CANNABIS IN NEW YORK – The rules may be complicated, but there’s a surprisingly simple solution

May 23, 2023

A new market with new rules

New York’s entry into the legalized recreational cannabis market represents a massive opportunity for both cultivators and operators. But it brings with it a host of challenges and significant risk given the intensity and complexity of the state’s regulations around cannabis marketing, labelling, and packaging—one of the country’s most complicated set of rules. DCM has the solution for getting to market quickly and compliantly.

To win the race to consumers’ hearts and wallets, both single-state and multi-state operators must have an advanced digital platform in place that can handle large volumes of complicated, variable data and execute on demand. Plus, they need the ability to apply rotating messages and must have auditing capabilities to demonstrate compliance. Without this, they face a long list of challenges that will slow them down, or potentially even shut them down.

Operational challenges and risks

As with many highly regulated industries, the complexity of the regulations reflects the complexity of the products themselves. The innumerable variations of cannabis formulations contribute greatly to the rules and requirements that govern its production, particularly for branding and labelling: potency of THC and CBD, milligrams per serving and per package, number and recommended size of servings, traceability of product batches and strains, the cannabis symbol, standard health warnings, and more—all of which have to fit onto small packages.

Cannabis operators that do not have an adequate digital marketing platform or labelling/packaging solution will face significant challenges, risks, and costs due to:

Manual information processes that are slow, labour-intensive, and highly error-prone
Production bottlenecks due to labelling inefficiencies
Long lead times that significantly hinder speed to market
Lack of brand compliance and consistency across markets
Obsolescence costs due to pre-printed labels for products that do not perform well in market
Potential regulatory fines resulting from non-compliance

And then there’s one of the hardest to execute regulations: the mandatory rotation of health warning messages, which must oscillate across all product SKUs with even distribution throughout the calendar year. This requirement alone adds incredible complexity to the production process. To circumvent this challenge, some operators are choosing to put all four warning messages on every package. It’s an understandable decision given the complexity of executing and tracking rotating messages, but one that leaves them open to risk, since the regulations specifically state that this approach is not allowed.

Jim Ferreira, JD, is a trained lawyer and the SVP of Business Development at DCM. Based on his experience in the U.S. cannabis market, he has one crucial piece of advice for cannabis operators:

“Take a proactive approach to your business needs and think about tomorrow, not just today. Maybe for now you’re fairly small and only in one state, but what are your expansion plans for the future? Where will you be operating and how much complexity will this add? Will you be able to reliably guarantee compliance with multiple sets of regulations? As we all know, growth brings great reward but also great risk. To remain competitive, you need to be sure you can get your products to market quickly and compliantly, especially in strict markets.”

Jim Ferreira, SVP of Business Development

Consider an investment advisor who needs to print portfolio information for in-person client meetings, or produce digital documents to email securely.

“You could have a universe of hundreds of investment products, and need documentation for 15 of those for a meeting,” Mr. Ferreira explains. “DCM can construct all these documents in a compliant manner, so that advisors can do what they do best: advise their clients.”

DCMFlex: Created for FIs, engineered for cannabis

DCM serves the branding, marketing, and communication needs of 8 of the top 10 cannabis cultivators in North America. What got them there? 25 years of experience supporting the highly regulated financial services industry—and a uniquely powerful solution. DCM leveraged its knowledge of best practices in the FI space and reconfigured its proprietary technology platform, DCMFlex, to serve the complex needs of cannabis clients.

“DCM’s solution was designed, tested, and refined with financial institutions, and then carefully re-engineered for the cannabis industry,” says Shelly Anwyll, SVP North America Emerging Markets, DCM. “We have worked with 80% of the Canadian cannabis market since the country’s federal legalization in 2018, and we continue to scale organizations across North America. That’s why we know our solution works and can handle whatever added complexities the NY regulations bring; the technology has already proven to be powerful and agile enough to adapt however we need it to adapt.”

Compliance and speed to market: It’s possible to achieve both

DCMFlex is a marketing automation and workflow management platform that hardcodes brand standards and regulatory requirements into its system—so when labels are produced, all of the correct information is automatically generated, guaranteeing consistency and compliance. This allows cannabis cultivators and operators to focus on running their businesses without being concerned about how to remain compliant.

Key features of DCMFlex include:

	A just-in-time model that automates dynamic labelling components: potency, lot information, barcodes, etc.
	Ability to execute rotating health warning messages and track their usage across all SKUs
	Hard-coded specifications that ensure compliance while allowing other packaging elements to be adjusted
	Automatic cascading of changes across all impacted artwork (while hard-coded specs keep critical information intact)
	Real-time proofing, which minimizes back-and-forth communication and rework
	Customized reporting that provides a single transparent view of all order information to facilitate governance and oversight