The High Stakes of Traceability: Why Cannabis Facilities Need Transparent Supply Chains

What Is Traceability in Cannabis?

Traceability in the context of the cannabis industry refers to the ability to track and trace the journey of a cannabis product from seed to sale. It involves documenting every step of the production process, from cultivation to distribution, to ensure that each product and all their ingredients can be traced back to its source.

Traceability systems are nothing new to traditional food, dietary supplement, and pharmaceutical companies, as well as other types of industries. However, states that have legalized marijuana require the use of track and trace systems for their marijuana licensees. These state-required systems track seed-to-sale which help monitor the movement of products throughout the supply chain and help ensure regulatory compliance. Aside from ensuring regulatory compliance, using a traceability system also helps to safeguard product safety, quality control, and consumer trust. We hope to shed light on the requirement of these systems and reasons to implement track and trace systems, especially if your state doesn’t require such systems.

State Required Marijuana Track and Trace Systems

Marijuana state programs primarily seek to use the same track and trace system to help limit diversion and product sold to the unregulated market. By using a single trace and trace system, all state licensees are held to the same program. By far the most commonly required track and trace system for marijuana licensees is METRC, which stands for Marijuana Enforcement Tracking Reporting & Compliance. If you’re located in a state with legal marijuana, love or hate it, most likely you’re required to use it.

These state-required track and trace programs are a seed-to-sale traceability management and reporting tool used by regulatory bodies and licensees. Each plant is assigned a unique identification tag that tracks the plant’s movement and transfer throughout the supply chain. Tracked activities include the planting, cultivating, harvesting, testing, transferring, processing, and selling of marijuana. A quality and safety downside to using these state-required track and trace systems is that they only track marijuana and do not also track certain quality or safety elements of product traceability. For example, these systems do not track specific original lots and batches of cultivation chemicals, non-marijuana raw manufacturing material, raw material testing results, and so forth.This is when using an additional traceability program or using other methods of tracking come in handy. Other tracking methods include spreadsheets, current Good Manufacturing Practice (cGMP) software system, and so on.

Hemp Company Traceability Systems

Traditional food, dietary supplement, and pharmaceutical industries outside of cannabis are not required to have a specific track and trace program, but most find them extremely helpful. Similar to traditional food, dietary supplement, and pharmaceutical industries, the hemp industry is not required to have such track and trace programs. Although not required for the hemp industry, implementing a traceability program is highly recommended for the reasons listed below.

Reasons for Using Traceability Systems

1. Quality Control and Consistency

Consistency in product quality is paramount in the cannabis industry. Whether for medical or recreational use, consumers expect a predictable and reliable experience with each purchase. Traceability helps maintain this consistency by allowing producers to identify and address issues in the production process quickly. If a particular batch of cannabis exhibits unexpected characteristics or issues, traceability enables the pinpointing of the problem and prevents it from affecting other batches. Tracing a product's journey through the supply chain allows a company to detect inefficiencies or quality issues that might arise. This information can be used to improve processes, streamline operations, and maintain consistent product quality. Many traceability programs include inventory management which can be useful when tracking the amount of inventory within the facility. By tracking inventory, facilities can determine when to purchase materials to not interfere with production, which increases efficiencies.

2. Regulatory Compliance

Cannabis regulations can be complex and vary widely from one jurisdiction to another. Traceability systems help cannabis facilities adhere to these regulations by providing a clear record of compliance at every step. This ensures that cannabis businesses operate within the law, reducing the risk of fines, shutdowns, or legal issues that can tarnish a company's reputation. Companies are held to numerous regulations and standards, such as those set by state departments. Implementing a strong traceability system helps safeguard compliance with these various regulations, reducing the risk of fines, penalties, and damage to reputation.

3. Consumer Safety

Ensuring the safety of cannabis products is non-negotiable. Traceability is instrumental in identifying and recalling products that may pose health risks, such as those contaminated with pesticides, mold, or other harmful substances. In the event of a recall, traceability systems enable swift and targeted actions, reducing potential harm to consumers and minimizing financial losses for the company. In the event of a product safety issue, a track and trace system allows the company to quickly detect the source of the problem. By pinpointing affected batches or lots, a company can avoid an “any and all” recall, which could be debilitating to any company. A rapid response to a recall is essential to prevent illness, reduce liability, and minimize financial losses.

4. Building Consumer Trust

Trust is essential in any industry, and it's especially critical in the emerging cannabis market. Transparent supply chains build trust with consumers by showing that the industry is committed to their safety and satisfaction. When customers see that a company is diligent in tracking and documenting its products, they are more likely to choose that company over others.

5. Sustainability and Accountability

Many consumers are becoming increasingly concerned about the environmental and ethical aspects of the products they purchase. Traceability can also help cannabis facilities demonstrate their commitment to sustainable practices. By tracking the origins of their products, businesses can prove that they source their cannabis from ethical and environmentally responsible growers, further enhancing their reputation.

6. Mitigating Supplier Issues

A traceability system allows companies to track the quality and safety of a supplier’s material. If an issue arises that can be traced back to the supplier or manufacturer, the company will be able to address the problem quickly.

7. Competitive Edge

Prioritizing product safety and quality through a robust traceability program can gain a competitive advantage in the market. This also is true for companies that are getting certain certifications such a cGMP and good agricultural and collecting practice (GACP) in their facilities. These kinds of certifications put your products, and business as a whole, leagues above your competitors and is a huge marketing and exiting advantage.

8. Certifications

Both good manufacturing practice (GMP) and GACP certifications require quick access to materials through the supply chain. All raw materials, growing mediums, agricultural chemicals, ingredients, primary packaging, and finished product must be tracked in a traceability program. Products shall be clearly identified for all stages of production from receival through to finished goods and shall be able to be traced forward to the consumer and traced back to the supplier. Having a strong traceability program supports a quick and less painful product recall experience.

Closing Thoughts

A traceability system is crucial for any company! These systems help ensure product safety, regulatory compliance, quality control, consumer trust, and overall operational efficiency. Traceability systems provide the tools needed to quickly respond to challenges and recalls while also capitalizing on opportunities for improvement and growth.

In the rapidly evolving cannabis industry, traceability is not merely a matter of convenience; it's a necessity. From ensuring product quality and safety to complying with complex regulations and building consumer trust, traceability systems play a crucial role in the success and longevity of cannabis facilities. As the industry continues to grow and evolve, investing in robust traceability systems is not just a best practice but a key strategy for staying competitive and reputable in this high-stakes market.

About the Author

Kim Stuck is the CEO and founder of Allay Consulting. Direct correspondence to: kim.stuck@allayconsulting.com.