Post date: 4/3/2018

Is Your California Cannabis Business Compliant?

If we look at the current landscape facing the cannabis industry, we find that a business is made to comply with a huge number of regulations. This is the biggest obstacle for businesses operating in this market or planning to join the market.

METRC, “regulatory compliance system” for marijuana businesses, ensures compliance in the cannabis industry by identifying and tagging plants, cannabis, and cannabis products. To check compliance, the Marijuana Enforcement Division has the authority to perform audits of cannabis industry businesses. A MED member may inspect a business’s facilities, operations, inventory. It may scrutinize the METRC account to check for discrepancies between the “recorded business proceedings” and the “actual operations” of the business.

For commercial cannabis purpose, dual licensing operates in California. Dual licensing, here, means that the cannabis business will first have to obtain a permit from local jurisdiction and then obtain a license from the state i.e. two sets of regulations it has to comply with.

If you are too overwhelmed by the regulations and don’t understand from where to start, here is a checklist that will give you an idea of what the road to obtaining a California Cannabis license looks like.

ONE. Preparing a list of regulatory authorities.

At the state level, there are three main regulatory agencies.
The Bureau of Cannabis Control.
The Department of Food and Agriculture.
The Department of Public Health.

Other regulatory authorities to which the cannabis business has to comply with include the Department of fish and wildlife, Regional water boards, the California Department of Insurance and the California Department of taxes and fees administration.

Under local jurisdiction, you’re likely to need the approval of the City Council or Board of Supervisors, the City Manager, the Planning Department, the Zoning Administrator, and Police, Fire, and Building Departments.
Prepare a list of all the agencies (and their requirements) that will regulate your cannabis business.

TWO. Get knowledge about local ordinance.

Getting local permit is first step towards obtaining your Cannabis license. The local cannabis ordinance will enlist the criteria you need to adhere to get a license. You must have a security plan, business plan an odor mitigation plan and a community relations plan which aligns with local ordinance. Some local ordinances are stricter than State’s regulation. You need to make sure your application adheres the local rules. Listening to public hearings of local jurisdiction will familiarize you  decision makers and the community.

THREE. Checking location.

You need to make sure that Business is located in area zoned for cannabis activity and satisfies local and state requirements. In case of a lease, the lease should enlist cannabis operations as a permitted use.

FOUR. Prepare Standard Operating Procedure.

You must prepare a SOP for every part of operations. Every requirement of the State or local body should have a corresponding SOP. Employees should be trained to follow the SOP for every action.

FIVE. Conducting Audit.

It’s important not only to have SOPs but also to follow them. Conducting regular financial, security and inventory audit will not only  prevent a regulator showing up at your door for poor business practices but also save all potential penalties.

SIX. Complying securities regulations.

If you’re raising funds from investors you need to consult your attorney. It should be determined whether the investment constitutes security. If yes, whether securities exemption is available should be analyzed.

SEVEN. Reviewing.

It’s important to review all the representations, warranties, and indemnity provisions in your  contracts from time to time. You must also make sure that  the other contracting party complies with all regulations. He/She has proper licenses and will compensate you if they’re negligent or deviate from their representations and warranties.

EIGHT. Have a compliance team.

Depending on the size of your cannabis business, you must maintain a compliance team. Compliance team is important not only for regulatory reasons but also for identifying any inefficiencies and irregularities in your operation and correct them. Regular meetings of compliance team and your employees will benefit as improved communication will improve profits.

Compliancy of the laws is important for the success of any business. Pinpointing the cannabis business requirements for starting and then  maintaining itself in the market are as follows:

1. Licensing requirements
2. Proper visitor intake procedure
3. Seed to sale inventory tracking
4. Proper waste disposal procedures
5. Record keeping and documentation requirement
6. Packaging and labeling requirement
7. Cannabis transportation procedures
8. Product storage
9. Securities requiremet
10.Preparedness for State or local inspections

The regulations laid down by the law must be followed through a robust compliance
protocol to not just obtain but also maintain business license. When proper laid down procedures are followed it results in standardized and reliable cannabis. Customers down the supply chain are satisfied and are assured of the same quality every time. This will create loyal customers for the business and will also help differentiate the business against the like businesses in the competitive market.

Reference Links:
1. https://www.metrc.com
2. https://www.cannalawblog.com/cannabis-compliance-the-essentials/
3. https://evolutionzconsulting.com/metrc-101-metrc-work/#sthash.9KX8DQqQ.Zi13Lai9.dpbs

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