Cannabis Compliance Issues for Retailers

We’re a few years into the regulated cannabis marketplace, and many cannabis retailers feel like they’re riding a rollercoaster without a safety bar. Running a successful cannabis retail business has its ups and downs, twists and turns, and quite a few bumps along the way. It’s a thrilling but complicated business environment, and cannabis compliance issues for retailers play a dominant role in day-to-day operations. Entrepreneurial dispensary and delivery service owners must be organized, creative, and detail-oriented. They understand (or will soon discover) that an essential part of running a retail cannabis business is complying with many regulations to better enjoy the ride. 

Rest assured, you’re not alone in dealing with compliance challenges, and we thought it might be helpful to provide a brief list of common cannabis compliance issues for retailers. 

Create a Compliance Strategy

Do you have a general compliance plan? Whenever possible, create an overarching strategy for how your dispensary handles compliance issues. Start with identifying critical issues, developing standard operating procedures, and assigning lead employees to monitor/implement them. You can then work your way down the compliance priority list with the caveat that everything is vital to one degree or another. Even minor mistakes may lead to a visit from regulators, fines, or a suspended license. 

Inventory Data Management

Every state with regulated cannabis sales requires extensive inventory and supply chain management. In California and several other states, this means complying with the Metrc® track and trace program. Licensed retailers must account for all cannabis inventory and provide inventory records to the state’s Bureau of Cannabis Control upon request. Investing in a Point of Sale platform like BLAZE that integrates with Metrc will help keep you on top of your inventory data. Don’t take chances! The BLAZE POS platform also includes warning notifications for potential compliance issues to help avoid unexpected violations.

For Mark Simonian, COO of HAVEN Cannabis Dispensaries, Metric compliance requires partners like BLAZE. “There are many ways BLAZE helps HAVEN stay compliant with the state track and trace system through robust METRC integration,” Mark said. “In particular, the pending transactions section makes it easy to identify and reconcile any Metrc issues such as when a transaction doesn’t go through because a tag is wrong or UID is off by one number.” Mark is absolutely correct that when it comes to compliance ⎼ sometimes the little things can grow into larger compliance issues when left unchecked.

Tax Reporting

One of the most important arguments for legalizing cannabis is the tax revenue generated by regulated retail sales. State budgets are reeling, and as a result, accurate tax reporting and collecting are paramount to state officials. Retail sales and use taxes must be tracked and paid to the state’s coffers, and spotty record-keeping is a surefire compliance violation. It is the retailer’s responsibility to collect all taxes due on each retail sale and keep accurate records for several years. In states with both medical and adult-use cannabis sales, accurate tax records closely integrate with customer records. If a patient’s MMJ card has expired, any tax breaks afforded to medicinal purchases may be invalid. If an official state audit reveals poor record-keeping or other tax-related noncompliance issues, the retailer may face an expensive day of reckoning. Any underpaid taxes, interest, and penalties going back to the original purchases could be a costly mistake. 

Customer Records

Cyber and data security are of paramount importance for cannabis retailers. Patient and customer records must be secure as a breach may lead to several non-compliance issues. While data security standards may vary from state to state, it is essential to have strong online and internal data protection plans in place. Secure and correct patient check-in is also vital. Is the receptionist properly trained to recognize a fake ID or MMJ card? Are your records accurate for medical marijuana card expiration dates? Are you properly tracking customer purchases that violate your state’s daily purchasing limits? This is sometimes described as “looping” and regulators may deploy undercover sting operations to test a retailer. Mark from HAVEN weighed in on how BLAZE helps ensure customers are over 21 or over 18 for medical, and the dispensary has updated IDs and doctor recommendations in their records. “It’s great when city or state regulators require transaction history or data because the BLAZE POS platform is so user friendly for generating the necessary reports,” Mark said. 

Dispensary Security

Dispensary security is a never-ending endeavor. Physical security, inventory custody, employee access to secure rooms and safes, monitoring cash transactions, and electronic security measures require intensive planning and operation. In many states, arduous regulations require extensive security arrangements to obtain a license and keep it in good standing. Some states also require strict adherence to building and safety codes specific to cannabis dispensaries, often down to the square inch. States commonly define the number of security cameras, their placement, and recording specifications. Given the preponderance of cash-based retail sales, dispensary security is essential for the retailer and its customers. 

Compliance Issues for Cannabis Delivery 

The delivery personnel may be required to carry a copy of the retailer’s current license, a valid driver’s license, and possibly an employee ID. Passengers are not typically allowed in the delivery vehicle. California regulations mandate transporting cannabis products using a lockbox, container, or cage secured in the vehicle or in the trunk. Most importantly, before providing cannabis products to the customer, a delivery employee must confirm the customer’s age and identity. It’s also important to remember that delivery transactions cannot be made after the state’s mandated dispensary business hours. Cannabis delivery can be a contentious political issue in many jurisdictions, and compliance with state and local laws is absolutely critical. Anti-cannabis politicians will use non-compliance issues to weaken public support, so don’t give them a reason to do so!

All Those Other Regulations

In addition to cannabis-specific compliance requirements, dispensaries need to follow general business laws as well. Workplace safety protocols, employee rights, sexual harassment, and diversity training may be required. A licensed retailer must maintain financial records, personnel records, training records, contracts, permits, security records, and like California, many states require they be made available to state regulators upon request. This is why it’s so important to partner with a company like BLAZE. We can assist with all your cannabis compliance issues for retailers and help keep you organized. We endeavor to make compliance as easy as possible so you can stay in your lane and enjoy the ride along the way.

Care to start a conversation about your compliance needs? We’d love to help, so don’t hesitate to contact us!

Subscribe to our Newsletter

Sign up to receive monthly updates, industry news, webinars and more!