The passage of Proposition 64 — which legalizes, taxes and regulates recreational use of marijuana by Californians who are 21 years of age and over — is creating another major IT initiative within the state government.
The ballot measure, which voters approved Nov. 8 by a 56 percent to 44 percent margin, requires the California Department of Food and Agriculture, Board of Equalization and other participating state agencies to expand IT systems the state currently is developing for the medical cannabis industry in order to regulate licensing and product tracking.
The so-called "track and trace" program will "at a minimum, [contain] the same level of information for marijuana and marijuana products as required to be reported for medical cannabis and medical cannabis products," Prop 64 says.
Furthermore, the ballot measure requires any software, database or IT system the state uses to be interoperable with third-party cannabis business software applications and also compatible with a secure Application Programming Interface (API).
According to Techwire sources, the state of California has been anticipating that Prop. 64 would add a bigger workload to the systems being designed. A conference room at California Department of Technology headquarters has been turned into a "war room" where staff from two dozen agencies and departments are working together to plan the system architecture, which those involved expect will cut across a broad swath of state government.
A system will need to be in place by 2018. State officials acknowledge that with just 14 months until then, California will likely only launch a platform with a "minimum viable product," given the tight time frame.
For medical cannabis alone, California is standing up multiple licensing and tracking systems that will regulate cultivators, transporters and retailers. The same types of players participating in the non-medical marijuana industry will be regulated under Prop. 64. The state is using alternative procurement vehicles to buy the needed software, in some cases.
New Frontier Data estimates California’s marijuana industry will generate $7.6 billion a year in direct sales to consumers by 2020.
“With the passage of adult use in California, the state has become the new epicenter of the legal cannabis industry. As both the oldest medical cannabis state and the largest cannabis consumer population, sales in California are projected to dwarf those of any other market. Additionally the integration of California’s technology and marketing expertise will be enormously into the cannabis industry both domestically and internationally,” said New Frontier Data founder and CEO Giadha DeCarcer.
New Frontier Data says Prop. 64 will create two new taxes, one on cultivation and another on retail sales. Tax revenue could approach $1 billion annually, according to some estimates.
