Owning and operating a small business comes with no shortage of challenges. But for cannabis dispensaries and retailers, the complex legal framework can present serious obstacles. Failure to comply can lead to fines, jail time, and even losing business licenses.
With an ever-changing regulatory landscape, cannabis business owners need to ensure that they’re in constant compliance with the laws. And even the smallest breach of compliance can lead to steep consequences. While most business owners may set out with the best intentions, things can still fall through the cracks.
Here are 5 common mistakes that cannabis business owners often overlook.
Insufficient employee training
Owners and operators likely recognize the importance of strictly following compliance requirements. But not every team member will come on board with the same understanding. Some of the most obvious mistakes happen because employees weren’t properly trained.
From production to sale, every step comes with very specific rules and procedures to ensure legal compliance. So the training process needs to be thorough. Developing and consistently updating standard operating procedures is key. It’s also important that managers explain the reason for each specific rule so that employees can understand the gravity of certain mistakes.
For example, when shipping cannabis, the weight recorded by the dispensary needs to match exactly the weight on the shipping manifest. But if an employee improperly stores the cannabis, it can gain or lose water in response to the humidity in the room, and therefore fluctuate in weight. This can result in serious consequences for both the supplier and the dispensary, from hefty fines to even losing their licenses.
Taking the time to invest in comprehensive employee training can not only prevent legal issues down the road, it can also boost your business and create a safe, trusting work environment.
Processing expired or illegitimate licenses
Each state where cannabis is legal has its own set of licensing requirements. These can include licenses for retailers and dispensaries as well as cultivation and transportation. As a business owner, you’re responsible for making sure that the retailers and suppliers you work with are fully licensed. Otherwise, you risk having your operation shut down.
Additionally, employees need to be up to date on any required work permits per state and local law. For example, in Colorado, employees must have a MED employee license to work in the cannabis industry. Regulators will conduct audits of your employees, and if any are operating on expired licenses or without a license at all, you could face legal trouble.
You can avoid these issues by conducting routine audits yourself. That way you can ensure that everyone you work with is up to date on state work requirements.
It all comes down to individual states and their specific requirements. But regardless of where your cannabis business is located, bad record-keeping can have significant repercussions. Businesses in the cannabis industry are expected to keep a detailed record of all internal operations.
This includes but is not limited to:
- Seed-to-sale movement (some of which must be tracked through state software systems)
- Pesticides and care routines (for growers)
Some states require this information to be recorded digitally. Others want paper copies, and some want both. You don’t want to fall behind or leave out important information should there be a random inspection. It can cost you your business, even if you’ve followed every law to the letter.
It’s also very helpful to keep a backup of everything. You’ll be in hot water if your business is facing controversy or your practices are called into question by state regulators. Without accurate, detailed records, you certainly won’t be given the benefit of the doubt.
Another best practice when it comes to record-keeping is to make sure that all employees involved are signing off. That way you know what happened when and by whom.
One of the biggest offenses a cannabis retailer can commit is over-selling to customers. Each state has a precise cap on how many grams can be sold to an individual in a single day. Violating this, whether intentionally or accidentally, can land you in prison. It’s not something to take lightly.
It’s important to keep in mind that this isn’t as easy to regulate as it might seem. Specific limits vary depending on the form of the THC. Concentrates and edibles, for example, will have different caps than flower. And equivalency laws (which again, vary from state to state) can make this even more complex, with states recognizing different dosage amounts and limits for concentrates.
Another risk is looping. This term refers to customers who purchase the maximum amount and then return later to make another maximum purchase, generally with the intent to illegally redistribute the product.
These risks are easily mitigated with technology designed specifically for the cannabis industry.
Not investing in sophisticated technology
Ultimately, cannabis business owners can’t oversee business operations and maintain compliance without the use of state-of-the-art technology. Software designed for the cannabis industry is critical to the compliance and the success of your business.
When choosing a software solution for your cannabis business, you should look for one that will:
- Prevent overselling through accurate seed-to-sale inventory management
- Provide compliance management to ensure you stay up to date on any legal changes
- Store detailed data and records to assist with state audits
- Generate regular sales reports to help you maintain inventory and compliance
- Integrate functionality across departments (accounting, marketing, inventory, etc.)
Anthea powered by Retail Control Systems offers sophisticated technology solutions your cannabis business needs to stay compliant and successful in this challenging industry. In addition to a complete digital retail suite to help retailers, NexTec is an enterprise resource planning software that’s designed specifically for the cannabis industry.