December 12, 2019

Ensuring Cannabis Compliance Is Done 'by the Book!'

by McKenzie Swisshelm

Experts predict that revenues from legal cannabis in the US will soar over $23 billion by 2022.

The potential profit is large.

With numbers like that, more people are getting involved in the cannabis business. But this industry comes with regulations that make running a business more complicated.

Cannabis compliance is essential in this industry, whether you're a grower or a seller. To ensure your business has the chance to grow and thrive, you need to know the rules inside and out.

So before opening your doors, get up to date with this cannabis compliance guide. Keep reading to learn more.

 

Layers of Cannabis Compliance and Regulation

The layers of cannabis compliance and regulation are complex. The state in which you live as well as your local municipality have their own regulatory framework for cannabis businesses. On the federal level, legislation from HIPAA, FCC, and OSHA also comes into play.

Until now, the most important regulations came from the state and local level. But as more states legalize and the industry gains legitimacy, more regulatory agencies are involved.

With the federal, state, and municipal levels of governments involved, the layers of compliance are many. They all differ in their scope, and they also differ according to whether you're a grower, manufacturer, seller, etc.

Besides the sheer number of regulations you have to know, they're also constantly changing.  Staying on top of these very important regulations can be challenging, especially considering you still have a day-to-day business to consider.

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General Challenges and Best Practices in Cannabis Compliance

While operational systems can help you stay compliant, knowing what potential challenges may arise can also prepare you for the worst. Below, we go into detail regarding some of the best practices and challenges faced by cannabis businesses - so you might learn from those mistakes.

 

Licensing

Medical and recreational cannabis businesses of all kinds must be licensed by the state in which they operate. The license required by your business is dependent on whether you're a retailer, a dispensary, or a cultivator. Operating without a license is a big mistake that can result in your business being shut down.

Beyond getting a license and keeping it updated, there are other specific documents you'll need to operate. These documents also depend on what part of the industry you're involved in and will differ on the state and municipal level. Ensure that you have all the right documentation, that it's always up-to-date, and your dues and fees are paid.

 

Preventing Theft

When cannabis products are stolen, they become a public health concern. The stolen product often ends up being sold illegally, which is why preventing theft helps reduce crime and keeps the community safe. 

For this reason, there are state-mandated tracking systems and inventory management regulations. These regulations help cannabis businesses prevent theft from occurring. They also help detect theft when it does occur.
 

Inventory Management and Audits

Related to the above, part of managing your inventory means managing your employees. In fact, 30% of retail theft comes from internal employees.

That's why you should never leave your finances or your inventory in the hands of one person. Allow for oversight in your tracking and managing and have more than one individual involved. This gives a potential theft less opportunity to take advantage of having too much control.

Beyond theft, managing your inventory is important for state and local cannabis compliance. If called on, you need to be able to show that you are responsible for managing your inventory. Your business must have demonstratable checks and balances in order to keep your operating license. 

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Public Safety

Perhaps the biggest cannabis compliance issue, at least in the eyes of regulatory agencies, is public safety. That's especially true when it comes to children. 

The safety of children is a major priority for those in the cannabis business. There are laws regarding this at all levels of government, highlighting it's importance.

Many of these cannabis compliance laws have to do with packaging and labeling. Requirments have been put in place to make it difficult for minors to access cannabis or be exposed to it. These include:

• Packaging, advertising, and labels should not be made to appeal to minors
• The word "candy" cannot be used on packaging, labeling, or on the product
• Edibles cannot be made in the shape of humans, animals, or fruits

Violation of any of these rules is considered the most serious when it comes to compliance.

 

Security

There are two ways to think about security in cannabis compliance security of your product and security of information.

Firstly, we've talked about the importance of preventing theft. Preventing theft means more than installing a security surveillance system to prevent and detect both internal and external theft. The security of your product means proper inventory management controls, compliance with local and state ordinances, and checks and balances for transportation and storage.

On the other hand, there is still a stigma associated with cannabis use. As such, your clients' information must be a top priority. And in the era of digitally storing important personal information (i.e. credit card information), that means having a top-notch IT security system.

 

Help Understanding Cannabis Compliance

Considering the sheer number of cannabis compliance regulations, and all the layers of government involved, staying compliant isn't exactly easy. For business owners, running a day-to-day business on top of ensuring compliance can be tricky. 

But, fret not, because there is help. Beyond asking for another set of eyes from a trusted employee or group of employees, we can help ensure that your business is up-to-date and ready for what's next. 

Contact us to find out how we help cannabis businesses with their HR and payroll.

Cannabis Employees & Hiring: Free Webinar from Greenleaf HR

McKenzie Swisshelm

McKenzie Swisshelm is the Marketing Manager for Greenleaf HR and Worklogic HR. She produces effective content like a fifth-year wizard but with a knack for strategic marketing, crafting digital strategy and, of course, Charms. In more wanky marketing muggle jargon, her specialties include setting metrics and reporting systems and then refining all of the above to impact an organization’s core business objectives and drive top line growth.

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