How to Develop an Effective Cannabis Compliance Program
Cannabis compliance is a must for any commercial cannabis business in operation today. An effective compliance program will protect your cannabis business, and everyone involved so that you can focus on what matters most: growing your business.
Managing a cannabis business can be challenging because you are dealing with a plant with a long history of abuse. On top of that, the legal requirements for cannabis are constantly changing and being updated. Without a robust compliance program, you could be subject to legal action or have your business license revoked by regulators. That could mean the end of your business.
Let’s look at some of the best ways to establish an effective cannabis compliance program so that your business stays compliant with all relevant laws!
1. Know Your Local Laws
Before you begin operation, you must know the laws of your state and locality. You don’t want to implement a compliance program for employees or customers only to learn that you could have avoided legal trouble. For example, the Cannabis law in Oregon, like many others in the US, requires a licensed dispensary to store marijuana products where it is not accessible to anyone under 21 years old. This kind of law must not be overlooked in the operation of your cannabis business.
Keep this in mind as well: if your company ships cannabis products across state lines, it is subject to both federal and state regulations in all states where the product is shipped. For example, if your company ships into California from Colorado, both states’ laws apply. While each state may differ slightly on specific issues related to cannabis businesses, some of the following basic requirements are common across most jurisdictions:
a. A company must have a license to operate as a cannabis business (the type of license varies by state but generally includes both cultivation and retail operations).
b. Employees must be trained on marijuana laws and regulations (including using reasonable care not to violate them) and how to protect themselves from liability if they do.
c. A company must have an inventory tracking system and other means of ensuring that all cannabis products are kept secure from unauthorized access or use.
d. Cannabis companies must have a business plan and financial projections that show how they will make money.
2. Document Your SOPs
When it comes to compliance, having a system in place is an essential first step. The next step is documenting your system and ensuring it works as intended.
Even if the law does not require it, creating written SOPs can help you maintain high compliance within the cannabis business. To get the most out of this step, you should ensure that each section and procedure of the SOP are properly documented so that all employees know how they should conduct themselves.
SOPs can be anything from equipment operation manuals to procedures for handling customer complaints. These guidelines should also be documented in a way that is easy for everyone involved with the business operation—employees and management alike—to access.
Documenting SOPs helps establish confidence in your program and provides an easy-to-access guide for employees to reference when completing tasks or answering questions about policies and procedures when regulators investigate.
3. Conduct regular training and education on policies, procedures and relevant regulatory requirements
If employees don’t know what they’re supposed to do or why they’re doing it, you can’t expect them to do their jobs effectively. One of the best ways to ensure your company’s compliance with regulations is by getting every employee involved in a training program on changing industry standards or requirements.
A training program should be as comprehensive as possible, covering all aspects of your business that could affect its compliance with local, state and federal laws. It should also include information on workplace rules (SOPs), how those rules apply in specific situations, and how employees can report violations within their departments or company.
4. Understand who regulates your segment of the supply chain
There are several different cannabis regulatory bodies. If you’re unsure which agency has jurisdiction over your operation, it would be best to seek clarification. For example, growers are often regulated by multiple agencies such as county agricultural commissioner, state agriculture department and possibly even federal authorities such as the DEA.
The state-by-state regulation of cannabis is complicated enough, but things may get even more complex when local municipalities get involved. If there’s no comprehensive compliance program, you may be subject to rules from several agencies in one region—and that’s no fun!
For instance, two main agencies in California ensure that cannabis businesses are appropriately licensed and operate within legal parameters.
a. Bureau of Cannabis Control (BCC)
b. CalCannabis Cultivation Licensing Program (CCCLP)
You need to know who regulates your segment of the supply chain. For example, if you’re a retailer, that may mean knowing if you are required to register with the state or county in which you operate. If so, specific requirements will apply to your business and compliance program.
5. Ensure effective monitoring and auditing of activities, including for compliance risks
Monitoring and auditing are the foundation of any compliance program. To ensure effective monitoring and auditing, you must:
a. Establish a process to monitor compliance risks. You can assess your firm’s current control environment, including any gaps in your current controls from state licensing requirements. Doing this will help you identify where existing rules must be strengthened or new policies implemented.
b. Implement robust monitoring systems for all key areas within the business (e.g., financials, production, supply). These systems should be designed to easily identify potential red flags when something goes wrong so that corrective actions can be immediately taken if needed.
6. Establish a clear escalation process
You can’t expect to catch every single compliance problem on your own. That’s why it’s essential to build an effective system to monitor and report compliance risks and ensure that proper escalation occurs when non-compliance issues arise. This system should include:
a. A clear escalation process for non-compliance issues, including who will handle them and what their specific responsibilities will be.
b. An effective system for monitoring and reporting compliance risks, such as data collection procedures or audits conducted by third parties (i.e.independent consultants).
Let RADD CANN help you navigate the complex cannabis industry landscape. For a free consultation, please contact us or email us today!