In the 'New Normal' Youth Safety Is Imperative For the Cannabis Business

In the 'New Normal' Youth Safety Is Imperative For the Cannabis Business 

Today’s Investors and Bankers Are Aware of The Importance of Youth Safety!

Investors have made their stance in the current business investing climate; buy distressed businesses. Performing their due diligence, this 2nd round of cannabis investors is not only scrutinizing dramatically decreased valuations and multiples, they are realizing more now than ever, the need for extreme youth safety in cannabis. 

The licensed legal cannabis industry, not that long ago, was thought of as the Gold Rush and often called the Green Rush. Investors threw money into the visions of the entrepreneurs and colleagues in a still early industry sector, filled with local, state and national rules and regulations. While cannabis mergers and acquisitions continue to be overly active, there is a heightened awareness of presumed easy access of cannabis to consumers. “Youth Safety.” So what your company is doing to prevent youth access continues to be a hot topic. 

In the very beginning of the Global COVID-19 Pandemic in March 2020, cannabis has been deemed an essential business in the United States. Cannabis companies created and marketed overnight solutions for providing access to the many patients and adult-use customers. Two of the best solutions created are curbside pickup and Delivery to Home options. As more consumers went online to order their cannabis products, the importance of companies that provide technical solutions for online child protection in ‘high-risk’ industries became most apparent says Joan Irvine, Co-Founder & CEO of ResponsiTech. Joan is a 20-year veteran of online youth safety and speaks to companies on their need to do everything possible to prevent youth access to cannabis.

Compounding concerns, beyond the traditional online age verification, revolve around money. Cannabis is faced with lack of banking, which has in general kept the cannabis industry, a cash-only business. This has limited the growth of the legal industry, and the handling of cash is now considered a public health issue. This year, in June 2020, we saw that cannabis dispensaries were targets of the protests where looters knew there would be a lot of cash. The fact that cash is the method of purchase for cannabis products, the issue becomes most relevant for our youth obtaining these products. Illicit businesses are a large part of our cannabis market, unfortunately, and they request no age verification!

The industry is looking forward to the day that they can work with banks, but will the banks want to work with them? Many do not understand that even if banking becomes available for cannabis companies, the clients they choose to work with will have to go through extensive scrutiny around youth safety that will make government regulations and compliance pale in comparison. Many parents, cannabis industry professionals and legislators know that the legal industry is making great effort to help protect our youth, and solutions are available for cannabis companies and cannabis brands.

According to Mia Hyun, President and Founder of MobiusPay a merchant processing company: “I’ve seen the benefits self-regulation provides the risk mitigation that banks and credit card issuers need to do business with my clients. In addition to helping restrict underaged youth from websites, the optics also helps banks convince their boards to accept such clients. When I present a client, it is noted that this client is going above and beyond in their effort to be compliant with regulatory concerns and a good corporate citizen. The potential in the cannabis industry is huge and will be a windfall for many. Most companies in the financial services are waiting in the wings preparing to jump once the US Federal government passes the SAFE Act which will allow banks to accept such clients. But banks are inherently risk-adverse and have zero-tolerance policy against any illicit activity; especially when it relates to youth. It is a complicated and serious responsibility; one that compliance departments struggle with daily. Banks know that self-affirming age verification is inadequate.”

A growing consensus, from the public and amongst legislators, is that the industry needs to do more to avoid marketing to children. Examples of marketing that appeal to children include companies using TV images, names and even logos that children recognize. 

There are experts who know how to help companies avoid these marketing mistakes and Scott Rabinowitz of Buoyancy Digital is one of them. Scott, a 20-year veteran of age-restricted digital marketing, said “did you know that if you engage any form of online advertising from any vendor for your cannabis brand, that the legal burden falls to you as the licensed cannabis brand to ensure that every venue where you advertise on the internet or elsewhere, is serving your ads to an audience that is at least 60% (or more based on State Regulations) of proper adult age to view the ads?”

What Can The Cannabis Industry Do Today to Address Youth Safety?

As an industry, we have already implemented some solutions. Companies continue to use self-affirming ‘age gates’ for initial entry to their sites. But as problematic issues continue to rise to the surface with online orders and home delivery, even Health Canada stated that the current self-affirming age gates, 'Are you 21?' and ‘Birthdate Verifiers’, are insufficient. Going further, the Canadian government’s public statement says it is not cost effective to use actual age verification to merely browse through a site, leaving the industry in a vulnerable legal position for companies in brand marketing and under-age access.

Irvine spearheaded a parental filtering solution that became an international self-regulatory industry standard for another age-restricted industry. The solution received numerous awards from legislators for its effectiveness and required dual responsibility from both the industry and parents. Website owners add a parental filtering code to all entry points to their sites, and parents implement the parental control on ALL equipment. The result is that children are blocked from even accessing sites.

ResponsiTech has established a specific parental filtering code for the cannabis industry called the Responsible Youth Safety (RYS) Label.  Embedding this code on all entry points on your company site demonstrates there is an industry effort to self-regulate as it relates to youth safety. Moreover, because different U.S. states and countries will have different requirements, the industry will rise above what is legally required in any one state or country – resulting in a higher level of compliance. A cannabis parental filtering code is advantageous for your company, your investors, and the international cannabis industry for legal protection. The banks, of course, will note this effort.

Do your part and prevent youth access to cannabis today by demonstrating to your investors and bank partners that your company, and brands, are at the forefront for youth safety. As more states and countries move toward the legalization of cannabis, establish and adopt the RYS industry standard parental filtering solutions by ResponsiTech, to help your business prevent illicit youth access and ensure that your company is not just compliant, but going above and beyond existing regulations.

ResponsiTech is looking for Partners with access capital and to the national and international cannabis industry to help spread the adoption of RYS and demonstrate once again that the industry can self-regulate.

Joan Irvine, ResponsiTech Co-Founder & CEO, brings over two decades of policy development, government relations, and advocacy for online child protection in ‘high-risk’ industries to the cannabis industry. She successfully spearheaded an international award-winning parental filtering label and worked with First Amendment, Internet Security, and Privacy attorneys, international law enforcement and ICANN to establish online child protection policies. 

Joan @responsitech.com

https://www.dhirubhai.net/in/joanirvine/