SAN JOSE, Calif., April 5, 2018 /PRNewswire/ -- A new report from Freedman & Koski, a nationally recognized consulting
The report was commissioned and funded by Green Bits, the leading retail management and automatic compliance platform that helps legal cannabis companies run their businesses. Freedman & Koski controlled the paper's content and methodology, and its ground-breaking conclusions apply broadly to the sector.
Read the report by clicking here.
The report details the problems that plague the current framework of the industry, which the authors define as "Cannabis 1.0." This framework was marked by a lack of access to banking and other financial services, transportation issues, environmental problems, and water and energy limitations. In addition, as recreational and/or medical cannabis has become legal in 30 states and the District of Columbia, the accompanying regulatory structure has grown into an inconsistent patchwork of state-level laws and rules that pose massive challenges to broad-scale implementation across the nation. Consequently, cannabis regulation is one of the most comprehensive and complex regulatory regimes in the world.
The authors conclude that, to overcome these challenges, all sector stakeholders must embrace technology and innovation, especially concerning compliance with state rules mandating that every milligram of THC be tracked from "seed to sale".
"In the absence of federal laws that impose a national regulatory compliance structure, tech companies are stepping up to provide the infrastructure and tools that cannabis companies need to succeed," Green Bits CEO and Founder Ben Curren said. "Fundamentally, management of retail stores and compliance with state rules is a data problem. Tech companies like Green Bits are best positioned to bring order to the chaos, helping to increase the level of compliance in states by providing the important data that states need to make their regulations effective."
"Cannabis 1.0 has advanced into a multibillion dollar industry because of all the progress in the states, which are, as has often been said, the laboratories of democracy," said Freedman & Koski Co-Founder Lewis Koski, who co-authored the report and previously served as the Director of the Colorado Marijuana Enforcement Division during the state's legalization of cannabis. "The rising influence of tech start-ups in the sector have set the stage for the Cannabis 2.0 era, have helped to remove some of the sector's unpredictability, and will supercharge its future growth. Federal legalization will not happen anytime soon, but tech companies are paving the way through their data-intensive solutions and will ensure the industry is prepared to capitalize on it and grow when it happens."
According to the report, anticipating Cannabis 2.0 requires the embrace of a stark reality – that federal policy lags behind the states and, moreso, the tech solutions that have entered the sector. For example, one of the highest hurdles presented by the illegality of cannabis at the federal level is that no national financial services firms can openly bank cannabis businesses and no large money transfer firms can openly allow electronic transfers. In the absence of policy change, national financial and other players are unlikely to participate in the sector because of unmitigated risks. As of December 2017, there are only 296 banks and 94 credit unions providing depository services to cannabis businesses across the country.
For Cannabis 2.0 to truly take hold, the authors argue that the federal government must comprehensively reform federal laws such as: amending IRS codes so cannabis industry operators are not penalized by section 280E; amending the Bank Secrecy Act and regulations administered by the Federal Reserve, FDIC, National Credit Union Administration, and other agencies to provide access to traditional financial products; and changing regulations so that the U.S. Department of Agriculture and Environmental Protection Agency treat cannabis like other agricultural products and promulgate rules that enhance, complement, or narrow state-level regulations.
"We predict that Cannabis 2.0 is helping to create a tech-driven and agile industry that responds to a shifting and uncertain policy environment, offers workarounds for the lack of federal legalization, and meets the demands of regulators, business owners, and consumers," said co-author John Hudak, who is a consultant at Freedman & Koski and also serves as deputy director of the Center for Effective Public Management and a senior fellow in Governance Studies at the Brookings Institution. "Private-sector tech companies are leading the way, and it's time for the federal government to follow."
About Freedman & KoskiFreedman & Koski (www.freedmankoski.com) is a consulting firm that offers expertise in cannabis legalization to help state and local governments succeed in the cannabis sector.
About Green BitsGreen Bits (www.greenbits.com) is the nation's leading retail management and automated compliance platform built to help legal cannabis retailers grow their businesses. Green Bits serves nearly 1,000 cannabis retailers across 12 states – Alaska, Arizona, California, Colorado, Maine, Maryland, Massachusetts, Michigan, Montana, Nevada, Oregon, and Washington State. In 2017, Green Bits processed more than $2.2 billion in sales through its point-of-sale platform. With more than 60 employees, Green Bits is headquartered in San Jose, California, and has an office in Portland, Oregon.
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SOURCE Green Bits
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