Business
Opinion: The top 5 cannabis compliance mistakes and how to avoid them
Plant-touching and ancillary cannabis businesses are operating within one of the world’s most fragmented regulatory landscapes.
And as more U.S. markets come online, keeping track of cannabis compliance requirements will only become more complex.
The importance of marijuana regulatory compliance cannot be overstated.
Implementing a robust compliance program is critical to protecting not only businesses but also licenses, pipelines and reputations.
It is also key to creating a culture of accountability that encourages employees to follow the rules, which frequently change.
Here are the top five cannabis compliance mistakes to avoid:
Mistake 1. Not understanding the agencies that regulate you
One of the most common mistakes cannabis entrepreneurs make is failing to understand the agencies that regulate their businesses.
For example, California has numerous state agencies that regulate cultivation.
At the local level, operators can be regulated by a board of supervisors or city council as well as fire, planning, police, public health and tax departments.
A good first step to enacting a robust compliance program is creating a list of all local and state regulatory agencies and keeping their contact information easily accessible.
Mistake 2. Tuning out after you do the initial legwork
Regulations that apply to your business are likely to change.
Your company will benefit from monitoring local and state agencies as well as the legislature in key markets.
These entities usually give plenty of notice before discussing cannabis-related issues.
Sign up for email notifications from all relevant authorities and have a system that tracks important meetings on a calendar, monitors agency websites and helps you stay on top of the latest regulations – both proposed and final.
Mistake 3. No standard operating procedures, checklists or monitoring logs
This is a big one.
Many cannabis businesses cut corners when it comes to setting up standard operating procedures, checklists and monitoring logs.
It is nearly impossible to stay in compliance if you don’t have a firm grip on day-to-day business processes.
Taking the time to identify steps that could present potential compliance risks and setting up SOPs will help mitigate risk.
For example, you might need checklists for packaging and labeling or logs to sign visitors into your facility.
Keep in mind, these tools have no value unless you train staff on implementation.
So, in addition to setting up SOPs, checklists and monitoring logs, don’t forget to set up regular employee training.
Mistake 4. Documents aren’t easily accessible
The number of businesses I have seen get dinged for failing to fully understand all reporting requirements is astronomical.
Many operators fail to keep records accessible in the event of document requests from state or local agencies.
Consider creating a master list of records and then organizing them to be easily accessed when needed.
You can also integrate reporting requirements into your SOPs and then ensure that employees understand which situations trigger reporting requirements.
It is a good idea to make sure your list identifies whether a given situation requires prior approval or can be reported after the fact.
For example, employee hirings and firings can typically be reported after the fact, whereas bringing on new owners or investors – or modifying your premises – will typically require prior approval from a state and/or local agency.
Having a comprehensive, easily accessible list of reporting requirements will help considerably with your compliance efforts.
Mistake 5. Failing to leverage the tools at your disposal
Many companies fail to implement technology and tools that can identify compliance issues before they become a problem.
Software-as-a-service (SaaS) solutions in other heavily regulated industries such as banking, finance and insurance already have widely adopted the use of financial technology and regulatory technology tools to improve business operations.
Today, there are a host of SaaS solutions that can help business owners electronically store and organize their documents.
These tools allow business owners to search records electronically, download and print records, if needed, as well as track all processes and procedures and help spot potential problems.
Ultimately, these tools not only help ensure that nothing dangerous makes its way to the public, but they also protect the reputation of your business and can save your company significant time and money.
Marion Mariathasan is the CEO of Simplifya, a Colorado-based regulatory and operational compliance software platform for the cannabis industry. He can be reached at media@simplifya.com.
Source: https://mjbizdaily.com/how-to-avoid-common-cannabis-compliance-mistakes/
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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