Cannabis cultivators play a vital role in the supply chain of the cannabis industry. However, they face unique challenges that require effective risk management to keep their operations running smoothly. From climate change to workplace safety to cybersecurity threats, cannabis cultivators need to be proactive in identifying and addressing risks.
One of the challenges that cannabis cultivators face is overproduction due to bumper harvests. While this may seem like a good problem to have at first, it can lead to financial loss if demand does not match supply. To mitigate this risk, cultivators must find innovative storage technologies or accept a severe pricing cut for their flower.
Another significant risk that cannabis cultivators face is cybersecurity threats. Cybercriminals have been exploiting digital vulnerabilities more frequently since the pandemic started, and nearly every industry has been affected. As a result, cannabis cultivators must prioritize best cybersecurity practices and protect their online networks and high-end equipment from cyberattacks.
In addition to protecting property and data, cultivators must prioritize employee safety. They should provide adequate safety measures and updated protocols for workers handling heavy machinery daily. Moreover, they should be mindful of social movements like #MeToo or Fight for $15 as employment-related litigation has been on the rise recently.
Cannabis regulations are continually changing at the local, state, and federal levels. Cannabis cultivators must keep up with these legal developments to avoid noncompliance penalties that can be costly. They should also be aware of changing risks in other industries that can impact their bottom line.
To effectively manage risks, cannabis cultivators should use a five-step process: identification, analysis, evaluation, tracking, and treating. By pinpointing vulnerabilities and understanding how much loss could hurt, they can make informed decisions on how to approach each risk. With a strategic risk management plan in place, cannabis cultivators can avoid events that could set them back financially and recover more quickly from losses.