7.26.19 – SIW –
As legalization spreads, how to secure the cannabis industry looms as a sticking point for security providers
It doesn’t take much persuasion to convince Tim Sutton that the opportunities open to security professionals in the exploding world of legalized cannabis in North America can be a transformative experience. He is living it.
Sutton has more than three decades invested in the security industry, from both the end-user’s perspective and that of a systems integrator. His expertise spans operational management, loss prevention, physical security and risk assessments to technical security systems design and implementation. He has worked in various security vertical sectors including healthcare, retail, government, manufacturing and property management. Sutton’s professional life, however, changed forever when he joined Sorensen, Wilder & Associates several years back in Illinois as a cannabis security consultant.
“My introduction into cannabis came in 2013 — that’s when Illinois passed a medical cannabis program. I was tapped as a consultant. At the time, I worked in a firm that was a consulting house on one side, and a security integrator on the other side. So, I had a lot of different types of responsibilities. But I wrote security plans for a couple different companies, cultivation centers, and dispensaries. It’s competitive process. They won. That made me an expert. Next thing you know I’m everywhere,” chuckles Sutton, who now works as a senior security technology consultant with Guidepost Solutions, a global company featuring investigators, security and technology consultants, and compliance and monitoring experts.
Prior to joining Guidepost Solutions Sutton worked as a director of security for Greenhouse Group, a medical cannabis dispensary serving patients throughout Illinois. He admits he was overwhelmed when he first joined the organization, not realizing the sheer size of the rapidly expanding cannabis industry. Laws legalizing medical marijuana have been passed in 36 states in the U.S. and in the District of Columbia in one version or another.
“I’m no smarter than anybody else, but I was in the right place at the right time. And it has afforded me many opportunities. One of those organizations wanted me to be their director of security. They didn’t want me consulting for anybody else anymore. So, I did for two years,” says Sutton, who shared his experience in the world of cannabis security last week at a Global Press Summit in Montreal, Canada sponsored by Genetec. “I’ve worked physically boots on the ground in every single aspect of the cannabis industry from seed to sale, technically and literally.”
This Is No Smoke Screen: Business is Booming
According to a 2019 report issued by Grand View Research out of San Francisco, the global legal marijuana market size is expected to reach $66.3 billion by the end of 2025. It is anticipated to expand at a CAGR of 23.9% during the forecast period. Increasing legalization and use of marijuana in medical as well as recreational applications is expected to promote the growth.
The report credits the growing adoption of cannabis as a pharmaceutical product for treating severe medical conditions, such as cancer, Parkinson’s disease, Alzheimer’s, arthritis and other neurological conditions as the prime reasons driving demand for medical marijuana now and in future years. Add to that the increasing need for pain management therapies and growing disease burden of chronic pain among elders is also expected to boost demand.
Even more evidence comes from New Frontier Data, one of the leading cannabis market research and analytics firms in the U.S., which states that despite cannabis still being considered illegal under federal law as a Schedule I drug, estimated revenue from legal cannabis sales were estimated at $10.4 billion in 2018 and created more than 250,000 jobs in the industry. All these numbers are constantly evolving and will rapidly grow once the Federal Government legalizes cannabis, which most experts say will happen within the next three to five years. Conservative numbers predict that the U.S. marijuana industry will generate $17.5 billion in tax revenue by 2030, according to Vivien Azer, a Wall Street analyst who has been handling the cannabis market for Cowen & Company since 2016.
With Growth Comes Regulation and Compliance
The staggering growth of the cannabis industry has outpaced its often-non-existent approach to security and compliance. Chris Rodriquez, the Director of Loss Prevention for MedMen, the nation’s largest boutique cannabis dispensary chain, with 19 licensed facilities nation-wide and more than 1,000 employees, has 26 years in corporate security and has been with MedMen for a year. Like Sutton, he has been taken aback by the exponential growth of the industry which is reflected in his own company’s expansion. With that growth has come a more sophisticated security profile.
“I think as more states come on board, people and businesses are encouraged. They understand the value of the cannabis industry and where it’s going, which is really what got me into it. I think people see what that looks like down the road,” says Rodriquez. “Our founder had never even tried cannabis before, but he saw it as a business opportunity 10 years ago and jumped in with both feet. But with that he demanded that everything be done right and by the book. Security became a huge issue for us as our business has grown across the country. We want to be the model of security proficiency in the industry.”
In addition to its stylish retail outlets, MedMen also operates highly efficient growing facilities that require an integrated and advanced technology footprint. Rodriquez points to his Global Security Operations Center GSOC), along with intel, physical security, retail loss prevention departments, and a crisis management response team that rounds out MedMen’s security and risk management philosophy that is as diverse and multi-faceted as any Fortune 500 company.
While it might be a bit unconventional to some security professionals, this nascent industry is ripe with innovation and opportunities to those who are willing to climb aboard says Rodriquez.
“We’re looking at a lot of different things when it comes to physical security, but we made a decision a long time ago that in terms of all our video management for security and all of our access control was to be run through a single platform. We’re also looking at tracking plants from seed to sale and using something like an RFID solution, just because there’s so much compliance requirements. We need to look at all technology options that allow us to substitute manual labor for an intelligent solution that will help us not only track the plants, but people and other assets as well,” states Rodriquez, who is presently using Genetec solutions among others as his primary security systems vendor.
“We do a good job of keeping our facilities secure. With our access control system coming through one location, and more than 1,700 cameras on the Genetec platform throughout all our cultivations and our corporate offices, it gives us the unified approach we felt necessary to meet all the security and compliance requirement. Our present solution gives us an opportunity to monitor behaviors and allows us to identify things that might put us at risk later. The goal is to also make these solutions seamless in the retail space as well.”
Calling All System Integrators
For security generalist like Michael Elkin, the surging cannabis industry offers unlimited opportunities to those who are willing to seize them. The current Vice President of Partnerships and Sales for High 12 Brands, a cannabis-focused consumer packaged goods company based in Toronto, Ontario, whose goal is to build and operate premier global cannabis brands by developing strategic supply-chain partnerships and taking a consumer-focused approach to product creation and marketing, Elkin has been both a security marketer and a systems integrator. With Canada’s legalization of cannabis across the board last year, he figures security solutions providers are ripe to tap into this market here and south of the border.
The one area he sees wide open for business is systems integration, especially in the U.S. as legalization continues to spread.
“There’s no integration. There’s no proper security innovation in my mind in this cannabis space, and there’s so much opportunity — we talk about it all the time. Like grow rooms, you can integrate humidity control, lighting, access control and video, all with alarm monitoring. Dispensaries can use an analytic for heat mapping and integrators would be able to sell that system to a marketing person saying, ‘Listen, if I could tell you how many people are coming into the store, where they are going and provide you with anti-pass back and authentication at all your entrances in facilities, would you be interested?” offers Elkin, who adds that in one facility that he worked with back during his days as an integrator, his firm was actually able to lower the grower’s insurance rate because of the integrated security and building management system that was installed. “The possibilities are endless. Facilities can integrate their fence detection with their parking and license plate recognition as well and that is something nobody is doing yet. But it’s not happening because facility managers, at least in Canada, don’t understand any of this. Innovation comes with knowledge and understanding what you can do with your system.”
Elkin also figures that for many growers and retail outlets, the lack of serious security planning is still about ROI. He stresses that it is up to security professionals to educate those in the cannabis space and say, “Look, this is the amount of money that you’re going to save if you doing something as simple as integrating time and attendance into your security system or integrating humidity control monitoring. It’s a process and it will change.”
Sutton concurs that in the U.S. security is becoming more than an afterthought. He says he sees the shift among security leaders in the cannabis industry, with the most encouraging sign being that he’s finally dealing with actual security directors and managers manning the helm for the mid-size to enterprise businesses. But he admits that is still the exception more than the rule.
“I’ve seen so many young startups that are run on the fly. They have a cousin that retired from the military or the police and that’s their head of security, we got that covered they figure. And then they go on down to, ‘I got a guy that grows tomatoes every year. He can be my lead grower, or these are guys that have been operating illegally in a basement somewhere for a while, so that’s my grower’. There’s so much unprofessionalism out there. Most of the people who get into this sector are not business people and they are quickly finding out to run a profitable cannabis business legally takes money — a lot of money,” says Sutton, adding most novice growers are shocked when he and his team begin to discuss the cost of security system options and that he understands many perspective clients just aren’t security savvy.
“Business and security are not what they’re about. They know how to grow cannabis, and they’re very passionate about what it can do and how it can help people. That’s all they really have to go on. The business sense is not there. I’ve seen things (security projects) go from a $750,000 security system expense in a cultivation center — 142 cameras, 38 doors initially — to be $1.2 million by the time they were done with all their change orders. The system didn’t grow, but it was because they kept changing everything they were doing. A simple lack of business intelligence on their building process. We see it all the time, but it is changing for the better. And I think Mike is right, the more vendors and integrators work with this industry there will be a better understanding of what security’s role is and how it can improve their product and business future.”
About the Author: Steve Lasky is the Editorial Director of SecurityInfoWatch.com Security Media, which includes print publications Security Technology Executive, Security Business, Locksmith Ledger Int’l and the world’s most trafficked security web portal SecurityInfoWatch.com. He is a 30-year veteran of the security industry and a 27-year member of ASIS. He can be reached at email@example.com.