All of the hard work building cannabis business pointless if compliance fails
You own a shoe store. Your factory makes furniture. The business you hatched in your kitchen three years ago now crafts burritos in a facility, which you ship frozen to coffee shops across the region. For all of the above, compliance matters — different local, state and federal regulations guide how you do business. But navigating the regulatory waters is a minor part of your work
Rules are Tougher, Different for Cannabis Businesses in California
You own a dispensary. A grow. A company that manufactures THC-infused chocolates. Compliance is one of the foundations of your entire California business. It’s complicated, and ever-changing. Mess up, just once, and watch your life savings go up in smoke.
Cannabis entrepreneurs and businesses face manifold challenges unique to the industry, including banking (we really can’t work with traditional financial institutions), and worry about a cannabis crackdown from the federal government and zoning issues. But when it comes to complying with the thicket of regulations that touch everything from security cameras in grows to product testing to labeling, record-keeping, inventory-tracking and so much more, the cannabis industry stands apart. The wilderness of rules and regulations that circumbscribe nearly every aspect of the industry is staggering.
Got it? You’d better — dropping the ball in the compliance realm is like playing with matches on an oil rig.
California is Least-Compliant Cannabis State in the Nation
California cannabis businesses are the least compliant in the nation, even though the rules have been fairly mushy (compared to the regulations that will be implemented in 2018), according to Steve Ownes, the CEO of Adherence Compliance, a Colorado firm that manages compliance for cannabis business, in an interview with Forbes.
“California’s market has been mostly unregulated since inception, but all businesses must be dually licensed and compliant by Jan. 1, 2018. There’s not much time,” he said. “Compliance is the coming storm in California.”
Three Ways to Stay On Top of Compliance
Hire employees or contractors who make compliance their business
Building and running a company takes a lot of work. You need to deal with logistics, employee training, paying invoices, product development and so much more, every day. Tunneling into the rabbit’s warren of compliance will steal far too much valuable time, and you still might not get it right. Whether you hire a staffer who makes implementing and monitoring compliance her job, or enlist the services of a contractor that specializes in cannabis compliance, this is an important step.
Get involved in the industry
Even with good a good compliance-oriented team in place, things can fall through the cracks, especially because rules tend to change. Put 10 or 30 cannabis entrepreneurs into a room for a happy hour meet-and-greet, however, and chances are people will be talking compliance — including those new rules the city manager quietly implemented two weeks ago. This is one industry where networking truly matters, and not just for the sake of drumming-up new business or cementing existing commercial partnerships over drinks (or puffs). In cannabis, networking is key, too, for staying on top of regulatory shifts and compliance challenges. Get out there amongst your people, and talk compliance.
Remember how we urged you to hire staff or contractors to handle compliance? We meant it — that’s an important step. But that doesn’t imply you can forget about compliance and move on to other business-building tasks. Compliance is far too important to just hand-off and walk away — remember one misstep could mean a fall into the abyss (say goodbye to all that you have built). In addition to networking and talking with industry friends about compliance, become familiar with the biggest compliance issues, and check on them yourself whenever you have spare time. When you are walking through the manufacturing facility, re-examine all of the verbiage on the labels sitting in stacks. While at the store, try to fade into the background every once and observe how your budtenders interact with customers — are they following all of the rules? Regulations nearly swaddle all that goes on in the grow, including the substances used for fertilizer and to fight pests. Understand the range of banned substances, and make sure you don’t find any jugs of the forbidden stuff tucked away in corners of the grow. Meet with your compliance team every week and go through a check-list of compliance issues. Track compliance just like you track inventory and sales.
And get to know your regulators, too. There is a good chance they will swing by your business now and again for spot checks. They will be scrutinizing your paperwork with microscopes. Testing labs could be part of your world. Don’t hand-over all interactions with regulators to employees — make sure you know them personally, and vice-versa.
If you stay on top of compliance and hug it close as an ongoing priority, chances are you never will fall into that abyss.
Now get out there and create the best tasting, most THC-precise line of chocolates in California. The product development work will make you sing, the branding will engage your creativity, prepping the sales team on the pure awesomeness of the new product will fill you with energy. This is what you were made to do. And if all of the compliancy i’s have been dotted and t’s crossed, you should be able to engage with the fun stuff for the rest of your long career in this historic industry.