A new study by The Harris Poll and digital marketing and compliance solutions consultants Fyllo reveals that nearly two-thirds (63%) of companies see compliance issues as a critical barrier to growth.
The study, “Leading With Compliance: The Key to Growth in Highly Regulated Industries,“ which surveyed 305 compliance leaders at companies in highly regulated industries including cannabis, healthcare, financial services, alcohol and pharmaceuticals, revealed surprising commonalities: all struggle with a complex web of federal and local legislation and an outdated compliance approach that impedes growth.
Interestingly, while pharmaceutical and financial services were cited as the gold standards for compliance models, more than a quarter of companies in highly regulated markets said they look to the cannabis industry as a model for compliance best practices.
“Cannabis professionals are operating in a regulatory environment that changes daily across federal, state and local levels,” said Chad Bronstein, CEO and founder of Fyllo, whose company serves clients in the cannabis and other highly regulated industries. “As such, cannabis businesses have been quick to embrace tech solutions that streamline compliance processes to free up resources for growth, with the industry becoming the benchmark for effective management of compliance processes at scale.”
Despite the fact that more than three-quarters (82%) of companies in highly regulated industries currently accept that compliance is a cost of doing business, over the past five years, these companies have been cited on average 12.6 times for noncompliance. This results in extensive operational, reputational and financial risks.
Compliance Status Uncertainty
Moreover, the majority of compliance leaders admit that they are often uncertain as to whether or not their organization is compliant due the dynamic nature of the regulatory environment.
When asked if their company could adapt quickly to sudden changes in its regulatory or compliance environment, 61% did not believe their company could, with 28% pointing to outdated technology as the cause.
“In the face of fast-paced regulatory demands, outdated processes can’t keep up and that derails growth,” Bronstein noted. “This survey revealed that companies want to utilize technology to understand regulatory updates, whether new laws or even just local legislative conversations.”
The study revealed hidden impacts of compliance problems:
- Higher Costs: Nearly 50% said non-compliance results in higher costs to attract new investors and win new customers.
- Diminished Growth: The vast majority (82%) report that adhering to regulations saps resources that would otherwise drive expansion into new markets (43%), new products/services (43%) and innovation (38%).
- Lost Revenue: 25% said problems led to a loss of customers; 20% said it led to employee turnover.
- Damaged Trust: 73% of companies say compliance issues damage trust among consumers, regulators and employees.
Fyllo delivers data, media, retail and regulatory solutions that enable organizations to streamline compliance, increase efficiencies and scale with speed. Mainstream brands also seek out Fyllo’s Data Marketplace to target previously inaccessible cannabis and CBD consumers.
The Harris Poll is one of the longest-running surveys in the U.S., tracking public opinion, motivations and social sentiment since 1963. It is now part of Harris Insights & Analytics, a global consulting and market research firm that strives to reveal the authentic values of modern society to inspire leaders to create a better tomorrow.