Cannabis Buyers Are Uniquely Vulnerable To Cyber Attacks
Experts in the field of cyber security say North America’s emerging cannabis industry, and its customers, could be especially vulnerable to hacks and extortion. Cities like Baltimore, as well as the state of Georgia’s court system, and Lake City, Florida, have been the recent targets of sophisticated ransom ware infections, with attackers demanding payment to stop their disruption of crucial municipal data systems.
Officials in Lake City, facing the potential loss of the entire city’s information systems, paid a $460,000 ransom. Baltimore refused to pay a $75,000 ransom and is now dealing with an $18 million cleanup job. Cyber security experts say the legal cannabis sector offers a tempting target for online criminals.
“Any type of new business or new industry is definitely going to be vulnerable,” says Matthew Dunn, associate managing director of the cyber risk practice at Kroll, a corporate investigations and risk consulting firm based in New York.
Speaking to the cannabis industry journal Leafly he said “Bad guys always seem to be a step ahead of us when it comes to technology..... Legitimate businesses and legislators are playing catch-up on how to go ahead and build defenses to combat those techniques that are being used against them.”
Everything Online, Everything Vulnerable
As more cannabis businesses come online and use state cannabis tracking systems, accounting apps, and point-of-sale software, they also present themselves as targets for cyber criminals.
Recent Cannabis Attacks
That vulnerability isn’t merely theoretical. These are just a few of the break-ins made public over the past few years:
- In Calgary, Alberta, hackers accessed the personal health records of a medical cannabis referral agency in late 2018.
- In November 2018, hackers breached the privacy of 4,500 Ontario Cannabis Store customers through a weakness in Canada Post’s tracking website.
- In 2017, the California cannabis delivery service Eaze confirmed that a former employee of a medical cannabis clinic broke into the patient database of both the clinic and Eaze.
- Also in 2017, the cannabis tracking system MJ Freeway suffered two cybersecurity breaches within a period of six months.
- In early 2018, Washington State’s cannabis traceability database was hacked; the intruder stole product transfer and manifest data.
Cyber Extortion Thrives on Stigma
The cannabis industry is also vulnerable to some unique forms of cyber extortion.
“Let’s say bad guys are able to get a hold of a database of cannabis customers at some type of retail dispensary,” said Dunn. “Some of these customers may not want the public to know that they are utilising cannabis, even if it’s legal. If they’re in the public limelight, if it’s something with their employment, whatever it may be.... Criminals know this, and if they can…utilise this information to try to extort money from them to keep their silence, then they’re going to do it,” he added. “It’s similar to the things we’ve seen in the past with ‘sextortion’ kinds of cases.”
The Cost of a Hack
Even without extortion, the cost of cyber-crime can be tremendous. Research done last year by IBM and the Ponemon Institute found that, on average, a data breach costs a business close to $4 million, with a nearly 30% likelihood that an affected business will experience another data breach within two years.
A Cash-Driven Business
Dunn believes cyber-attacks can be even especially devastating for legal cannabis companies, many of which are cash-driven and don’t have access to insurance, bank loans and the other safeguards that can keep a besieged mainstream business financially afloat during a crisis.
For a cannabis business, Dunn says, “If you are suffering some compromise to your network, and if you have to spend a fair amount of money to go ahead to contain it and remediate it, there may not be enough revenue left for you to continue to operate that business.”
Three Pillars of Security
Many firms, according to Dunn, view cyber security as a purely IT problem. But they fail to realise that most cyber-attacks are “end user-based,” meaning they go after individuals within a company. As a result, cannabis retailers need to educate their work force about what Dunn calls the Three Pillars of Cyber Security:
People: Training company staff to understand that they’re the first line of defense against cyber-attacks. Cannabis businesses, Dunn says, “have got to educate their employees that they are being targeted every single day. You’ve got to educate them not to click on every link that comes in, or open attachments without absolutely confirming that it’s coming from a trusted individual.” That includes executive-level staff.
Policies/Processes: One of the most common ways for cybercriminals to hack into a victim’s network is by stealing passwords and credentials. Cannabis businesses should also think about developing so-called acceptable use policies on company computers. Employees freely surfing the internet from a corporate network, Dunn said, can unknowingly download malware and other programs that can disrupt trade or compromise sensitive information.
Technology: Hardening a network from cyber-attack via firewalls, anti-virus software, security updates for hardware, as well as monitoring malicious activity or policy violations, is a must, Dunn says.
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