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Cannabis Compliance: Avoiding the Landmines

By Nicholas Kovacevich

If you are in the Cannabis Industry, then you already know the importance of keeping your business compliant. While outsiders may not appreciate the web of regulations that govern most marijuana-related businesses, those inside the industry have to deal with them on a daily basis.

Unfortunately, there are still many instances where dispensary owners, producers, processors, or others in the industry risk losing their businesses, their livelihoods, and possibly even their freedom, for failing to adhere to state and local regulations.

There are many examples of dispensaries being cited for failure to comply with regulations.

For example, during the first round of compliance checks at retail marijuana stores in Washington state, 18 businesses sold marijuana to an underage investigative aide. The businesses were cited and the individuals who sold the marijuana were referred to their respective prosecuting attorney’s office for potential criminal prosecution.

A more alarming example happened just recently: Washington’s retail marijuana businesses got calls from the State’s Liquor and Cannabis Board before the sting operations began, warning them and reminding them about best practices to keep cannabis out of the hands of minors. But when the board sent underage operatives into the stores, four of businesses still failed the test.

However, it’s not just selling to a minor that can trigger fines, license suspension, or criminal prosecution. Compliance with all regulations is mandatory, and there are a few areas that can be tricky, even for experienced business owners.

Packaging, or “exit packaging” as it is commonly referred to since it pertains to how product must be contained before it leaves the dispensary, along with labeling requirements, is an area that is ripe with potential compliance land mines.

Requirements for exit packaging vary from state-to-state, and range from virtually none in California, to Nevada’s lengthy list of rules and regulations.

Take a look at the precise labeling regulations in Arizona. Failure to adhere to even one of these requirements can spell big trouble for dispensary owners. Labels must include:

  1. The dispensary’s registration number;
  2. The amount, strain, and batch number of medical marijuana;
  3. The approved Arizona health statement in its entirety;
  4. Where the marijuana was cultivated or obtained;
  5. The date of manufacture, harvest, or sale;
  6. A list of all chemical additives, including nonorganic pesticides, herbicides, and fertilizers, used in the cultivation and production of the medical marijuana;
  7. The registry identification number of the qualifying patient.

Plus, depending on where the marijuana was grown and how it was obtained, the label may also be required to include a list of all chemical additives, including nonorganic pesticides, herbicides, and fertilizers used in the cultivation and production.

Colorado has very specific packaging requirements that have presented challenges to many dispensary owners. The regulations state, in part:

  1. Before sale to a consumer, a retail marijuana store must place products in a container that is child-resistant or place the container in an exit package that is child-resistant.
  2. Child-resistant packaging must conform to the federal consumer product safety commission’s regulations and an ASTM standard; be opaque so the product cannot be seen; be re-sealable if not intended for single use; and be properly labeled pursuant to the Retail Code.

While that may sound simple enough, but the fact is that many containers sold in Colorado (and elsewhere) are not legally “child resistant.” The law states that each container must be tested by an independent lab and approved to meet CPSC standards. While many container companies go through the expense of having their products tested, others do not, and offer “knock-offs” that may look like approved containers, but are in fact, not certified or compliant.

There have been instances where agents with the Colorado MED (Marijuana Enforcement Division) have entered dispensaries and asked to see the actual Consumer Product Safety Commission (CPSC) Packaging Approval Certificates. At least one dispensary was shut down until it could provide the certification (which it could not), and resulted in them having to place a rush order and restock their entire inventory of exit packaging with certified, complaint products.

California presently has almost no packaging regulations, however that will likely change within the coming year as new legislation is being drafted to address inadequacies in current codes. Dispensary owners are being asked to voluntarily begin adopting CPSC child-resistant packaging regulations now, before they are mandated in the near future.

Minnesota requires cannabis be properly packaged in compliance with the United States Poison Prevention Packing Act’s standards for child resistant packaging. Again, many cannabis containers may look similar, but the onus is on the dispensary owner to make certain that their packaging meets these standards, or risk fine, closure, or confiscation of goods.

Nevada takes packaging regulations to another level by requiring that any container or packaging containing usable marijuana, edible marijuana products or marijuana-infused products must protect the contents from contamination and must not impart any toxic or deleterious substance to the usable marijuana or marijuana product.

Currently, there are inexpensive, foreign-made containers on the market that do not meet this standard, nor do they use FDA-Approved materials. These cheap bottles are known to impart residue, flavor, and scent to cannabis stored within.

Once again, remember, “Let the Buyer Beware.” It is the responsibility of the dispensary to ensure that their packaging meets their state’s requirements, and has the required certifications.

Washington State regulations demand that a producer or processor may not treat or otherwise adulterate usable marijuana with any organic or nonorganic chemical or other compound whatsoever to alter the color, appearance, weight, or smell of the usable marijuana. As some foreign-manufactured containers are known to impart taste and smell, processors may need to use containers made in the USA with FDA-approved materials.

Other quirky regulations include:

  • New Jersey requires the name and address of the Alternate Treatment Center on each package;
  • New York requires the word “marihuana” spelled as such, and it appears on each label several times;
  • Oregon requires the name of the laboratory that performed the testing on each label.

In summary, dispensary owners, producers, and processors need to take heed. The rules and regulations regarding selling legal marijuana can be complex, and more demanding than they appear.

It is always a good idea to check with a trusted packaging partner to ensure that all components of your packaging meet not just the spirit, but also the letter of the law.

Nicholas Kovacevich

Nicholas Kovacevich

Nicholas Kovacevich is the Co-Founder and CEO of Kush Bottles, Inc., which has become one of the best-known packaging and accessory companies in the cannabis industry. Under Kovacevich’s leadership, Kush Bottles has grown to become a premier supplier, with offices in several states, proprietary product lines, and a fully staffed compliance department.

Kovacevich graduated Summa Cum Laude in from Southwest Baptist University, and started and ran several successful companies prior to founding Kush Bottles. Widely interviewed in major media, Kovacevich has emerged as an expert in matters pertaining to cannabis compliance, industry trends, marijuana packaging, and canna-business financing options. He can be contacted at [email protected]

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