5 Challenges Your Cannabis Tech Startup Needs to Solve: 2020 Edition


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While this creates diverse income streams and new markets, here are key challenges your tech startup needs to be aware of, before you can start selling weed, legally.

Liability, licensing and law

With a heavily regulated industry like cannabis, it’s always your fault.

It must be ensured there’s enough “cushion” in your capital funding to implement changes that may arise on the fly. Until it has become “mainstream” and established, weed legalisation is likely to be implemented in steps, and constantly evolve through different iterations and public ‘pilots’. All of this means, you better have a solid legal counsel who are proactively monitoring evolving weed laws in your area.

For a tech startup leveraging e-commerce, strong cybersecurity efforts are an inevitable prerequisite given the potential liability that may arise from the trade.

Identity and age verification

Online identity verification products, as they exist today, provide enough “indication” of whether a person behind the computer are likely to be who they say they are, but do not absolutely guarantee it. This applies to both Knowledge Based Authentication (KBA) workflows used by major credit bureaus, as well as AI-powered ID document verification products. The latter can indicate when an ID appears to be ‘forged’ but can’t ever, fully rule out that it isn’t, unless a public-facing authoritative database exists to verify the document by its issuer.

For an e-commerce startup planning to distribute marijuana completely online, stringent checks need to be in place to reliably verify your customer’s age and identity to ensure that the person receiving the order is legally entitled to it.

Medical prescriptions

The process of ID verification is further complicated in jurisdictions where only medical use for cannabis is legal for the time being, and recreational isn’t. That’s when an additional step is imposed on your startup to handle and verify prescriptions.

Will prescriptions be electronically dispatched from a patient’s doctor to your pharmacy? Are the doctor’s registered in your system? Or would you rather ‘partner’ with an existing pharmacy and merely act as a provider?

There is a lot of medical terminology and policies here to be aware of. What about the electronic platform that will handle this workflow? Will it comply with patient confidentiality and privacy laws, such as HIPAA (in the U.S.) and GDPR?

Geographic restrictions and VPNs

Internet as we know is a giant virtual bubble. A person in a particular area can easily pretend to be based in a completely different country, hiding behind a VPN. Granted, technologies exist today, as used by video streaming websites, to detect and ‘blacklist’ VPNs, they do not always work. VPN IPs can be ‘dynamic’ and the providers frequently update their global server lists, thereby introducing fresh IPs in the pool.

For your marijuana business this means, a person or an ID thief based in a U.S. state which forbids marijuana at every level, could instead order from a state or a jurisdiction where recreational use and online sales are widely permissible, while, if applicable, using forged identity document ‘scans’ and somebody else’s information to pass the security checks.

Even if your online pharmacy only delivers in certain areas, the loopholes around the postal delivery system could be exploited to bypass the geographical restrictions altogether.

Secure postal delivery

I’m not talking about merely dispatching certified, signed and tracked deliveries, but having enough verification in your workflow so that somebody does not take advantage of a “forwarding address” or post office redirection policies. This one is intuitively harder to implement.

Building on the previous point, a person could provide their “shipping address” as that of a mail forwarding company based in an area where ordering marijuana online is legal. The forwarding company then ‘blindly’ redirects the package further to the person in another state. Alternatively, post office based ‘redirection’ can be used to bypass any secure delivery workflows your company may be relying on. If all else fails, there is always the good ol’ pal receiving packages on one’s behalf.

Conclusion

In conclusion, the idea behind starting an online marijuana startup is a thrilling one which brings in great traction from different communities and a tremendous business opportunity. But to step into this relatively untested territory without addressing some of these challenges wouldn’t be a smart idea.

Previously published at https://medium.com/@AkshaySharmaUS/5-challenges-your-cannabis-tech-startup-needs-to-solve-in-2020-dd9616998175

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