Compliance Chronicles: 3 Key Pitfalls Cannabis Operators Overlook
Compliance in the cannabis industry is a maze of regulations that can leave even the most well-intentioned operators vulnerable to fines, shutdowns, or worse—license revocation. As a cannabis attorney, I’ve seen firsthand how small oversights can lead to significant consequences. In this blog, I’ll highlight three of the most common compliance pitfalls and how to avoid them.
Pitfall #1: Ignoring Local Permits
While many operators focus on state regulations, neglecting local permits can be disastrous. Local governments often have their own requirements, and failure to comply can result in immediate shutdowns.
Why Local Compliance Matters:
Local approval is often a prerequisite for state licensing.
Cities and counties may impose zoning, community engagement, or operational requirements that differ from state rules. Make sure that your business is following both state and local licensing rules and regulations.
Common Mistakes:
Overlooking Zoning Laws: Some operators choose locations without verifying compliance with zoning ordinances. This can lead to entering into a lease agreement and spending time and money only to find out, the location does not comply.
Missing Renewal Deadlines: Expired local permits can halt operations.
Skipping Community Engagement: Certain municipalities require outreach and support letters from stakeholders. Even if your municipality does not have such a requirement, it’s a great idea to get to know your neighbors and understand their concerns. Being a good neighbor is a key to successful long-lasting cannabis business.
How to Avoid These Mistakes:
Do Your Homework: Research zoning maps and ordinances before signing leases.
Track Deadlines: Use compliance software or calendars to manage renewal schedules.
Engage Locally: Build relationships with community leaders and government officials.
Pitfall #2: Incomplete Recordkeeping
Recordkeeping isn’t glamorous, but it’s one of the most critical aspects of compliance. Poor documentation can lead to significant fines and regulatory scrutiny.
Why Recordkeeping is Critical:
Regulators rely on records to verify compliance with seed-to-sale tracking, employee training, and more.
Accurate records are essential for audits and inspections.
Common Mistakes:
Over-reliance on Software: Assuming automated systems are foolproof without manual checks.
Insufficient Employee Training: Untrained staff often make data entry errors.
Skipping Internal Audits: Many businesses fail to routinely check records for accuracy.
How to Avoid These Mistakes:
Invest in Training: Ensure all employees understand tracking systems and compliance requirements.
Conduct Regular Audits: Identify and address discrepancies before regulators do.
Maintain Backups: Store both digital and physical copies of essential documents.
Pitfall #3: Neglecting Employee Training
Your employees are the front line of compliance. Without proper training, even the best systems and protocols can fail.
Why Training Matters:
Employees are responsible for executing daily compliance tasks, such as inventory management and customer interactions.
Regulators often scrutinize training logs during inspections.
Any act, omission, or failure of an employee, within the scope of employment, is deemed an act, omission, or failure of the licensee – i.e., your employees mistake is your mistake.
Common Mistakes:
Underestimating Turnover: High employee turnover can leave critical gaps in compliance knowledge.
Generic Training Programs: One-size-fits-all training often overlooks role-specific requirements.
Failure to Document: Without proper records, it’s impossible to prove training occurred.
Failure to have Continuing Education and Training: Licensees should ensure their employees are up to date on the regulations and offer refreshers on a regular basis.
How to Avoid These Mistakes:
Develop Role-Specific Training: Tailor programs for budtenders, cultivators, and security personnel.
Document Everything: Keep detailed records of training sessions, including dates and attendance.
Make Training Continuous: Update programs regularly to reflect changes in regulations or company policies.
Safeguarding Your Success
Compliance is the backbone of a successful cannabis business. Ignoring local permits, recordkeeping, or employee training can jeopardize your operations. By addressing these pitfalls proactively, you’re not just avoiding penalties—you’re building a sustainable business that regulators and customers can trust. If you’re feeling overwhelmed by compliance challenges, let’s work together to safeguard your success.
Contact me today to develop a proactive compliance strategy tailored to your cannabis business. Together, we can navigate the complexities of this industry and ensure your operations thrive.
