The Cannabis Industry is Growing and So Are the Fines: Learn How You Can Upgrade & Safeguard Your Business with Identity Verification
November 3, 2020
The cannabis industry as a whole, for medical and recreational marijuana, is growing substantially; retail sales are expected to reach at least $15 billion USD by the end of 2020 in the United States alone and could reach over $37 billion USD by 2024. As with all regulated goods and services, cannabis retailers face many challenges and strict consumer safety standards with which they must comply. As the industry continues to grow, scaling verification capabilities can be a challenge.
4 Issues Cannabis Retailers Face
There is no shortage of challenges cannabis dispensaries face both from a regulatory standpoint and in day-to-day operations that can result in a negative reputation, loss of customers, fines and suspensions that lead to a significant loss of revenue.
1: Expensive Employee Mistakes
If an employee mistakenly violates regulations such as selling to underage or letting in looping or smurfing customers, the business itself is liable. Despite any training received, there’s no guarantee that employees will be able to accurately identify fraudulent attempts by customers when dependent on manual ID check and barcode scanning.
Retailers are restricted in the amount of cannabis they can sell per transaction or day (depending on the state) to consumers, but some consumers try to take advantage by looping—making a purchase at a dispensary for the maximum amount allowed, leaving and then returning shortly after to the same dispensary to attempt another transaction. As a result of illegal practices, including looping, owners of a major dispensary chain in Colorado were charged with jailtime, millions in fines, as well as revocation of marijuana business licenses and a 15-year banishment from the industry in the state.
In addition to looping, smurfing is another issue dispensaries face when it comes to customer fraud and complying with the amount of cannabis they can sell per person. Smurfing is when customers make a purchase at one dispensary and then go to other dispensaries on the same day to make more transactions, usually using the same ID and for the purposes of selling the marijuana on the black market.
4: Underage Sales
Whether through mobile, delivery or on-premise, selling marijuana to underage consumers is a significant risk that dispensaries do their best to avoid. This isn’t always possible, as was the case for a cannabis dispensary forced to pay a $2,500 penalty for underage selling, an added fine for having minors in a restricted area and had their retail license suspended for 15 days due to “human error” which cause a much more significant loss in revenue due to being shut down.
It’s Time to Upgrade Your Business
Many cannabis retailers use manual ID checks, UV pen lights or barcode to verify IDs, but rather than secure one’s business, these practices are key facilitators in regulatory violations and can lead to license suspensions and fines. In many cases, barcodes attached to a fake ID will still work. Retailers that are looking to expand operations can no longer afford to use barcode scanning and manual ID checks as their primary source of identity verification.
Cannabis dispensaries that incorporate automated identity verification solutions into their operations will be able to:
- Eliminate manual review and underage selling (no need for employee training)
- Create a faster and more frictionless customer experience (no long lines or wait time)
- Comply with regulatory customer purchase limits (prevent looping and smurfing)
- Create contactless workflows to keep their business and customers safe (adhere to COVID-19 safety standards)
- Improve customer experiences by modernizing access, check-out and decreasing wait time/lines
In today’s digital age, customers expect streamlined and frictionless user experiences, whether they are transacting remotely or in person. Transitioning to automated identity verification will upgrade and safeguard your dispensary, especially when it comes to age checks and operational compliance.
With Acuant’s Trusted Identity Platform, cannabis dispensary owners can trust that their business is secure and compliant. Contact us to learn more about how Acuant’s AssureID™ provides accurate document authentication and age verification in seconds for mobile, web and on-premise workflows, and our InfinitID® provides an out of the box solution for on-premise ID scanning and age verification.