CANNABIS COMPLIANCE
Cannabis Compliance is complicated and ever-changing, that much we can all agree on. However, compliance doesn’t have to be so hard when building your business. Building a strong foundation rich in resources can set you and your team up for success when tackling compliance. In this piece, we break down the fundamentals of how to overcome the struggles of compliance with grace!
Many companies will plan ahead by hiring a compliance officer, but in reality, compliance is a full-time job for more than one individual. In an ever-changing regulatory landscape, having a compliance team can help relieve pressure off the rest of your organization.
Though this may sound excessive for budgeting, building a permanent compliance team at your business will save on the upfront and costly expenses one might incur when hiring experts to train your staff (and return multiple times a year). This keeps the conversation of compliance fresh on your team’s mind and offers a consistent resource for training and assistance.
An example of a compliance team may look like:
Choosing the right track and trace software can make or break your business. Each system has its own benefits, some including user-friendly interfaces, customizable workflow, or integration with other points of sale software. While others may have limitations in terms of interprocess communication.
Depending on the nature of your business, it may benefit you to identify which tracking software is best for retail, manufacturing, or cultivation respectively. There are many software options that accommodate a vertically integrated business, but these can oftentimes be more expensive and complicated to set up. This is why it may be preferable for a specialized company to choose a system specific to their needs (i.e. retail, cultivation).
Internal audits are mandatory to stay compliant with the GMP regulations. When making GMP cannabis products, your first priority is to ensure your product is safe for consumers. With government regulation coming into play, companies need a strict compliance program in place. Good manufacturing practices (GMP) is a set of standards for ensuring that products are consistently produced and controlled according to quality standards. Failure to comply with GMPs can lead to recalls or other serious consequences.
Having a comprehensive guide for your staff on how to conduct internal audits is key to saving money and maintaining compliance. Internal audits can happen on a daily, weekly, and monthly schedule depending on the complexity of the task.
A useful tool in creating easy-to-follow audit plans is to incorporate visual aid and reference images for your team to compare. This could include photographs of what your retail stores and counters should look like at the end of a shift. Having examples of both the correct and incorrect setup can create an excellent visual cue for your team to follow, minimizing misunderstandings and errors in cleaning and safety.
Although tempting, risk-taking is not a wise choice when operating a cannabis business. It can be extremely expensive to properly run a business in the cannabis industry, which unfortunately can lead some business owners to cut corners and save money.
This type of behavior could cost you your business, as the fines and penalties associated with continued compliance violations could double or even triple your expenses, and in the worst case could lead to the revoking of your license. To avoid this, it’s best to go slow and steady when establishing your business in a compliant way. That way you won’t have to worry about missing any steps or incurring unnecessary fees.
One of the most common places to find marketing compliance violations is in your company’s online and social media content. In a cross-sectional study in Canada, surveying 261 cannabis-licenses firms, 86.3% of these companies with an online platform had at least one violation, which was found to occur significantly more on social media compared to brand websites. The compliance violations found ranged from a lack of age restrictions for youth, unsubstantiated claims, omission of risk information, and glamorization of cannabis products.
Under the Cannabis Act, and Cannabis regulations it is prohibited to market cannabis to young people (defined as a person under the age of 18, but can be varied by provincial statute). However, it is completely legal for companies to market their products online to adults 18 years old or older. This can be accomplished by adding an age-gated home page and conducting analytics to focus marketing efforts on the correct age demographics.
In addition to age restrictions in marketing, the Cannabis Act also prohibits brands from utilizing celebrity endorsements. This law defines a celebrity endorsement as a product being represented by means of depicting a person, character, or animal (both real or fictional).
Staying current on industry-related news can keep you ahead of regulatory changes and trends in the market. These should be reliable sources of information that don’t lean heavily into legal language. Having news updates in easily digestible formats will enhance your ability to understand and even educate your team on the latest trends and changes.
In addition to an internal compliance team, it is critical to hire compliance experts to assist in your quarterly and annual compliance audits. Having a third-party opinion outside of your day-to-day team can help bring any blind spots to light, and offer new and unique solutions to your team on adjusting your compliance protocols when the regulations change.
Regardless of where your company is in the process of becoming a licensed cannabis operation, compliance experts can assist with setting up compliance with you for the first time, or post-licensing support. Seeking outside assistance will fast-track you on everything from the application process, to implementing operating procedures.
A compliance expert can assist with the setup and onboarding process to Canada’s Cannabis Tracking Licensing System (CTLS), which is required for all companies handling cannabis products. By teaming up with an experienced consultant, you can avoid the common mistakes and any additional costs and time that may have been lost in learning the system on your own.
You can have a well-trained and equipped team tackling internal compliance, but occasionally regulations will shift and possibly require collaboration between lawmakers and business owners. In fact, having a consistent line of communication with regulators can offer insight into the reality of operating a cannabis business, and can benefit the industry as a whole through well-informed lawmaking.
Regulators want to see the industry succeed, but have much to learn. Establishing an ongoing relationship with them helps keep the business’ perspectives in mind. Some regulators will even have their staff inform you of upcoming changes to be aware of, or ways to get involved on specific issues.
When initially planning your business, it is critical to be well-read on the local laws around operating a cannabis business. This includes everything from health codes, security requirements, manufacturing and cultivation procedures, and record-keeping. You can find all of the details about the Cannabis Act and Canadian cannabis regulations here.
Keeping good records of your business operations is fundamentally the most important thing you can do to guarantee compliance, as well as assist in problem-solving should something go wrong. Ideally, your company will have up-to-date standard operating procedures for all processes, as well as internal production and storage logs. Having a second source of data can help a compliance officer or inspector confirm information if there is ever a question of accuracy with your compliance and workflow.
It’s recommended to have copies of your operational procedures accessible for all of your staff, ensuring they can revisit or recommend revisions if needed. Good recording keeping could potentially save your cannabis business!
