By Nicholas King & Suzanne Harank
States that are opening up to cannabis consumption must meet the eight (8) points of the Cole Memorandum when developing their medical and/or recreational marijuana programs.
How do states prove they are meeting the federal guidelines and how do you prove you are following your state’s laws? As always, it is being prepared with paperwork that documents compliance with state rules.
The amount of paperwork demanded of businesses by local, state and federal regulatory agencies can be daunting — and onerous — unless one properly prepares for the blizzard. Small, risk-taking entrepreneurs dominate our emerging Cannabis Industry. We are being required to quickly adapt to standards developed over decades of experience that have often been borrowed from drug, tobacco and alcohol industry regulations.
So how can smaller businesses survive the compliance paper storm? At MRMCompliance, we have found the answer is in four words: knowledge, organization, accessibility, and maintenance
- Knowing what documents are required by the various agencies regulating your business is the first step. Some documents, such as business and tax licenses, certificates of occupancy are standard for any business. Other documents like waste logs, floor plans, security logs, potency and contaminant profiles are specific to our industry and vary from state to state. Every cannabis business owner either needs to know, have someone on staff, or hire a consultant specializing in compliance, who is knowledgeable of all of the documents required by their state. In states with centralized tracking and monitoring programs, many of these documents are inherent in the digital systems. However, there are always additional documents recorded on paper that must be produced on demand by an inspector, such as transportation manifests and testing results. But, knowledge is not enough.
- Organization of documents is the second step for successful regulatory compliance. Does your POS system provide reports require by the regulatory agencies? Have you documented your production and/or distribution procedures?Are your floor plans and security and surveillance diagrams located in logical places? How are your reports stored or recorded? Are employee trainings and/or disciplinary actions properly documented? Have employees that have received compliance or standard operations procedures (SOP) training signed documents to that effect? You, the business owner, are always ultimately responsible for your employees’ actions. If you can document that an employee failed to follow a SOP, it could save your license if that employee violates point 1 (distribution to a minor) of the Cole Memorandum.
- Accessibility of documents, especially during a compliance inspection, is critical. Whether the information is stored digitally or in binders, do managers — and owners — have easy and quick access to any document a regulator may ask for? One problem we have noticed with digital record keeping is that, being out of sight, the records are also out of mind. Under the pressure of a regulatory audit, it is all too easy to have a brain freeze (yes, we have seen this happen) and an owner or manager may not remember how to access the requested digital files. Properly organized and differentiated binders on a shelf reduce that risk significantly. Moreover, an owner or manager’s ability to quickly find any document the regulatory agent asks for demonstrates the business’s organization competence, which can assure the agent that you take compliance seriously.
- Maintaining records is probably the most tedious and mind-numbing activity required of any business owner. As rules evolve and change, how are you staying current? How can you demonstrate that to your regulator? Do you, an employee you appoint, or an outside consultant you hire regularly, review your regulatory agency’s website for bulletins which may affect your business? Are the changes implemented in a timely manner — that is by the required date — and can you prove it? You want to avoid having that “file” basket stacked high with forms that should either be in binders or scanned and placed in appropriate digital folders for easy retrieval.
Knowing what documents are required by your state and local authorities, having the records organized into logical and appropriate categories and easily accessible by owners and appropriate employees, and constantly maintained and updated,will assure your regulatory agent that you are complying with the documentation rules.
And just as important, following these four steps will help provide you with peace of mind in our quickly evolving industry.