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As legal cannabis regulations spread across the U.S. and the industry continues to evolve, individual states are instituting cannabis tracking software as a requirement for oversight. Each state — and by extension each system — comes with its own unique set of rules, and responsibilities. Regardless of where you operate, or what part of the plant you sell, legal cannabis operations must comply with their respective state’s chosen system. As companies expand to multiple states, it becomes difficult to find effective strategies. To help navigate the complexities in Washington State, we share our experience with Leaf Data Systems (Leaf) to provide a bit of context on its nuances, its strengths/weaknesses, and to offer tips on how to manage compliance.
Leaf became the official state cannabis tracking software of Washington in 2017 and it is currently owned by the publicly traded company Akerna (NASDAQ: KERN). Much like other tracking systems, including Metrc and BioTrack, Leaf tracks cannabis from point-of-origin to sale. While necessary for the legal market to function, Leaf poses some interesting challenges for Washington cannabis businesses.
After legalization, Washington experienced numerous issues implementing a stable tracking system. It initially implemented BioTrack, then attempted to bring on Metrc the following year. Finally, in 2018, Washington implemented Leaf, which was hacked in the first two days. Then in 2019, Leaf crashed, resulting in a state-wide outage that lasted for four days — a result that cost state cannabis businesses hundreds of thousands of dollars.
Licensed operators in Washington found themselves with an issue: how can they legally operate without the state’s reporting system? Fortunately, other cannabis tracking software seemed to have avoided this shortcoming. Metrc, for example, allows operators to purchase tags in advance. If Metrc fails, businesses can continue to tag plants and reconcile the movement later.
While Leaf still needs a similar fix, it offers a key benefit. Leaf’s open API allows users to report movement inside a validated third-party system without duplicating data entry or creating a process requiring a user to be in two systems. With a single entry point, operators can enter data in their internal systems that automatically transfers to Leaf. This eliminates any wasted time, or potential of human error in data transference — a huge efficiency for both Leaf and its Washington operators.
A Washington company that took advantage of this opportunity is Viva Cannabis, more widely known for their products Dorado Extracts, Fire Five Packs, and Freedom Flower. The company was frustrated by the intensely manual process required to monitor its products: binders, sheets of paper, and spreadsheet after spreadsheet. Viva Cannabis was aware that its process could not keep up with demand if they spent most of their time managing two systems — one for manufacturing and one for tracking cannabis for the state. They wanted to spend their time on their business, understanding costs per gram, identifying quality issues, and optimizing operations. Viva Cannabis was able to implement a solution that efficiently tracked their product and gave them critical financial and operational information about their business.
Viva Cannabis set realistic expectations for their internal team about the resources involved, hired a team, then planned a six-month ERP implementation. Viva Cannabis’s initiative was successful, in part due to the careful selection of the internal and external implementation teams. A few short weeks after implementation, Viva was able to have visibility into its production processes, its costs, and its yields. The cannabis tracking software implemented was a robust manufacturing software with an accounting backbone that was API integrated into Leaf (meaning no more double entry! — goodbye spreadsheets!).
If you are in the market for a technology stack, adopting cannabis tracking software that engages smoothly with state tracking requires thoughtful planning and preparation. Resist the urge to jump straight into a seed-to-sale solution that only addresses the tracking area of your business. Use this time to align your business data with your operations and your costs.
To be successful, cannabis companies need the ability to track products compliantly and derive business insights from their software without the onerous burden of managing two systems. A single software solution allows companies to compare numbers, spot trends, create accessibility to all departments, and enable automatic reporting to the state-tracking systems via open APIs like Leaf. Check the list of validated providers registered with your state tracking system and then carefully consider how and where the applications gather, store, and access data. You can review specific tips on how to evaluate cannabis software here.
Although Leaf Data Systems struggled initially and still needs a workaround in case of an outage, the software’s come a long way. Its open API allows official integrators to hook directly into the system so that users only need to report data in one place. This feature creates a higher level of connectivity for Washington operators that not all states enjoy. If current levels of communication and collaboration continue, Leaf Data Systems is on its way to improving its use in the Washington market.
If you are interested in learning more about Silver Leaf CBC and how it works with Leaf Data Systems and other tracking systems, contact us.
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