Cannabis Compliance Problems & How to Solve Them

April 13, 2021 Cannabis Business, Entrepreneurs, Legalization

Cannabis compliance problems are the ultimate damper on any business operating in this sector. While countless Americans have been supporting the industry by purchasing cannabis products as they struggle with the pandemic, building and maintaining a cannabis business is challenging.

Even as the industry continues growing beyond what any would’ve thought, maintaining cannabis compliance is still tricky. With unstable and unstandardized cannabis regulations throughout the U.S., it’s safe to say that navigating these restrictions and avoiding costly infractions (or worse) has ganjapreneurs uneasy.

Each state offers its own set of guidelines, demands, and procedures for participating in the marijuana industry. Neighboring states can have entirely different regulations, and some municipalities will vary in their compliance demands.

Let’s cover some of the most common cannabis compliance problems you might encounter while operating a cannabis endeavor. Feel free to use these ‘green nuggets’ of information to enhance your business’s ability to adhere to regulatory requirements.

Looking to mitigate your risk and avoid costly infractions? Contact us today to learn more about what we’re doing to help our clients maintain compliance.

cannabis compliance issues and mitigation

Common Cannabis Compliance Issues to Consider

While maintaining compliance might seem like a lot of work for little to no ROI, this couldn’t be further from the truth. Dodging violations is crucial to remain in business, and once an operation is found violating, the consequences are extreme.

But what happens when a cannabis business isn’t compliant?

Compliance consequences tend to range from huge finds to business license forfeiture. In some cases, business operators can temporarily lose their business.

For instance, according to Marijuana Business Daily, MedMen lost its Virginia medical cannabis dispensary license. Virginia regulators voted to take away the company’s medical marijuana dispensary license because it violated the state’s conditions. These demands were supposed to be met for the operation to get its license and start MMJ sales.

MedMen’s story in Virginia is a worst-case scenario. But the truth of the matter is that without taking caution and remaining compliant, this is a possibility.

Regulatory compliance in the cannabis sector isn’t optional; it’s essential. Whether you’re into cultivation, manufacturing, distribution, or retail, every business in the seed-to-sale supply chain has to adhere to local, state, and federal cannabis compliance demands.

cannabis compliance problems dispensary marijuana

Maintaining Cannabis Compliance

Maintaining cannabis compliance takes time and effort. Between maintaining adherence to regulatory demands, training staff, and preventing non-compliance violations, there’s a lot involved in ensuring your company remains compliant.

Marijuana compliance is a burden. But it’s crucial to protect your investment. For smaller cannabis businesses that find themselves operating on thin margins, maintaining compliance is vital for survival. Unlike large-scale companies, these smaller operations aren’t as established, which means an infraction can be the business’s death sentence.

cannabis compliance problems dispensary marijuana

Cannabis Regulation Complexities

Cannabis regulation complexities are demanding. Without expert assistance, the burden to know about regulations and requirements is placed on the business operator. And since requirements are subject to quick alterations under state and local legislatures, staying up to date on this information is quite time-intensive.

Maintaining cannabis compliance is even more challenging for those growing their business with the idea to scale. For those looking to expand their operations into other jurisdictions, understanding the differences between each region is crucial.

Implementing compliance initiatives and handling all of the other day-to-day operations involves learning tax regulations, occupational safety, medical privacy requirements, food safety, and other aspects of the industry as they relate to your endeavor. And the pandemic hasn’t made this any more straightforward.

Here are some of the most common cannabis regulation complaints:

1. Too many regulations for cannabis

Cannabis compliance in the U.S. isn’t simple, nor is it straightforward. Regulatory frameworks at all levels involve standards, licensing systems, and laws that impact your business as per where and how it operates. Federal cannabis compliance also has some special considerations, including legislation from the Health Insurance Portability and Accountability Act (HIPAA), the Occupational Safety and Health Administration (OSHA), and the Federal Communications Commission (FCC). 

2. Complicated regulations

Cannabis compliance and regulations at all levels have multiple layers. These can be complicated, confusing, and ever-changing, all of which can make compliance feel overwhelming. Cannabis business operators are expected to know and adhere to many regulations, rules, and laws while operating in this sector, ultimately contributing to the complexity of working in this sector.

3. Too much time without a return on the investment

As business owners, we invest our time with the expectation of an ROI. But the time-consuming nature of compliance with little value besides maintaining company licensure makes it difficult for business owners to want to invest the time on compliance. This is especially problematic for small operations that don’t have the time and capital to invest. Simply put, the time these businesses spend on compliance takes away some time that could be spent on things contributing to their bottom line.

4. Unstable reporting tools

While reporting tools for the cannabis sector are available, most of them are unstable state-mandated reporting tools. This is why we recommend combining using a Point of Sale system with a CRM system to communicate with the POS, as well as spreadsheets to maintain books and facilitate record reviews.

With COVID-19, regulations have become even more unstable. State and municipal governments are reacting to the pandemic with inconsistency that only adds to the confusion. But it’s possible to ease the burden of compliance with preparation.

cannabis compliance problems dispensary marijuana preparing

Easing Compliance Issues by Preparing

Compliance is crucial for all cannabis endeavors looking to scale their operations. As more states continue to legalize, we can expect these changes to persuade federal cannabis compliance-related change. But still, it’s essential to abide by regulatory compliance demands at all levels.

Even though the industry lacks an easy way to handle compliance and regulation, it’s possible to minimize the chance for error and reduce your operation’s risk.

Learning about why the laws and regulations control the industry will give you a firm understanding of what you’re legally allowed to do. While the regulations change frequently, it’s empowering to remain current on all legislation.

Prepare for cannabis compliance by:

  • Staying updated on industry trends
  • Reading regulatory blogs and newsletters
  • Participating in training and webinars
  • Monitoring relevant agency websites
  • Bringing in a cannabis CPA to mitigate compliance risk

Meticulous record-keeping will ensure your marijuana business is organized. But this also saves you and your company time, money, and effort in case the time comes when regulators want to check your compliance. This is why investing in secure and efficient record storage systems and documentation is such a crucial aspect of operating a cannabis business.

The cannabis sector is still being monitored closely. With this in mind, now is the time to dedicate the time, effort, and energy to achieving and maintaining compliance standards.

Looking for help monitoring your cannabis operation’s compliance? Our fully-integrated financial partner model is the solution that scales. Contact us today for expert assistance.