THC and CBD are sweeping the markets giving a safe form of relief to those in need across the country.
Of course, the legalization of cannabis—not to mention the acceptance of it—is still in its early stages. This means that the legal lines involved can be a bit blurred.
The legal status of medical and recreational cannabis is evolving. These legalities vary from state to state, but there is one thing that is certain:
Maintaining compliance with cannabis regulations is essential to preserving your reputation and your license to operate.
Maintaining a successful dispensary is simple. All you have to do is understand the cannabis compliance risks and how to avoid them.
Cannabis Compliance Risks
Complying with the laws and regulations of the cannabis industry is rule number one. Everything from cultivation to sales must follow state and county regulations. This includes local laws and regulations as well.
While this may be a basic rule, the details involved are anything but basic. The entire cannabis industry still has a stigma attached to it. With that stigma comes a lot of scrutiny. So any cannabis compliance missteps can result in a negative impact to your brand image. It can also result in a hefty fine, a complete shut-down—or all the above.
Regulatory audits are will make or break a business. To ensure you avoid any cannabis compliance issues during the audit, we’ve made a list of seven potential missteps to avoid.
#1 Unable to Recognize Fake ID
Among the top cannabis compliance risks, this is the most common.
Compliance regulators check on this routinely to make sure dispensaries are vigilant in checking that the customers are of legal age or that they have medical status. This is typically carried out as a “sting” during which law enforcement will send in an underaged individual to make an attempted purchase.
Dispensaries that fail this compliance check are usually criminalized all over social media to discredit their representation of the entire industry.
#2 Neglecting Security Requirements
Security requirements in cannabis compliance go beyond an alarm system and video surveillance. A number of specifications apply between state laws and local ordinances.
Inventory must be properly surveilled among all stages of transportation and storage as well as properly managed. Any discrepancies in inventory can result in a very large fine and other penalties.
#3 Allowing Customers to Loop
The term looping refers to customers who go to dispensaries, make a maximum product purchase, and returns to make another maximum purchase. This compliance issue obviously has to do with those who purchase cannabis products with with the intention to distribute the product for resale.
Failure to catch looping customers in your dispensary can and will most likely result in jail time—for both parties involved. (This also goes for overselling after a customer has reached their maximum).
#4 Expired or Improper Licenses
Every state has its own regulations for the licensing required among medical and retail cannabis dispensaries. There are business licenses, retail licenses, dispensary licenses, cultivation licenses and other specific documents needed on municipal and state levels.
Failure to have the necessary and up to date paperwork is one of the biggest cannabis compliance mistakes. It’s crucial to know and keep current whichever licenses you need, and this includes having all application and/or association fees paid. Otherwise, you run the risk of getting shut down.
#5 Neglecting to Comply with Product Safety Laws
Some of the greatest cannabis compliance risks are the issues with safety, packaging, and labeling of the products. Of course, specific regulations also vary within each state. In most states, all products must be childproof and any warnings and symbols must be clearly marked on each individual product.
You’ll have to learn your states’ local laws and keep an eye out for any changes to remain compliant.
#6 Violation of Patient/Customer Privacy
People still value their privacy—as well as their credit card information. The last thing you want to deal with is a data breach in your system. Make sure you know what your state requirements for information retention are as well as implementing the proper security measures for your technology.
Your customers’ information isn’t the only thing you want to protect—keep in mind that you don’t want to lose any transaction history or inventory records either. If you lose any of this information or if there’s a violation of privacy, you could be facing civil and/or criminal penalties.
Dispensary Compliance is Good Business
Cannabis compliance risks can easily be avoided with proper research and planning. The legalization of cannabis and cannabis products is still fairly new, which is why as a dispensary owner, you and your business are under a microscope. You must be on your toes at all times to ensure that your business not only thrives but remains intact for years to come.
If you have any questions or concerns about licensing and for your cannabis business, we’re here to help with our cannabis consulting services.