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How to use ID Scanner in Cannabis Business

May 7, 2024

Regulating Cannabis like Alcohol Creates a Privacy Concern for Consumers

Cannabis is regulated like alcohol in 18 states so now the 21 and over crowd really has something to enjoy. Weed is legal! Well, not completely however, many people who can legally consume alcohol can also use cannabis and grow their own plants without penalty in the US. This has led the entire cannabis industry to regulate the schedule one substance in a whole new way. One of the latest technologies for meeting compliance standards includes ID scanners.

While the penalty for using a fake ID to buy alcohol is stiff for both the user and the establishment, dispensaries have unique regulations. Recent heightened security measures at dispensaries may include video surveillance, ID scanner technology and external data storage. The main concern for cannabis consumers is of course, privacy however, the benefits of scanning technology may outweigh the risks.

What Are the Main Cannabis Security Laws?

Legal compliance is the main reason cannabis dispensaries use security systems. Advanced scanning and data recording technologies for ID verification make it easy to maintain compliance even in the ever changing marketplace of marijuana sales. It’s important to note that ID scanners are just a small part of a much larger overall security strategy for the rapidly growing recreational market. Strict adherence to state and federal regulations include the use of not only ID scanners, but also advanced video surveillance, alarms, data transfer and external storage.

The main cannabis security laws include 7 main categories:

  1. Video Surveillance Systems. The concept of video surveillance in the cannabis industry is not unlike other businesses. With compliance as a top priority, many dispensary owners implement advanced security measures with cameras, superior video quality, documentation and stored footage. Cutting-edge surveillance technology in  dispensaries can include motion activation, live streaming capabilities, and the highest-quality footage. This security helps dispensary owners meet the laws requirements for compliance. In some places all entrances, pick-up areas, POS, storage and the sales floor areas must include cameras with adequate lighting to capture video footage throughout the interior premises.
  2. Alarms. These systems can include everything from ID verification, fingerprint recognition, video imaging and automatic alerts to law enforcement. Any dispensary may need a range of alarm systems in order to not only protect the property, but also products, data, and employees. Alarm systems for a cannabis facility can include basic hardware all the way to the most advanced technical software. Alarms may or may not be part of a separate video surveillance system for the exterior or interior of a cannabis dispensary. Security experts are commonly used to determine the type of alarm, silent, automated, or visual depending on the location of the property.
  3. Securing Cash. In many states, cash is the only acceptable form of payment in a dispensary. Cannabis is still federally illegal and classified by the DEA as “schedule 1 cannabis,” which means that as far as FDIC banking goes — cannabis is a cash-only business. This can create complications for dispensaries even where marijuana is decriminalized. Unable to use traditional banks, dispensaries face challenges in business operations as they frequently need to store and secure large amounts of cash. If proper cash handling and storage protocols are not followed, compliance issues may also arise. Other risks of improper cash handling for cannabis dispensaries include fraudulent activity, theft and even a loss of an operational license.

Dispensaries may use local banks and credit unions that work with cannabis businesses however, there are only about 700 such financial institutions. The SAFE Banking Act offers hope to cannabis businesses as the bill would prevent banks from denying service to dispensaries. Following compliance for cash handling includes secure cash storage, minimal amounts on-site, third-party transportation and video surveillance for identity verification at point of sale.

  1. Access Control. Investing in a dispensary means that managers need to secure access to the facility as well as consumer information, client data and other business documents containing intellectual property. Important to all aspects of the operations of a dispensary, access is also controlled by law in some states. The purpose of access control policies is to protect property, people and assets as well as maintain compliance with local and federal standards. While each state is different, the range of access control solutions varies and may include policies, systems, infrastructure, software, scanners, safety equipment and more.
  2. Digital Storage/Transfer. Data storage and management requires attention to data protection and customer privacy. In order to protect your data, dispensaries may use encrypted data storage systems, or cloud storage for confidential transfer. The cannabis industry currently includes 35 states that collect customer information from government ID scanning, as well as tracking purchases. Compliance obligations and good business practices also include addressing privacy and data breach risks. Security systems for a cannabis dispensary may include computer hardware, software, tracking and targeting criminal activity. Cyber hackers are known to leave traces behind stealing customer data including health and personal data. Cannabis businesses use point-of-sale software, accounting apps and tracking systems in an effort to protect themselves and customers from cyber attack. Cyber criminals are estimated to cause up to $6 trillion in damages.
  3. Check-In Area. Cannabis is a classified substance holding strict penalties for possession, use and distribution. The check-in process may seem casual, but as you give your state issued ID all of your customer details are shown in your profile. With such rigorous regulatory processes on state and federal levels, the check-in process is important not only to the customer experience but also for legal compliance. The check-in area commonly includes video for surveillance and ID scanners for accurate registration.
  4. ID Verification. Verifying your identity with a government issued ID is required for check-in. As the ID scanner records your data for legal compliance, the scanner also reveals to the budtender your liscenceture, allotment and medical records if you are a cannabis patient. Because every dispensary customer has different needs, each person can benefit from accurate check-in with an ID scanner. The ID verification process is also how dispensaries eliminate fraudulent shoppers, underage users and fake cannabis cards.

Why Do Dispensaries Scan ID’s?

If you’ve ever wondered, “Why do dispensaries scan your ID?” you’re not alone. This common question serves several important purposes: ensuring the safety, legality, and efficiency of cannabis sales. Let’s break it down in simpler terms: 

  • Enhanced Age Verification: Dispensaries scan IDs to prevent underage sales, as required by law. Advanced technology in ID scanners helps verify features such as holograms and microprinting, effectively reducing the risk of selling to minors and protecting both the dispensary and its customers.
  • Improved Efficiency: Scanning an ID is much faster than manually entering information. This expedites the check-in process, reducing customer wait times and improving the dispensary workflow. 
  • Streamlined Compliance: Dispensaries operate in a highly regulated environment.  Regulations often require detailed recordkeeping of customer purchases, including age and identity verification. Why do dispensaries scan your ID? Because scanners can automatically capture and store this information electronically, simplifying compliance efforts and reducing the risk of human error in record-keeping.
  • Data-Driven Insights (Optional, with Customer Consent): With customer consent, dispensaries can use ID scanner data to understand customer demographics, purchase trends, and preferences. This anonymized data helps personalize experiences, tailor products, and create targeted marketing campaigns.
  • Potential for Loyalty Programs (Optional, with Customer Consent): Some dispensaries use ID scanners to link customer IDs to loyalty programs. This allows them to reward repeat customers with special discounts or promotions. However, it’s crucial to emphasize that customer consent is important for such practices. Why do dispensaries scan your ID? It’s to facilitate these loyalty programs.
  • Combating Fraudulent Activity: ID scanners can help deter fraudulent activities beyond underage purchases. They can identify individuals who might be using stolen IDs or attempting to purchase cannabis with the intent to resell it illegally. This additional layer of security protects the dispensary from financial losses and potential legal trouble.
  • Inventory Management: Another key reason why dispensaries scan your ID is because, in some states, dispensaries have limitations on the amount of cannabis a customer can purchase within a specific timeframe. ID scanners can be integrated with inventory management systems to track individual purchases and ensure customers stay within their legal limits.
  • Protecting Customer Privacy: While privacy concerns are valid, reputable dispensaries prioritize data security. ID scanners typically only capture basic information like name, date of birth, and address. This data is encrypted and stored securely, and dispensaries should have clear policies outlining data collection and usage practices.However, the question of “Why do dispensaries scan your ID?” often brings up privacy concerns. Dispensaries use secure data storage to protect personal information, ensuring that the benefits of ID scanning—such as POS tracking and fraud prevention—do not come at the cost of customer privacy.

What Happens When Your ID is Scanned at a Dispensary?

When your ID is scanned at a dispensary, a multi-step verification process is initiated. The scanner extracts encrypted data such as your name, date of birth, and photo, confirming your eligibility to purchase cannabis. Advanced scanners also check for features like holograms and micro printing to detect fraudulent IDs, preventing illegal sales to minors—a serious offense that could result in fines and license suspension. 

If you are enrolled in the dispensary’s loyalty program, the scan may link your visit to it, offering discounts or points for future purchases. This can grant you access to discounts or points redeemable for future purchases. In some states with buying limitations, the scanner can work with inventory systems to track your purchases and ensure you stay within legal allowances.

Dispensaries prioritize data security, capturing only essential information and encrypting it for protection. They maintain transparent policies on data use, and you may opt out of non-essential data collection.

ID scanning ensures compliance, streamlines check-in, and enhances security. After verification, dispensary staff may access further details like medical marijuana card information, aiding budtenders in personalizing your shopping experience.

However, it’s important to remember that ID scanners are just one step in the overall verification process. The budtender will likely check your physical ID as well to ensure it matches the scanned information. This two-pronged approach ensures the utmost accuracy and security.

What Are The Main Benefits for Dispensaries?

Compliance checks can be stressful for dispensaries if they do not have the correct data management systems. Solutions for meeting state and federal requirements can include automated data storage and tracking for each visitor. Processing customer data is vital to an effective customer experience and it is also essential to tracking daily allotment, eliminating fraudulent activity, and storing private data. Human error is a leading cause of data loss and so implementing sophisticated tools to collect, store, and analyze customer information is all part of the dispensary business.

The ability to immediately upload customer data for reliable identity verification and storage is invaluable to dispensary owners. Not only are scanners an easy way to create and maintain customer profiles, but they also spot a fake ID fast. The illegal sale of cannabis holds a hefty penalty in every state for both the customer and the dispensary. In some areas, a dispensary can lose their own license for only three fake ID cannabis dispensary. Dispensaries avoid fraudulent activity with fake ID scanners for criminal detection, and customer data reporting.

What Are The Main Benefits for Customers?

Cannabis customers enjoy a slew of benefits from dispensary ID scanners. Not only does their customer profile record all of their preferences, allotment and rewards but they can also speed through check-in with the use of scanning technology. Pot shops are able to verify a cannabis customer quickly and reliably eliminating human errors in data processing. Because a cannabis customer is already at risk of a data breach, dispensaries commonly use encrypted systems to reduce the risk of personal data privacy violations.

ID scanners expedite the check-in process and protect both the customer and the retailer by preventing underage sales. With less waiting time during check-in and at point-of-sale, dispensary operations are a smooth process. Today, you’ll find security measures to prevent the use of fake ID’s including ID scanners for identity verification and database management. While some customers are concerned about the risks, ID scanning is for information verification only, and no personal data is stored without customer consent.

What Are The Main Customer Concerns?

Cannabis customers’ personal data becomes exposed when ID scanners are used in dispensaries. Medical data including health conditions, strain preference and allotment can also be at risk of a data breach if the sales system is hacked. Industry experts work hard to ensure privacy for customers however, data breaches are not uncommon so exposed customer data is now a main concern. Now secured and encrypted systems are in place to reduce the risk of cyber attack on cannabis companies and customers.

Here are the four main concerns of cannabis customers:

  1. Purchases. If you have ever visited a dispensary as a customer you already know that the process includes identity verification. Anonymous cannabis purchases are non-existent in order to adhere to the strict compliance guidelines of the industry. In many dispensaries a customer will show proof of identification three times or more. If you have nothing to hide, there is no real concern besides a data breach however, some people feel at risk. Purchasing cannabis with a state ID as a recreational customer is less risky for privacy concerns than if you participate in a medical parijuana program. However, with the growing acceptance of legal use, cannabis customers fear far less penalties for being identified as a marijuana user. In some cases registered participants of a medical marijuana program could lose basic freedoms in the workplace, and domestically (example of cannabis patient freedom losses).
  2. Customer Profiles. Tracking purchase limits for each customer is a requirement for dispensaries. Not only that, but just consider that dispensary managers must also be able to identify a licensed marijuana patient from any state if they are a customer. This daunting task is just one aspect of regulating cannabis for both medical and recreational use in the US. While privacy issues are a concern, there are many benefits to integrating ID scanning technology into the cannabis industry. For example, a customer can gain real-time access to their current allotment, and also apply license data to their profile. Law-abiding dispensary shoppers may also enjoy discounts and other perks from their detailed customer profiles as they are immediately updated with scanner data at every check-in.
  3. Data Privacy. Today, there are many risks for people who use data processing technology and store digitally. One of the biggest concerns for cannabis customers is that their personal data could be accessed without their knowledge. Recently, a data breach was reported at Natural Health Services cannabis clinics. The privacy breach affected their customer base including 34,000 patients at the medical dispensary. The data hack occured when patients were fraudulently approached for patient information via fake websites on the internet. The digital data breach is currently being reviewed in a class action lawsuit against the clinic. While every state holds different requirements for purchasing, growing and possessing cannabis there are risks associated with customer privacy. In some states, registration for a cannabis card can conflict with other citizen rights including gun ownership, employment eligibility, and some privacy.
  4. Hackers. Using a government issued ID to verify your identity at a dispensary means that you are also exposing your personal information. Your records include your full name, date of birth, phone number, email address, residential address along with medical data. This includes patient information, health records, medical marijuana program number along with your daily allotment of cannabis. In recording a customer’s medical records, a cannabis patient’s profile also includes the type of cannabis they use, quantity, date of purchase, and total cost of purchases. Photographs of your government ID can also be stored in a dispensary database, which can fall victim to cyber attackers.

How Can You Choose an ID Scanner?

Dispensary owners may choose to integrate ID scanners in order to gain the many benefits of the technology. Each scanner offers unique features that can streamline the check-in process and make customer profiles easy to manage. However, as cannabis dispensaries continue to learn as they go, owners may struggle with choosing the right ID scanner for their needs.

Here are three things to look for when choosing an ID scanner:

  1. High Value. If you are looking for an ID scanner, paying top-dollar for the latest technology is worth it. The high value of a scanner may pay off during operations in time, security and data storage.
  2. Extended Storage. The amount of data processing within a dispensary can be daunting to employees without the use of smart technology like ID scanners. Using a scanner system that includes encrypted external storage secures large amounts of information over time. Ideal for tracking and customer profile management, cloud storage is the preferred data storage platform.
  3. Integration. An ID scanner is one part of operability for security systems in a dispensary. Using the scanner is an ideal way to save time and reduce risks however, it is vital that the scanner is part of an integrated security system. Compliance for cannabis dispensaries includes a combination of video, data collection and tracking systems. In order to monitor POS systems and process transactions, there must be ID scanner integration into the overall security strategy.

Using ID Scanners in The Cannabis Industry

ID scanners are an ideal tool for dispensary owners. As a vital part of the check-in process, scanners not only protect against fraudulent purchases, but they also fill out customer forms automatically. Needed to meet daily compliance standards of the rapidly growing cannabis industry, ID scanners are a solution for tracking, organization, and storage of important data. However, the many benefits of using ID scanners for dispensaries do not come without risks. Criminal activity is always a concern for dispensaries so using scanners may also include a range of security measures.

The cannabis marketplace includes 38 states for medical patients and 18 states serving recreational customers. Each cannabis customer must be checked-in, verified through a government issued ID and recorded during each purchase. This includes a sophisticated system of surveillance, data recording, storage and security. The process of identity verification continues to improve as more dispensaries integrate ID scanners and the future is bright in the budding industry.