Member Blog: Cannabis Compliance – 6 Tips To Avoid Dispensary Fines

by Tommy Truong, KayaPush

Cannabis Compliance is one of the things to which every cannabis dispensary must pay attention. Not only does compliance ensure that you have the legal right to carry out your cannabis-related operations but it also helps keep your business from unnecessary fines and sanctions.

The U.S. Food and Drug Administration (FDA) has stipulated various regulations for cannabis-derived products at the federal level. In addition, there are regulations at the state level. Violating any of these regulations can land your cannabis business in trouble that could potentially lead to revoking your license.

Also, people generally have greater trust in regulation-compliant businesses, so compliance is healthy for your business reputation. It is important, therefore, to structure your business operations to align with the cannabis dispensary guidelines and regulations operational in your area. 

In this article, we will cover 6 tips and tools to help you keep your cannabis dispensary from incurring any fines or lawsuits, let’s dig in!

1 – Digitization of licenses and renewal

In an industry as critical as cannabis dispensing, unauthorized operations constitute a serious offense and may attract severe penalties. The reason should be obvious—cannabis and its products can pose a raft of risks when handled by the wrong people.

This is why your dispensary must be properly licensed by the appropriate government body to be fully authorized for cannabis operations. Your cannabis business is at the risk of heavy fines, suspension, or even total shutdown if you operate without a license.

Different states may have different requirements for obtaining dispensary licenses. There may also be local laws and regulations within the state. You need to ensure that you discover and comply with all the requirements applicable to your locality.

For instance, the State of Colorado requires that employees in the cannabis industry must possess a MED (Marijuana Enforcement Division) license. This means that if your dispensary is in Colorado you not only need to get licensed as a business but each of your employees must also obtain licenses.

You must also ensure that your business license and those of your employees (where applicable) are up to date.  The requirements for licensing evolve with changes in cannabis regulations and you will need to stay abreast with information about license requirements in your area in order to maintain your cannabis compliance.

Tracking your licenses and their renewals can be quite a task. But you can save yourself hassle and stress by using a digital HR system to store and manage your licenses.

With HCM software, you can manage your employee profiles and ensure that every worker has the necessary licenses to work in your company. This way, you minimize the risk of operating without a license and violating cannabis compliance regulations.

The software also lets you store and track your licenses and set up reminders to alert you when a license is coming due for renewal. This feature makes it easy for you to maintain up-to-date licenses and renewals. 

2 – Use state traceability with a seed-to-sale integrated POS.

One of the major concerns in the wake of the increased legalization of cannabis is the ability to monitor the product from seed to sale. From the top of the production and supply chain to the bottom, traceability is crucial to cannabis compliance.

Monitoring and tracking every single step of this supply chain helps to ensure that cannabis and its products do not fall into the wrong hands — and this goes a long way to ensuring that the product is not abused in any way.

Cannabis and its products can be exposed to contamination with toxic chemicals and other harmful substances via pests or unhygienic processes. Such contamination may pose serious health risks if not prevented or properly managed. With well-detailed traceability, you will be able to track each step to be sure all necessary safety measures are in place.

 Your license proclaims that you can be trusted with handling a product as sensitive as cannabis. One of the ways you can demonstrate this is by accurate accountability — and this comes naturally with good traceability. You should be able to give a proper account of every single cannabis product offered by your dispensary in case of audits or investigations.

Implementing adequate traceability is not as difficult as you might think. Compliant POS software that has this feature enables you to automate traceability with relative ease.

This type of software is integrated with the required traceability systems such as Metrc, BioTrackTHC, and Leaf Data Systems. With these, you can rest assured that your data reporting complies with the requirements of the U.S. government.

3 – Time clock software that uses facial recognition technology

Staying compliant in the cannabis industry requires that you commit your operations to qualified employees. Given that cannabis is a highly sensitive commodity and can easily be abused, you must establish a means of regulating who gets involved in your processes.

A time clock software product will help you keep track of your employees, their clock-ins, breaks, meal times, and other important indices. You can restrict and regulate who gets access to what, where, and at what time.

For instance, an underage person might attempt to clock in for a friend and get involved in your cannabis business operations. Also, chances are that someone in your company might attempt to punch in for a shift when it’s not their time. 

These buddy punching practices can sometimes land you in serious compliance violation trouble. Using software with advanced face recognition technology will help you control unauthorized employee clock-ins by granting access only to the right person in the right place — so you can be sure you are staying compliant as your workers have minimal chance of violating labor codes. 

Time clock software not only protects you from cannabis compliance risks but also from violating other laws that might lead to severe consequences. For example, violating the California labor codes — part of the laws in California — can lead to a lawsuit that may eventually cost you a fortune.

The California labor code provides that employees are entitled to a 30-minute meal break per five hours of work. This means an employee can potentially sue you with a PAGA lawsuit claiming that they have been deprived of meal breaks — a violation of a labor code. As trivial as this may sound, the lawsuit may eventually attract serious penalties to your business.

In this scenario, you can avert such lawsuits by providing proof that the employee clocked in and out for their meal breaks so gathering such evidence won’t be an issue. You can also automate your payment system to sort out necessary employee payments to ensure you stay compliant.

4 – Select POS software with purchase limit alerts and built-in ID

As part of cannabis regulations, different states in the U.S have different purchase limits. This means that you are not legally allowed to sell more than a stipulated amount of cannabis and its related products to a customer within a stipulated time.

For instance, both medical and recreational consumers can only purchase one ounce of cannabis per transaction in the state of Alaska. The limits are different in California where medical cardholders are allowed up to eight ounces per day, while recreational buyers are constrained to just one once daily.

If your dispensary does not pay attention to these purchase limit regulations, there is a high risk that you will be found to be violating the law and face dire consequences. Since it cant be difficult to manually track transaction limits, you can leverage POS software to set up purchase limit alerts.

Using POS compliance technology provides you with this very important feature. You can customize your system settings to alert your dispensary whenever a transaction goes beyond the stipulated purchase limit for a customer so, it becomes easier to set up your system to maintain your cannabis compliance anywhere you are in the United States.

Using a system with built-in ID features can also help you combat looping. Looping occurs when cannabis buyers purchase up to their limit, lay it off somewhere, and return for another purchase. It is usually done as a way to bypass the transaction limits.

With the built-in ID feature, you can link a customer profile to the transactions carried out by that customer. That way, you can easily detect the number of products a particular registered customer has purchased and set purchase limit alerts on their profile. So, no matter how many times they come, you will not be able to sell more to them if they have already reached their limit.

5 – Create customizable clock-in surveys

Clock-in surveys can help you ascertain some important details that enable you to maintain a compliant working environment. You can customize your clock-in surveys to obtain different information from different employees for different analyses and purposes.

For example, you can customize a clock-in survey to confirm that a new employee understands and remembers the compliance regulations applicable in your company. You can automate the survey to run for an employee’s first week at work to help them get accustomed to the regulations.

You can customize another clock-in survey to ascertain that your employees are up to date with the most recent legislative changes in cannabis compliance rules. This kind of survey can be automated to run at intervals, say once every 3 months.

Such clock-in surveys help you ensure that you leave nothing to assumption or chance. It goes a long way in keeping the consciousness of cannabis compliance very much alive in your dispensary.

6 – Hire a compliance manager

Given how important compliance is in the cannabis industry, it makes sense for you to prioritize ensuring that your dispensary is as compliant as possible. One of the most effective ways to do this is by hiring a compliance manager.

Notwithstanding, it is great to automate your operations to ensure compliance, it is also not a bad idea to employ a compliance manager to oversee your compliance-related issues.

Part of what a compliance manager does is to help you develop, implement, and review your internal operational policies to ensure they match the current compliance demands. In case any changes are made in compliance regulations in your area, your compliance manager will be devoted to enforcing those changes to keep your dispensary from violating the new rules.

Stipulating policies and regulations might not be sufficient. You may need someone who is committed to enforcing these policies among your employees. This is where employing a compliance manager can pay off.

With a compliance manager in place, you can focus on your business, its growth, and development while you can rest assured that you are not at risk of dispensary fines as a result of violating cannabis compliance regulations.

Tommy Truong is the Director of Partnerships at KayaPush; the cannabis software helping dispensary owners manage their employee HR, scheduling, and payroll. KayaPush also integrates with leading dispensary POS systems.

Tommy loves hot sauce, fried chicken, and running with his Boston terriers.