The cannabis industry comes with its own set of inherent security risks, especially in vertically integrated grow operations. Risks involved range from the basic physical security of a facility to intangible problems with cybersecurity, compliance, and along the supply chain. Simple physical additions such as full-time security or alarm systems can sort certain issues. However, abstract risks like cybersecurity can be more challenging to guard against. Regardless, minimizing risk can help to save money and headaches and ensure that a business can operate smoothly and efficiently.
Maintaining Supply Chain Security
The degree of security risks can vary widely depending on the stage of the supply chain. Logistics are largely the same as most traditional businesses, meaning supply chain security within grow operations actually looks quite similar to any other industry.
Protecting the supply chain is a high-level concern in cannabis, especially in relation to seed-to-sale, as each plant must be accounted for at every step of the way. Physical threats such as inventory theft can be managed with multiple backups and physical presence (ie guards, cameras, and alarms). This will be discussed in more detail later in the article. It’s important to note that each step of the supply chain comes with its own set of risks and with that solutions to mitigate them.
● Cultivation Security
In terms of cultivation security, it’s important to be vigilant for those waiting for you to discard products as well as theft in the grow. Burglaries are common in the cultivation side of the supply chain. However, it’s more difficult to take products from cannabis cultivation operations, as oftentimes, these products are still raw materials or works in progress, which would require extensive time to procure any significant volume.
Regardless, theft can still occur, and physical damage often includes broken doors and infrastructure as well as theft of important and potentially expensive tools used in the cultivation process. Additionally, while it’s often more difficult for security breaches to occur at indoor cultivation facilities, grow operations are susceptible to theft if the grow is located outdoors. Therefore, it’s quite important to create a secure perimeter in order to ensure that burglary risk is mitigated.
● Processing Security
For indoor grow operations, the processing stage of the supply chain, is where folks should be most concerned about burglary of product. Since the product at this stage is smaller, condensed, as well as often in packaging, it’s much more susceptible to security risk. Further, processing equipment is quite valuable, as it is usually quite expensive, enhancing risk theft. At this stage in the process, it’s important to have a physical security presence, as well as trusted individuals in the production process. Tracking products is also vital in this step to keep up with inventory, ensuring everything is in its proper place.
● Distribution Security
Distribution is also highly susceptible to risks such as theft. Unfortunately, this part of the supply chain also suffers from incidents of contamination and counterfeiting. Since large quantities of products are being handled, there can be a tendency for things to slip between the cracks, especially if detailed records are not kept.
Furthermore, since both product and monetary capital are traveling at this stage of the process, inventory is effectively turned into a moving target. It is crucial at this stage of the supply chain to maintain a changing delivery routine. By limiting the same routes and maintaining smaller order amounts, there is inherently less risk involved. Professionals will be less likely to “go after” smaller orders that involve people because it becomes too risky with a far lower return should something happen to the driver or delivery service, or anyone else involved in the distribution process.
● Retail Security
Finally, there are risks in the retail sector of the supply chain. Retail inventory shrink, associated with retail theft, resulted in nearly 50 billion in losses across the United States in 2018. Since dispensaries are at the end of the supply chain, they absorb almost all of the risks. They have properly packaged goods that can easily be taken from the showroom, and due to limited secure banking options, retail operations are susceptible to cash robberies. If vaults aren’t properly secured and hidden, burglaries can occur easily.
The product is also more easily sellable as it is in final form. Retail security can benefit significantly from physical security presence as well as monitoring systems, alarm systems, cameras, and more. Without these essential tools, retail operations are highly susceptible to security breaches. Beyond the threat of theft, it is also important to have a strong Point of Sale (POS) system as well as work with folks you can trust. Be sure to maintain reviews of the POS system and grant access to your employees at various levels to provide certain individuals with different degrees of permissions.
Preserve Your Data
Data preservation is vital to keeping your grow operations secure. A company has several options for creating a secure environment where data can be safely stored and accessed. While data preservation can be achieved by simply creating archives and copies, there are varieties of cloud-based data storage by large vendors like Google that are as secure as it gets. This is also important for compliance because regulatory entities want to monitor production from seed-to-sale to ensure that products for end consumers are safe. As such, it’s important for this information to be stored in a secure environment like the cloud. Storing data on the cloud must be done safely for your grow operations. By utilizing a secure cloud-based service, you can be sure that your data is preserved and protected. Make sure to have this information protected by secure measures such as password protection and two-factor authentication. Companies should also ensure that the cloud storage that they are utilizing prevents unauthorized access to the account, which can be further done by ensuring this data is encrypted. Data preservation is vital to grow companies to keep track of important records, such as security SOPs, cannabis tracking, and keep other sensitive information secure.
Balancing Cybersecurity Issues in Compliance
Cannabis compliance is incredibly important in an industry governed by tight and necessary regulations. Maintaining seed-to-sale software can keep your business compliant and allow your business to effectively mitigate risks raised by cybersecurity. These programs allow for necessary cannabis tracking and can be effective in keeping each stage of the process, from grow, to harvest, to extraction secure. Sometimes, for wholesalers, when cannabis sales are not advertised and security systems are closed-looped, this can feel like less of a risk. However, cannabis compliance software can further ensure processes are managed securely, all while keeping track of inventory. This is absolutely essential in the cannabis industry in order to keep consumers safe, so it’s important that regulations are strictly followed and that security risks are kept at bay.
Don’t Forget About Basic Physical Security
We’ve gone over the various levels of the supply chain and how to mitigate risks, but it’s helpful to further delve into what this looks like. In terms of physical security, most state regulations require that cannabis facilities have a perfectly developed video surveillance system. These systems should easily integrate and include alarms on doors, as well as motion sensors in areas that are either less trafficked or that shouldn’t have any movement at night. Additionally, the installation of metal bar locking mechanisms on doors can prove quite useful as an economical and convenient safety precaution. Another helpful idea for physical security measures includes having your facility’s alarm system attached to a remote monitoring service, as this helps to manage services elsewhere and is quite cost-effective.
Know Your Limits
No matter how much security you pour into the supply chain, it is impossible to eliminate all potential risks. Property that’s left unattended at night welcomes people for vandalism or to try and break-in. In this instance, physical security can go a long way to help mitigate a company’s risk. Full-time security is definitely recommended, but for something more cost-effective, be sure to invest in some sort of exterior monitoring system. Full-time security could be something as simple as 30-minute patrols or hiring a late-night guard. In terms of retail operations, dispensaries must have full-time security, whether day or night since they are dealing with easy to take goods, cash, and the public.
Make Employees, Property, and Product Top Priority
The most important thing to keep your grow operations secure is to ensure that your employees, property, and product remain your top priority. Some people put full-time security in dispensaries and have them monitor the other facilities remotely with the ability to dispatch security to any location if an issue arises. The key is to protect employees, property and products in the most cost-effective way. For delivery, most have trackers and cameras on cars to dissuade people.
Keeping security operations effective in each part of the supply chain is critical to cannabis grow operations. This comes in a range of forms depending on the part of the supply chain, but also whether you’re looking to protect physical or digital material. While it is certainly a complex issue, taking these steps to make the supply chain more secure is vital to your business and well worth the time, effort, and money that you put into it.
About the Author: Michael Sassano is Founder and CEO of Solaris Farms, one of the largest and the most technologically advanced cannabis cultivators in Nevada. Although his exciting career has led him to be involved in the fast-paced worlds of international real estate development, high-level banking, and cutting-edge tech-investing, it is the cannabis space where Michael Sassano has always shined the brightest. Michael is well known as one of the original movers and shakers in this sector, celebrated prominently in both mainstream business and cannabis media for his contributions to cultivation technology and as an industry futurist with a proven track record of successfully predicting trends and policy directions.
