marijuana supply chain from granting licenses, retail sales, distribution, and ensuring marijuana products are safe for consumption.

Mertc, which stands for Marijuana Enforcement Tracking Reporting Compliance, is one of these regulatory organisations, which regulates the whole supply chain of cannabis in 13 states. Mertc tracks, traces, reports and identifies trends within the cannabis market, to help monitor it. Any companies entering the legal cannabis market must follow the rules and regulations of Mertc (or any other regulatory system depending on which state you occupy). Due to this heavy regulation within the industry, it can make it particularly difficult for companies to take their cannabis products to market.

Credit and Debit Card Transactions

If cannabis companies are looking to sell their products online, there are several obstacles they must overcome to create a better online experience for their consumers. Because marijuana remains illegal under federal law, banks are unwilling to incorporate it as it is considered a high risk industry. While some marajuana organizations claim to accept major credit and debit cards, many of these card networks state that they do not allow merchants to use their cards to pay for marajuana products. This de-incentivisation of card payments makes it a predominantly all-cash industry, which makes it incredibly fiddly and hard for organisations to grow. This all-cash industry has forced marijuana companies to explore new ways to make financial transactions which are easier for them and their consumers.

We touched on the emergence of cannabis cryptocurrencies such as Hempcoin and PotCoin in our previous article. Cryptocurrencies provide cannabis retailers with alternative payment method to cash, but many within the industry haven’t adopted it. This is mainly due to cryptocurrencies price volatility and the heavy regulations placed on cryptocurrencies which provide even more paperwork and hassle for cannabis companies. Companies which are looking to enter the legal cannabis industry must consider how they can offer a seamless payment experience for their consumers. Payment gateways such as Stripe can integrate card payments easily for digital stores.

Know Your Customer: You also need to know that the person who bought the cannabis product is the person who receives it and this needs to be proven.

App Stores & Delivery Methods

As the sale of cannabis is predominantly transferred through cash payments, retailers are faced with the tricky task of how they receive this cash if the transaction takes place online. The emergence of marijuana delivery apps such as Eaze and Budly, have made the market significantly more accessible to consumers, enabling retailers to accept cash payments door to door. However, cannabis delivery apps now face increasing pressures as Google and Apple have banned any apps which help facilitate the payment of marijuana.

While this may come across as a huge set back to cannabis retailers looking to sell their products online, all hope is not lost. We recently wrote an article weighing the pros and cons of progressive web apps (PWA’s) which highlights how they can be advantageous if apps stores provide a barrier to entry. PWA’s are web apps which enable users to download them onto their phone much as you would with a traditional app. PWA’s eliminate the need to deploy the ‘app’ to the app store while still creating a seamless, interactive and app-like experience for its users.

Cannabis Digital Marketing

For marijuana marketing applicants, a local license must first be acquired to secure a state permit. But marijuana business licenses are granted only to a limited number of applicants. This can prove challenging within the highly competitive and already saturated market.

Once a company has obtained a marijuana marketing license, it’s still incredibly hard to advertise your product online. Digital advertising such as Google Ad’s and social media, including Instagram, Twitter and Facebook strictly prohibit the promotion of legal cannabis and its associated products. However, marijuana companies are finding innovative ways to promote their products without breaking the digital advertising rules.

Conclusion

It’s clear that while medicinal and recreational cannabis use is becoming more accepted among individual states in America, it is still incredibly challenging to enter this market within the digital realm due to how heavily regulated the industry is. Fundamentally, any company entering into this market must follow the rules on the cannabis regulatory system. While this may appear to be a daunting sector to enter in to, new emerging technologies are helping to make the legal cannabis industry more accessible and a viable business opportunity.