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Cannabis Compliance: What You Need to Know to Protect Your Business

Experts project that the global cannabis industry will grow from $28.26 billion in 2021 to $197.74 billion by 2028. With such impressive numbers, it’s no wonder that many entrepreneurs are investing in cannabis-related businesses. But despite the promising prospects in the cannabis industry, few businesses make it through to the top. This is because the […]

Cannabis Compliance

Experts project that the global cannabis industry will grow from $28.26 billion in 2021 to $197.74 billion by 2028. With such impressive numbers, it’s no wonder that many entrepreneurs are investing in cannabis-related businesses.

But despite the promising prospects in the cannabis industry, few businesses make it through to the top. This is because the industry is laden with complex federal, state, and local regulations. Getting a cannabis license, for example, is no easy feat. The application process involves tons of paperwork, mandatory background checks, and licensing fees. Even after obtaining a cannabis license, you need to continue with accurate record-keeping and reporting. Otherwise, you risk license suspension and hefty fines.

So what do you need to know to maintain your cannabis retail license? Read on to find out.

Seed-to-sale Tracking

The cannabis industry has strict requirements for tracking cannabis products’ life cycles from seed to sale. While this seems hard to hack, you can make the whole process easier by using the latest tracking technologies. Here are a few options to help you follow the tracking and reporting regulations.

Metrc

Metrc is the acronym for Marijuana Enforcement Tracking Reporting Compliance. It is a cloud-based software platform for tracking cannabis products from seed to sale. As of January 2022, 16 states had adopted mandatory Metrc software.

Metrc acts more like a reporting tool. However, it does not offer cannabis business owners in-depth data insights into the cannabis supply chain.

Fortunately, it allows third-party software integrations. So cannabis growers, manufacturers, and retailers can adopt seed-to-sale software that integrates with Metrc. Such integrations help improve their regulatory data reporting processes.

Seed-to-sale Software

Seed-to-sale software is an all-in-one solution that helps you gather data across the cannabis supply chain. You can then use this data to help you keep up with your state’s traceability and compliance regulations.

POS System

Despite the holistic nature of seed-to-sale software, you can still lose out on customer experience, sales reports, and data analytics. But with a good POS system, you can easily fulfill the specific needs of your cannabis business. The system also allows integration with government traceability platforms like Metrc and inventory management software to ensure compliance.

Looping

Looping

An undercover sting operation in late 2017 in Colorado led to severe punishments for the Sweet Leaf dispensary chain and marijuana grower. To put things in perspective, here are the punishments meted out:

  • $2 million in fines
  • Revocation of all its 26 cannabis cultivation, manufacturing & dispensary licenses
  • One-year prison sentence, one-year mandatory parole, and one year of probation for the three owners,
  • Budtenders facing felony charges
  • Orders to the owners to stay out of the marijuana industry in Colorado for 15 years

A compliance violation called looping led to local authorities delivering such severe punishments.

Every state that allows legal cannabis sales has a stipulated daily purchasing limit for consumers. For example, Colorado has a dispensary transaction limit that specifies a customer may buy or possess a maximum of 28 grams of marijuana in a single transaction.

Looping is the illegal practice of circumventing the state-mandated transaction limit. Essentially, customers will loop around the building after their initial daily limit purchase. A few moments later, they return for a second purchase from the same dispensary. They may buy and possess massive amounts of cannabis exceeding the legal limits specified under state law.

Fortunately, looping is easy to detect and prevent. This is especially true if you’re tracking daily customer purchases through requisite technology. You can use a POS system to ensure daily limit compliance. Here are the steps that the system follows to ensure compliance:

  • The POS scanner verifies each customer’s ID. It then creates a customer profile.
  • Each purchase by the customer is tracked and connected with their profile, capturing the full amount of weed products sold.
  • If the customer comes back on the same day, the POS will calculate the quantity previously bought. And the amount left before they strike their daily limit.
  • Upon reaching the daily limit, the system will issue alerts before future sales.

Selling to Underage Patrons

Selling marijuana to underage individuals contravenes cannabis regulations. In Oregon, dispensaries found guilty of selling cannabis to minors face a fine of $4,950 for a first-time offense. You could also have your license suspended for up to a month. And in the worst-case scenario, you’ll end up losing your license altogether. Similar to daily purchase limits, the legal purchase age for marijuana varies from one state to another.

That being said, fake IDs are becoming more sophisticated than before. Barcode-only solutions may not be enough to unmask them. But you can use automated ID verification through the dispensary POS to curb the onslaught of fake IDs. It captures ID data and issues an alert when the set minimum age is not met or if the ID is fake.

Packaging and Labeling Stipulations

Packaging and Labeling Stipulations

Different states have their own packaging and labeling requirements. But cannabis products are generally mandated to be in packaging, that is:

  • Tamper-proof
  • Child-resistant
  • Opaque (for edibles)
  • Re-sealable (if for several servings)

Consumers process the information on labels to make their purchasing decisions. In California, for example, cannabis product labels should not:

  • Use child-attractive designs like cartoons or images
  • Make unsubstantiated health claims

Of course, you may not be packaging and labeling cannabis products in your dispensary. Nevertheless, as a retailer, the onus is on you to make sure the packaging and labeling of all products on your dispensary shelves comply with your state’s regulations.

You don’t want to end up with a compliance violation right on your shelves without your knowledge. So make it a habit to inspect all received cannabis products from your suppliers. And make sure that they fulfill the requisite packaging and labeling requirements of your state.

The Bottom Line

Despite cannabis being legal in many states, it’s still a highly regulated substance. Therefore, cannabis businesses have to comply with many compliance regulations from federal, state, and local jurisdictions.

Because the regulations keep evolving, you must stay informed on the latest cannabis regulations and best practices. To make your work easier, consider hiring a compliance manager. They’ll do the leg work for you and ensure that you stay compliant and avoid license suspension.