Updated: Mar 20, 2019
Part of your task as a licensed cannabis cultivator is maintaining daily compliance with various, strict regulations across all facets of your business. Cannabis businesses are not only subject to state licensing and regulation requirements, but must also abide by city, county, and federal regulations as well. In the dawn of cannabis reform and regulation, federal and state legislators are still fumbling with fine-tuning the details, which can only be expected in such a new industry.
However, with legislation and regulations in a constant state of flux, establishing and maintaining compliance in your business may be complex, time-consuming, and at times, frustrating. Consequences for noncompliance include stiff fines depending on the type and number of violations or worse—loss of operational license. According to Adherence Compliance, cannabis businesses are likely to receive 14-15 infractions per audit. With an average score of 81%, there is not a single cannabis cultivator that is 100% compliant- so don’t feel so bad, bud.
It’s of the utmost importance, though, that stakeholders oversee compliance procedures in every dimension of the cultivation operation to avoid disruptions and remain reputable. The list below consists of the top five compliance violations for cultivation facilities. However, these are considered “across the board” infractions and it should be duly noted that compliance infractions and penalties will vary according to the individual state’s legislation.
Top 5 Cultivation Compliance Infractions:
1. The facility does not reconcile all cannabis inventories at the beginning and close of business each day. (Inventory Management)
2. The facility does not document the material changes required for standard operating procedures and regulated processes. (Standard Operating Procedures-SOPs)
3. The facility does not have a complete inventory of material safety data sheets where the product is used or stored. (Material Safety Data Sheets for chemicals and pesticides)
4. The facility does not maintain an adequate chemical and pesticide application log. (documentation and recordkeeping)
5. The facility has not properly documented all waste and waste removal. (waste and documentation)
HOW TO FIX IT
Inventory is the single most important element of your business- yet about 80% of businesses struggle in this department. For cultivation facilities, regulators review aging lists to determine if the facility is up to date on the physical state of plant inventory. Your state’s designated Marijuana Enforcement Agency will require tracking and documenting plants from seed-to-sale (chain of custody).
While the inventory management system records and archives plant phases, additives, and employee interactions, it’s important to reconcile those daily activities to ensure accountability and accuracy during the plants' maturation. Investing in a good inventory manager who can supply a spotless daily inventory record will save you time, money and products.
Standard Operation Procedures (SOPs)
Keeping your company’s compliancy in good condition includes maintaining standard operating procedures. It is vital to monitor, track, and record the evolution of your SOPs so that the most current versions are accurate, adhere to state regulations, follow protocol, and readily available for enforcement authorities.
Material Safety Data Sheets (for chemicals and pesticides)
Every facility must have an accurate and up-to-date listing of all Material Safety Data Sheets for all chemicals and pesticides on site. The chemicals and pesticides used must also meet the Department of Agriculture and OSHA standards. Under the Occupational Safety and Health Administration, employers are responsible and obligated to provide a safe work environment. State regulators may involve the Department of Agriculture and/or OSHA if issues with chemicals or pesticides exist.
Documentation and Record Keeping
The four most important systems to keep current include: on-premise inventory, inventory in point of sale system, state-mandated inventory tracking system for chain of custody, and accounting systems. Operations are required to document the application of pesticides during the cultivation phase. Every time an application of chemicals or pesticides is made, detailed information must be logged—including the application procedure, chemicals involved, approved applicator number, the employee who administered the application, and so forth.
Complete, updated, and accurate logs are vital to avoid fines and investigations in all facets of your business and its records. These include applications, waste removal, visitors, and security/surveillance logs. Potential issues and omissions in the documentation and record keeping are simple to spot and often lead to further investigations. In other words, just document everything.
Typical municipal bylaws require tracking plant waste down from the beginning to the end. All waste removed from your facility must be tracked down to the gram and sometimes combined with other waste to make it unusable and unrecognizable. There are many waste management services that will do and document the work for you or can provide third-party verification if you chose to self-render the cannabis waste onsite.
Form A Compliance Alliance: A Third-Eye To Help You Comply
It’s important to remember that a license to grow, manufacture, and sell cannabis is a privilege. Business owners tend to focus more on the offense of the industry, promoting marketing sales, and neglect their defense, compliance. Also—many of the components that are neglected in your business, are most likely neglected by your competitors as well. Make compliance a strength for your company to keep winning in the industry and to keep the industry winning. When companies comply, they are helping to fabricate quality standards in the cannabis industry. Don't meet the standard, be the standard.
Most importantly: be proactive. Consider consultation services provided by independent companies such as Adherence Compliance or The J. Whitney Group. Consultation services are separate from enforcement and reduce the risk of violations and penalties. OSHA also offers an On-Site Consultation Program for free and confidential safety and occupational health advice to small and medium-sized businesses in all states.
Detailed compliance reports are another great way to prevent infractions by having a third- party company evaluate what is happening and provide you a list to correct the infractions immediately. This makes the inspection process much easier and demonstrates you are acting in good faith and responsibly with your license. It indicates that you are, at least, trying to play by the rules.