Welcome to The Whole Gamet. This column is designed to provide cannabis entrepreneurs, executives, and those thinking about getting into the business, with real-world advice from someone who has been on the front lines. I am your host, Greg Gamet, and I have founded, operated, or been involved with a wide variety of businesses in the cannabis industry. I’ve had some great successes, and I’ve made my share of mistakes. This column is intended to help you avoid some of those pitfalls, and gain some tips and insight into what makes a cannabis business successful. I hope you enjoy this column, and I welcome your thoughts, comments, and feedback.
In today’s column I’d like to write about something that is vitally important, but is also a thorn in many rear-ends: And that is, compliance.
Mention the word “compliance” to many people and they run for the hills (which, by the way, is where non-compliant cannabis farming took root). However, today no cannabis company can afford to be without a deep understanding of the myriad of regulations and issues that can affect it’s operations and jeopardize your license.
Tip One: Get a Compliance Officer.
A good place to start with making sure that your business is compliant is by appointing a Compliance Officer. Every cannabis company needs one person who is dedicated to reading through the regulations, making certain that all paperwork is properly completed and filed in a timely manner, and will spend their days going through every aspect of the business to assure it is running in a compliant manner.
Ideally, this is someone with a background in compliance, or at the least, is highly detail oriented and can quickly grasp the many nuances of your state’s regulations. Ideally, you will find a person who has worked within the cannabis industry.
Here are just a few of the types of issues you will encounter: I know someone who is applying for a new outdoor cultivation license that is going to be located next to an existing grow. The two grows are on the same property, but have different licenses. This is more complicated than it may seem.
From detailed land plots and architectural drawings, to environmental impact statements, to water usage and drainage plans, to energy use, to the size of the concrete slab… every single detail needs to be documented in accordance with the state regulations. Failure to accurately list just one, seemingly inconsequential detail, can result in a shutdown of your entire operation.
Tip Two: Make friends with your local and state compliance officers.
Believe it or not, these people are not out to get you. They actually will work with you and help you get your operation in 100% compliance. I have found that working with the regulators and viewing them as an asset rather than an adversary is one of the best ways to make certain that you are doing everything correctly. Your compliance officer should be good at making friends with the regulators and will be the one point of contact. This will give all the regulators a consistent channel for communications.
Tip 3: Compliance is not a “set it and forget it” job.
Trust me on this. There will always be something that needs adjustment. Whether the location of your exit sign, or the height of your counters to meet American Disability Act (ADA) requirements, or some detail you never even imagined could be disputed, there will always be something that needs fixing or improving. Moreover, there are regular, almost weekly rule changes, so you will need to have ongoing training (see tip #4) and a continually updated Standard Operating Procedure (SOP) manual (see tip #5).
Does this really make a difference? You bet it does. Breaking the rules, no matter how seemingly small, can have big consequences. Documenting success and failure in this arena will show your compliance history in case you ever have to go to prove your company’s willingness to follow the rules. And that brings us to one of the hardest parts of compliance.
Tip 4: Train Your Employees.Train them again. Repeat the Process.
While you can specify the height of a counter, the angle of a camera, the gauge of a wire, and the flow of a water pump, you cannot control the human element. Employees are the single biggest reason many businesses fall out of compliance. It can be something really big, like letting a minor into a store, or something relatively small like not wearing a badge. Employees should be your biggest area of concern regarding compliance, and therefore, given the most attention.
Train your employees in compliance, and have drills, quizzes, and plenty of conversations about the importance of doing everything in accordance with the many rules that impact your business. Then do it again. And again.
Tip 5: Develop and Use a Standard Operating Procedures (SOP) Manual.
A SOP manual is useful because it details out the procedures on how to deal with a myriad of issues that can occur within a cannabis business. While some businesses have invested the time to write out this detailed manual, far too often this book just sits on the shelf, waiting for a crisis, to then be dusted off and reviewed. Your SOP manually is a living and breathing document, meaning you have to update it regularly. Regulation changes in the cannabis industry are inevitable, so keep your procedures up to date.
Your SOP manual is only as good as the people who wrote it, and moreover, it won’t do any good if your employees are not trained on it or don’t understand its content.
Get your SOP manual written by compliance experts, and then have your employees fully trained on its content. Provide refresher seminars on a monthly basis, and/or focus on one specific area to dig deep into.
The time to understand the rules is before a crisis occurs, not afterwards. Understanding the rules, procedures and regulations is your single best way to avoid problems, large and small.
Tip 6: Sweat the Big Stuff and the Small Stuff
There are no unimportant regulations. There are none that you can “let slide.” From the obvious regulations like making absolutely certain that all of your packaging is certified child-resistant to federal standards, to what are perhaps not so obvious regulations, like the amount of parking spaces in your lot… you cannot choose to comply with some and ignore others. Ever.
Tip 7: Maintain Transparency.
The fact is, you are going to slip up. Everyone does. What I have found to be the most effective solution to any kind of slip up is to immediately take corrective action, and then, notify your local compliance officer. That’s right. Admit your infraction, inform them of the steps you took to remediate the situation, and note how you are going to prevent the problem from happening again. You not only will be doing the right thing, but your honesty and transparency will demonstrate to regulators that you are taking compliance seriously and that you are a person of integrity. Believe me, integrity is everything. And it’s hard to get back if you ever lose it.
If you can summarize my thoughts on maintaining a compliant business into a couple of sentences, it is this: Embrace compliance, don’t fight it. Take it seriously. Train on it and make it a priority. Work with your local officials – they are there to help you. Reach out to others and get work groups together. Your colleagues and even your competitors have probably gone through something similar to what you may be facing, so open up and talk to them. Ask for help if you need it… you’ll usually find that good people are willing to share their expertise, experiences and wisdom.
Best wishes for your success!
Greg “The Whole” Gamet
Greg Gamet is a leading cannabis entrepreneur, consultant and educator. He has co-founded or managed a variety of cannabis-based businesses, including a cultivation facility, medical and recreational dispensaries, a packaging subsidiary, a consulting company, a canna-focused real estate company, and a software development group focused on helping cannabis businesses stay compliant. Currently, Gamet is the Chief Cannabis Officer for Gold Flora, a vertically integrated cannabis company located in California. Greg can be reached at [email protected].
Very informative article. Thank you.
I always tell clients, “If it isn’t documented, it didn’t happen!!!!” Like the way you broke this down.
Hi Greg. This is interesting as I work in health care, another highly regulated business, and everything you spell out here is exactly how it’s done in health care.
Great article Greg.
Any business that is heavily regulated needs a Compliance Officer. Good article.
Great advice. And, in line with Tim’s comment: documentation is your friend. Also don’t forget compliance with data breach laws. And if you’re running a medical dispensary, follow the HIPAA privacy & security rules. You might have doubts as to whether they apply to you, but the fact is, your patients expect and deserve top-notch privacy controls, so BE SAFE!
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