How Often Do Cannabis Companies Get Audited?

Written By :

How Often Do Cannabis Companies Get Audited

How Often Do Cannabis Companies Get Audited?

Introduction

In the fast-growing cannabis industry, staying compliant isn’t just about getting licensed it’s about keeping that license and protecting your business reputation. Regulators are strict because cannabis is a controlled product, and mistakes in production, labeling, or sales can affect public safety. This leads many cannabis operators to ask a critical question: how often do cannabis companies get audited?

The answer isn’t always simple. Audit frequency varies depending on where the business is located, the type of license it holds, and the company’s track record with regulators. Still, there are common patterns and expectations every cannabis operator should know.

Why Cannabis Companies Get Audited

Audits are part of the regulatory framework that ensures cannabis products meet legal, health, and safety standards. Unlike less-regulated industries, cannabis touches multiple compliance areas agriculture, pharmaceuticals, food safety, and taxation.

Common reasons for cannabis audits include:

  • Protecting public health: Ensuring products are safe, free from contaminants, and accurately labeled.
  • Preventing diversion: Making sure cannabis doesn’t flow into illegal markets.
  • Revenue and tax compliance: Verifying accurate reporting of sales and excise tax.
  • Maintaining standards: Checking adherence to Good Manufacturing Practices (GMP), Good Production Practices (GPP), or EU-GMP in international markets.

How Often Are Cannabis Companies Audited?

  • Audit frequency isn’t one-size-fits-all. Some companies are checked annually, while others face multiple inspections in a single year. The main categories are:

    • Scheduled audits: Usually happen yearly, often tied to license renewals. Regulators may also announce periodic inspections to review facility operations.

       

    • Unannounced audits: Surprise visits by inspectors to verify day-to-day compliance. These are common in jurisdictions where regulators want to discourage short-term fixes before known audits.

       

    • Triggered audits: Conducted when a complaint, product recall, or compliance violation is reported.

       

    For example, in Canada, Health Canada conducts regular inspections under GPP requirements. In the United States, state-level agencies such as the California Department of Cannabis Control (DCC) or Massachusetts Cannabis Control Commission may conduct annual inspections plus random checks.

Factors That Influence Audit Frequency

  • Not every cannabis company experiences audits at the same rate. Several factors determine how often regulators knock on the door.

    Key factors include:

    1. Type of license

      • Cultivation facilities often face agricultural inspections.

      • Processors and manufacturers see frequent quality and safety audits.

      • Retail operators deal with compliance checks on sales, packaging, and tax reporting.

    2. Location and jurisdiction

      • Rules in California differ from those in Michigan, and Canadian operators follow federal standards.

      • International companies seeking EU-GMP certification may undergo even stricter and more frequent audits.

    3. Compliance history

      • A spotless record may mean fewer audits.

      • Prior violations almost always lead to additional checks.

    4. Company size and output

      • Larger producers tend to face more frequent oversight.

      • Smaller operators may have fewer inspections, but rules are still applied consistently.

What Regulators Look for During Cannabis Audits

  • Auditors focus on whether a company consistently follows legal, safety, and quality requirements.

    Typical areas of review:

    • Recordkeeping: Seed-to-sale tracking, inventory logs, sales reports.
    • Facility standards: Cleanliness, pest control, equipment maintenance.
    • Product testing: Laboratory reports showing products are free of mold, pesticides, and heavy metals.
    • Security systems: Video surveillance, restricted access, alarm systems.
    • Packaging and labeling: Accuracy of THC/CBD content, child-resistant packaging, health warnings.
    • Employee training: Evidence of standard operating procedure (SOP) training and compliance protocols.
    • Tax compliance: Verification that excise and sales taxes are reported and paid correctly.

    Consequences of Failed Audits

    Failing an audit can seriously harm a cannabis business. Regulators don’t just issue warnings they can take swift action.

    Common consequences include:

    • Written warnings or compliance orders requiring corrective actions.
    • Financial penalties for non-compliance or tax issues.
    • Temporary license suspensions preventing sales or production until issues are fixed.
    • License revocation in cases of repeated or severe violations.
    • Reputation damage that discourages consumers, investors, or partners.

    In some regions, a failed audit may also result in a public notice, further impacting customer trust.

    How Cannabis Companies Can Prepare for Audits

    Being audit-ready isn’t just about responding to regulators it’s about building compliance into everyday operations.

    Practical steps to prepare:

    • Keep all records accurate, updated, and accessible.
    • Conduct regular internal audits (weekly, monthly, or quarterly).
    • Use compliance management systems or digital seed-to-sale tracking.
    • Train staff regularly on SOPs and evolving regulations.

    Work with experienced consultants to identify risks before regulators do.

3 7

Role of Compliance Consultants in Audit Success

  • Many cannabis companies, especially newer operators, find regulatory compliance overwhelming. This is where compliance consultants play a vital role.

    Consultants can help by:

    • Performing gap analyses to identify weak points before inspections.

       

    • Designing and implementing SOPs that meet regulatory standards.

       

    • Conducting mock audits to simulate real inspections.

       

    • Keeping companies updated on regulatory changes.

       

    • Supporting communication with regulators when corrective actions are required.

       

    At MFLRC, consultation goes beyond paperwork. Our team supports cannabis operators with licensing, GMP/GPP/EU-GMP compliance, and quality assurance programs that make businesses inspection-ready at all times.

    Best Practices for Ongoing Compliance

    Compliance isn’t a one-time task; it’s a culture that should be maintained daily. Companies that make compliance part of their operations are less likely to fear audits.

    Best practices include:

    • Scheduling quarterly internal compliance reviews.

       

    • Documenting corrective actions promptly.

       

    • Keeping communication open with regulators.

       

    • Monitoring regulatory updates from agencies in your jurisdiction.

       

    Investing in training so every team member understands their compliance role.

Frequently Asked Questions

How often do cannabis companies get audited by regulators?

Cannabis companies can expect at least one scheduled audit per year, often tied to license renewal. However, regulators may also conduct unannounced audits or triggered audits if complaints, product recalls, or violations occur. Frequency depends on the company’s license type, jurisdiction, and compliance history.

What factors increase the likelihood of more frequent cannabis audits?

Companies with prior violations, large-scale operations, or multiple license types often face more frequent inspections. Jurisdiction also matters—for example, California may require monthly inventory reconciliations, while other states like Oregon or Michigan set different audit cycles.

What do auditors typically review during cannabis inspections?

Regulators usually examine seed-to-sale tracking, inventory logs, sales and tax reporting, product testing results, facility cleanliness, security systems, packaging accuracy, and employee training records. Compliance in all these areas is necessary to avoid penalties.

What happens if a cannabis business fails an audit?

Consequences can range from written warnings and fines to temporary suspensions or even license revocation. In severe cases, regulators may publish violations publicly, which can damage customer trust and investor confidence.

Final Thoughts

So, how often do cannabis companies get audited? The reality is that it depends on where the business operates, its license type, and its compliance history. While many companies can expect at least an annual inspection, surprise and triggered audits are always possible.

Instead of waiting for regulators to arrive, businesses should treat compliance as an ongoing priority. With proper recordkeeping, routine internal audits, and professional guidance, cannabis operators can face audits with confidence.

If your business needs expert support in preparing for regulatory inspections, MFLRC provides specialized consultation in licensing, compliance, and quality assurance to ensure your operations remain audit-ready year-round.

Disclaimer
The above blog post is provided for informational purposes only and has not been tailored to your specific circumstances. This blog post does not constitute legal advice or other professional advice and may not be relied upon as such.

Clients are able to receive a free 30-minute consultation with a company representative to get a better understanding of what they need.

Let Us Do the hard work for you

MFLRC is a one-stop shop for all of your Licensing, quality assurance and compliance needs. Our team has years of experience in the cannabis industry and are experts in all facets. We offer a variety of services that will save you time and money. Let us take the burden off your shoulders so you can focus on what’s important – growing your business.

Contact us Now!

  • Email: info@mflrc.com
  • Call:1-647-544-7367

 

MUSSARAT FATIMA

Mussarat Fatima, President, and owner of MF Cannabis License and Regulatory Consultants has more than twenty years of experience in Quality Assurance, Quality Control, and Regulatory Affairs within the pharmaceutical, Food and Cannabis industries. She has a Master’s Degree in Food Sciences and Biochemistry; in addition to this, she also has a diploma in pharmaceutical Quality Assurance, Regulatory Affairs, and Quality Control. Also, she has completed several certifications specifically in Cannabis Quality Assurance, Regulatory Affairs, and Facility management from recognized institutes in Canada.

mflrc Mussarat Fatima

Written By: Mussarat Fatima
President at MF License & Regulatory Consultants
Website: 
https://mflrc.com/
Contact: info@mflrc.com

Share with others