Getting Compliant in a New Cannabis Market
November 8, 2018
November 8, 2018
If you prefer to listen vs. read about cannabis compliance, check out the podcast with Greg Huffaker III and Tyler Stratford that goes along with this post here.
The Business of Compliance
There’s a saying in the cannabis industry that cultivators, retailers, extraction professionals, etc. aren’t really in the business of producing and selling cannabis – instead, they’re in the business of compliance. The emerging cannabis industry is bogged down by regulation. The plant’s status as a schedule one drug means that when states start cannabis programs, they do so under strict control.
Enter compliance. A term we’ve all come to know, but what does it really mean?
A general answer is that compliance means following the letter of the law — making sure that your business is following the regulations, tracking what needs to be tracked, and securing what needs to be secure. However, it’s more than being on board with what rules regulators set out. Compliance is also about being a good and responsible business owner. It includes fully understanding the regulations, how they apply to your organization, and where to go when you’re not sure.
Leverage Your Compliance
Before you write compliance off as a minimum requirement to run in the background of your business, consider how compliance can be a competitive advantage in this new industry. Most people in this space know that federal prohibition is coming to an end sooner than people think. The common consensus is that we’re talking about “when” and not “if”. When federal legalization happens, the value of cannabis businesses is going to increase dramatically. Mergers and acquisitions are guaranteed. Being able to prove your business is not only currently compliant, but has never had a violation, could be the thing that tips the scale in favor of one business over another.
Businesses that are getting started today are figuring out that there is a long list of things to consider, depending on which area you’re working in. It’s a whole lot cheaper and requires a lot less effort to get it set up correctly on day one than to retrofit and make changes once the business starts running. To do that, our compliance experts suggest beginning with these action steps to get your business on the right track:
1. Find an attorney that you like: Emphasis on “that you like”. Don’t be afraid to shop around, as there are many attorneys in the cannabis space who don’t know the industry. So, it is not only important to find someone who knows what they’re doing, but also someone you feel comfortable asking about any questions that come up because they will come up. Ideally, you want your attorney to feel like a partner in the process.
2. Find someone who wants to do compliance: This is critical. Find someone who loves details and is passionate about compliance – someone process-oriented who can turn those compliance objectives into standard operating procedures (SOPs) so everything runs smoothly.
3. Create a culture of compliance: By prioritizing compliance and stressing the importance to employees, your business stands a much better chance of avoiding violations or worse. When we think about what happened in Denver this year with SweetLeaf, it’s clear that a culture that doesn’t prioritize compliance or that is interested in testing regulations can lead to the downfall of an organization. While some could argue that SweetLeaf was potentially within the regulations, they have also been stripped of their licenses. Exercise caution when playing with fire, folks.
4. Get help if you need it, where you need it: Cannabis consultants can be hugely beneficial, but may not be critical depending on your experience. If you are doing something brand new, it makes sense to hire a company that has the experience to help with that piece. However, there will certainly be areas that you can manage on your own. We believe in you!
5. Don’t be afraid to ask a regulator: Regulators are usually very happy to get feedback from the people working with the rules they created. In this industry, many regulations are written quickly, and thus, poorly, so asking a regulator to explain can be not only beneficial to your understanding, but potentially in how regulators draft rules going forward.
This is a condensed version of a blog that was written by CanopyBoulder, a venture capital fund and business accelerator for ancillary cannabis companies. Click here to read the complete “Getting Compliant in a New Industry” post.
Ready to take the next steps in a new cannabis market? Canna Advisors has compliance services available and we’re ready to streamline the process for you. Contact our team of experts today.