The Cannabis Industry is one of the most highly regulated industries in the United States.

Not only are cannabis businesses subjected to state licensing and regulatory requirements, they must support city/county/municipal and federal regulations and authorities as well. The overall risk of operating a cannabis business is significant.

The following list of top compliance infractions was obtained from the result of more than 300 regulatory compliance audits conducted in the State of Colorado. This listing combines both retail store and medical dispensary infractions for all licensees audited.

Top compliance infractions

The top five (5) are:

1. The facility (license) does not immediately input all marijuana and infused product into the State-mandated inventory tracking system and account for all variances.
2. The facility does not have an updated, accurate diagram of security and surveillance area in the licensed premise.
3. The facility does not follow regulatory guidelines on expired products (one or more).
4. The facility does not adequately prevent cross contamination with marijuana or infused product.
5. The patients/customers are not properly supervised/tracked at all times in restricted areas.

In Colorado, 38 percent of the retail stores and medical dispensaries audited did not properly account for all variances in marijuana or infused products in the state-mandated inventory tracking system when receiving product.

When any marijuana product is received, a valid transport manifest must accompany the shipment and all product must be validated — by strain/type, unit of measure, weight, etc. — for all variances prior to acceptance. Inaccurate acceptance of marijuana and marijuana product leads to increased inventory reconciliation issues and non-compliance.

Retail stores or medical dispensaries need to ensure that all required product attributes (e.g. weights by strain, verified units and concentrate weights, etc.) are accurate and verified. Without thorough intake processes and procedures in place, dispensaries and stores are increasing exposure to compliance risk.

Security and surveillance violations affect public safety. One of the most common infractions encountered to date involves facilities not providing an accurate diagram of security and surveillance — including cameras numbered to match the digital video recording (DVR) system, line-of-sight on cameras, and clear designation of the secured DVR restricted access area. As the product itself has chain-of-custody requirements, it is imperative to clearly outline the security and surveillance system and have supporting documentation as required.

The trouble with expired products

Expired products are a public safety issue as well.

Each edible must have a product expiration date when the product is no longer fit for consumption. When expiration dates are missing on edible products, or found to be past its “sell by” date, a public health and safety violation occurs if the product is displayed or sold.

If multiple expired products are found, the licensee could be subject to an administrative hearing. All owners should track and enter expiry dates into their point-of-sale systems and routinely run reports to ensure expired products are not available for sale to the patients or customers.

Cross contamination occurs when marijuana products — flower, shake, joints, concentrates, etc. — are not handled with sterile procedures. This can occur if any food products or non-sanitary items are near or around areas that process or sell marijuana. Contamination can also occur when marijuana product is handled by individuals without sterile gloves or tongs.

Technically, if any marijuana product is dropped on the floor, it should no longer be fit for consumption due to potential issues with contamination and contact with the floor. This dropped product should be tracked as waste and be properly disposed of according to regulatory guidelines. Something as simple as a bag of chips near a processing or point-of-sale area of marijuana can constitute a violation.

Supervision of patients and clients

Finally, on our combined top five listing for stores and dispensaries, we have proper supervision of patients/customers.

According to medical regulations in Colorado, all medical patients must be escorted at all times while in the limited access area. Additionally, proper supervision of retail customers involves checking valid identification at point of entry and at the time of sale. If, at any time, a patient is not supervised or a customer has not had their identification checked again at the time of sale, violations occur.

A operational marijuana license is the privilege to sell, cultivate or manufacture marijuana. Each license must be fully compliant to avoid risk related to fines, administrative actions and/or possible closure.

To survive in this industry, each operation must strive to be as compliant as possible.