Too often we hear new cannabis operators tell us they plan to utilize the Marijuana Enforcement Tracking Reporting Compliance (METRC) system directly to manage all aspects of their inventory and compliance. While on the surface this may seem cost-effective and an easier lift, after a short period of time using only the METRC system, experienced operators find themselves with significant gaps and searching for more.
After all, METRC (and other similar government systems such as LEAF Data Systems and BioTrack THC) are track-and-trace reporting systems with the sole purpose of tracking the movement of cannabis inventory throughout the supply chain. For all cannabis operators, this means logging into the METRC system to record every inventory-related transaction that occurs across your companies, locations, and licenses. It sounds pretty straightforward to maintain complete compliance, right? Unfortunately, it’s not quite so simple.
As cannabis operators begin to scale in product lines, company licenses and headcount the inefficiencies in manually recording transactions become more pronounced, and METRC data entry can quickly evolve into an organizational bottleneck. In addition, with so many moving parts in growing organizations, it becomes difficult to solely leverage METRC to holistically manage your inventory management and business operations. Effectively investing in implementing the necessary processes, tools, and technologies that support the multifaceted aspects of compliance becomes paramount to an organization’s success. METRC (and other track-and system systems) check the box for state track-and-trace reporting requirements but lacks the full breadth of compliance, inventory management, and business operations automation and optimization needed to effectively scale a cannabis enterprise.
METRC is Designed for Track-and-Trace Reporting
The METRC system has been set up by state regulators to track regulated medicinal and recreational cannabis throughout the supply chain. In these states operators are required to maintain accurate inventory in the METRC system, reporting information such as:
- Receiving incoming inventory from suppliers
- Converting raw materials to finished goods
- Sending customer external transfers/manifests
- Creating lab transfers/manifests
- Recording stock adjustments
Being METRC compliant is step one into building a compliant cannabis operation. Certainly, as operators are just getting started with their businesses, it may make sense to first and foremost ensure you are meeting the METRC related track-and-trace reporting requirements of your state.
However, even for small operators, performing the most basic tasks in METRC can be time-consuming. The Roshi Core subscription level was designed with METRC compliance at its core. The Roshi Core platform meets all of the METRC requirements of your state, while also providing you with the conveniences of a modern easy-to-use platform: mobile-first (iOS and Android), barcode scanning, and data reporting. The Roshi Core platform streamlines data entry and reporting into METRC by automatically adjusting inventory, creating packages, and transfer manifest templates.
While there are additional METRC reporting requirements for operators, at the core, the primary goal of track-and-trace compliance is to ensure that at any time you can confidently answer for regulators where your product is and where it came from.
Certainly, with some research this information can be extracted from the METRC system, METRC alone will not ensure you have what you need in the event of a regulatory audit. You will need to ensure you are prepared for performing a recall, notifying impacted customers, and demonstrating batch record documentation to name a few.
Solving the Bigger Issue – Compliance Beyond METRC
Even if you track and manage your cannabis inventory accurately, you may begin to realize that cannabis represents only one part of the bigger picture. If you have other inventory used in your operations (such as non-cannabis ingredients or packaging supplies), you will want to track these as well. If you look at the food, beverage, or drug industries, you’ll see that compliance needs to be a consideration for all ingredients used in producing any finished good. For example, suppose you infuse fractionated oil with cannabis to prepare tinctures or edibles, and your oil supplier calls regarding an issue with a specific lot that you purchased from them? In that case, if you can’t track where that lot was used, you could be faced with the difficult problem of determining what inventory was impacted and may need to be recalled or destroyed. Hopefully, you never get placed in such a dire position, but it unfortunately happens. Understandably, the focus is currently on cannabis compliance. Still, with how time-consuming working in METRC can be, you may not have the time or resources available to expand your compliance oversight to these other areas. However, manufacturers who are making an effort to begin tracking these other supplies will find themselves well-positioned in the event of unexpected recalls from their suppliers. Companies should consider precautions like this a best practice in the event the FDA begins tracking legal cannabis and cannabis products at the federal level, as they may want more information on all of the ingredients used in a product.
Focus on Compliance, Not Data Entry
If you’re already working in METRC, you may find that you’re spending a lot of time performing data entry in their system and not as much time as you’d probably like on other activities. Time constraints and inefficiencies are common complaints among compliance managers. Staff is spending too much time following up with co-workers tracking inventory usage when making products, tracking that on spreadsheets, and then reflecting that information in METRC as accurately as possible. It’s a never-ending game of “catch up,” and it can be exhausting. You could ask your employees to track this information on shared spreadsheets or documents. Still, if they’re not familiar with how you want the information captured, the limited validation in those tools can lead to varying levels of compliance and almost no consistency. Situations such as this can lead to a small team of highly trained team members effectively becoming data managers. Unfortunately, the role of “compliance manager” can become the role of “data entry clerk.” As you begin to consider tracking inventory other than cannabis, the complexities involved in such an approach grow exponentially until mistakes or oversights become almost inevitable.
Creating a Culture of Compliance
Other industries have solved the challenge of compliance by implementing inventory tracking systems embedded throughout all levels of the organization to allow input by line workers in real-time, with robust reporting for management. Unfortunately, those systems don’t take into account the needs of METRC. Thankfully, there are solutions available in the cannabis industry which marry the efficiencies of these inventory tracking tools with the regulatory requirements of METRC. By utilizing these tools, and having team members already working with the inventory record their actions in the software, they become part of the compliance solution, rather than a passive source of data requiring someone to collect, analyze, and record in METRC. In this way, every member of the organization becomes responsible for compliance without becoming an additional burden. The more these solutions can be tailored to your organization’s specific processes and products, the less intrusive they seem. The ideal scenario is when these tools become part of the operational process and not an “extra step.” Suppose the tool also tracks your non-cannabis inventory. In that case, you’ll have a great solution that supports holistic compliance across all aspects of your operation and will position you and your company to succeed in the ever-evolving regulatory landscape of the cannabis industry.
To start, you should implement robust internal processes and procedures to avoid raising any red flags to auditors in the first place. This would involve things like ensuring you have established SOPs, trained employees, robust documentation, and systems in place to manage and monitor compliance. With respect to inventory specifically, performing routine inventory reconciliations ensuring your inventory in METRC accurately reflects your physical stock (meaning no unaccounted cannabis floating around your facility) is your best bet to sail through an audit with minimal findings. Of course, this is easier said than done. Forgetting any of these steps or recording something incorrectly can quickly snowball into a massive number of discrepancies which can cause your organization to grind to a painful halt as you work to reconcile discrepancies. Avoiding this hurdle is why more and more organizations are dedicating full-time resources just to compliance.