Integration Key To Regulation Compliance For Specialized Crops Like Cannabis

Greg Lafferty, senior account executive with Practical Software Solutions
Greg Lafferty, senior account executive with Practical Software Solutions

Ornamental and produce growers are not unfamiliar with government regulations. There have always been tight controls on the storing and use of fertilizers, pesticides and other hazardous materials commonly found in a greenhouse. On the other hand, there are few government regulations for the plants they grow.

Growers who are considering supplementing their ornamental crops with vegetables or Cannabis will enter into a new world of government regulations. Cannabis growers may need to prove the tetrahydrocannabinol (THC) potency of their plants, whether they’re being grown for medicinal or recreational purposes. Growers with a vegetable crop may need to trace a lot that has come in contact with a certain fertilizer.

“Having the right tool for the job is just as important in the front office as it is in the greenhouse,” says Greg Lafferty, senior account executive with Practical Software Solutions. “There are several tools that can help your company stay in compliance.”

Integration Key For Business Solutions

Several business systems on the market can help with lot traceability, distribution and running a retail or medical facility.

“There are some really good industry-specific products out there especially for Cannabis growers, but they’re really more suited to mom-and-pop operations,” Lafferty says. “Some of these solutions can be run on two desktop computers, with one acting as a server. Most large-scale greenhouse growers have operations that go well beyond the capacity of this sort of setup.”

Many of these smaller, industry-specific business systems do not include native integration with an accounting system, Lafferty says.

“Integration is the key to efficiency, accuracy and compliance,” Lafferty says. “The more data that has to be keyed manually into a system, the greater chance there is to add errors into the operation.”

The fundamental basis of an Enterprise Resource Planning (ERP) system is integration throughout the process, from the initial sales order or forecast, through the manufacturing process and out the door with distribution, all tied to the general ledger. However, there are two distinct types of manufacturing processes: discrete manufacturing and process manufacturing. And not every ERP system is designed to do both, Lafferty says.

Discrete manufacturing is the process of assembling distinct items, like automobiles, chairs, towels, bicycles or brooms.

“We’ve always told our ornamental growers to think of themselves as a traditional manufacturer,” Lafferty says. “Instead of manufacturing a widget, they manufacture a plant. All we needed to do was help customize the ERP system to compensate for the unique challenges of manufacturing a live good, such as different grow times, mass changes to work orders and the life cycle of their inventory. The rest of the manufacturing process is remarkably similar.”

In process manufacturing, recipes and formulas are used to create a product instead of assembling components. For example, when it’s grown to produce oils or medicines, Cannabis growing falls under process manufacturing. Other industries that use process manufacturing include food and beverages, chemicals, paints and pharmaceuticals.

“It is a completely different animal,” Lafferty says. “Because of the intricacies involving formula management, regulatory compliance and other complexities, not every ERP system can support process manufacturing. However, there are a few ERP systems on the market that can handle both manufacturing processes extremely well.”

Outlook For Specialized Industry Segments

As of June 19, 23 states and the District of Columbia have laws legalizing Cannabis in some form or another, according to governing.com. Four states and the District of Columbia have laws that allow recreational Cannabis, while other states are decriminalizing the possession of small amounts of marijuana.

Although these statistics are trending toward more lenient Cannabis laws, everything could change in a moment’s notice, Lafferty says.

“In one election cycle, some or all of these laws could revert back,” he says. “In two years, they could change again. There is some potential for fluctuation in that industry right now.”

On the other hand, the ornamental industry already has opened its arms to the vegetable segment. With consumer demand for grow-your-own climbing, the 2015 Farwest Show dedicated its entire Growers Showcase exhibit to the veggies industry.

“You can’t overstate the impact the vegetable trend is having on the industry,” says Allan Niemi, director of events at the Oregon Association of Nurseries, producers of the Farwest Show. “We thought it was timely and relevant to devote this year’s Showcase to the latest and greatest of vegetables.”

However, if an ornamental grower decided to branch into vegetables or Cannabis, and then decided to drop the segment sometime in the future, it makes sense to not invest in a second business system or one that is so specialized, Lafferty says.

“It is important to invest in a system that is not a one-trick pony,” Lafferty says. “It is extremely important that a grower chooses a business system that not only can operate its entire ornamental operation, but also can expand and contract business segments as their business changes.”

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