Member Blog: Cannabis Compliance – 6 Tips To Avoid Dispensary Fines

by Tommy Truong, KayaPush

Cannabis Compliance is one of the things to which every cannabis dispensary must pay attention. Not only does compliance ensure that you have the legal right to carry out your cannabis-related operations but it also helps keep your business from unnecessary fines and sanctions.

The U.S. Food and Drug Administration (FDA) has stipulated various regulations for cannabis-derived products at the federal level. In addition, there are regulations at the state level. Violating any of these regulations can land your cannabis business in trouble that could potentially lead to revoking your license.

Also, people generally have greater trust in regulation-compliant businesses, so compliance is healthy for your business reputation. It is important, therefore, to structure your business operations to align with the cannabis dispensary guidelines and regulations operational in your area.

In this article, we will cover 6 tips and tools to help you keep your cannabis dispensary from incurring any fines or lawsuits, let’s dig in!

1 – Digitization of licenses and renewal

In an industry as critical as cannabis dispensing, unauthorized operations constitute a serious offense and may attract severe penalties. The reason should be obvious—cannabis and its products can pose a raft of risks when handled by the wrong people.

This is why your dispensary must be properly licensed by the appropriate government body to be fully authorized for cannabis operations. Your cannabis business is at the risk of heavy fines, suspension, or even total shutdown if you operate without a license.

Different states may have different requirements for obtaining dispensary licenses. There may also be local laws and regulations within the state. You need to ensure that you discover and comply with all the requirements applicable to your locality.

For instance, the State of Colorado requires that employees in the cannabis industry must possess a MED (Marijuana Enforcement Division) license. This means that if your dispensary is in Colorado you not only need to get licensed as a business but each of your employees must also obtain licenses.

You must also ensure that your business license and those of your employees (where applicable) are up to date. The requirements for licensing evolve with changes in cannabis regulations and you will need to stay abreast with information about license requirements in your area in order to maintain your cannabis compliance.

Tracking your licenses and their renewals can be quite a task. But you can save yourself hassle and stress by using a digital HR system to store and manage your licenses.

With HCM software, you can manage your employee profiles and ensure that every worker has the necessary licenses to work in your company. This way, you minimize the risk of operating without a license and violating cannabis compliance regulations.

The software also lets you store and track your licenses and set up reminders to alert you when a license is coming due for renewal. This feature makes it easy for you to maintain up-to-date licenses and renewals.

2 – Use state traceability with a seed-to-sale integrated POS.

One of the major concerns in the wake of the increased legalization of cannabis is the ability to monitor the product from seed to sale. From the top of the production and supply chain to the bottom, traceability is crucial to cannabis compliance.

Monitoring and tracking every single step of this supply chain helps to ensure that cannabis and its products do not fall into the wrong hands — and this goes a long way to ensuring that the product is not abused in any way.

Cannabis and its products can be exposed to contamination with toxic chemicals and other harmful substances via pests or unhygienic processes. Such contamination may pose serious health risks if not prevented or properly managed. With well-detailed traceability, you will be able to track each step to be sure all necessary safety measures are in place.

Your license proclaims that you can be trusted with handling a product as sensitive as cannabis. One of the ways you can demonstrate this is by accurate accountability — and this comes naturally with good traceability. You should be able to give a proper account of every single cannabis product offered by your dispensary in case of audits or investigations.

Implementing adequate traceability is not as difficult as you might think. Compliant POS software that has this feature enables you to automate traceability with relative ease.

This type of software is integrated with the required traceability systems such as Metrc, BioTrackTHC, and Leaf Data Systems. With these, you can rest assured that your data reporting complies with the requirements of the U.S. government.

3 – Time clock software that uses facial recognition technology

Staying compliant in the cannabis industry requires that you commit your operations to qualified employees. Given that cannabis is a highly sensitive commodity and can easily be abused, you must establish a means of regulating who gets involved in your processes.

A time clock software product will help you keep track of your employees, their clock-ins, breaks, meal times, and other important indices. You can restrict and regulate who gets access to what, where, and at what time.

For instance, an underage person might attempt to clock in for a friend and get involved in your cannabis business operations. Also, chances are that someone in your company might attempt to punch in for a shift when it’s not their time.

These buddy punching practices can sometimes land you in serious compliance violation trouble. Using software with advanced face recognition technology will help you control unauthorized employee clock-ins by granting access only to the right person in the right place — so you can be sure you are staying compliant as your workers have minimal chance of violating labor codes.

Time clock software not only protects you from cannabis compliance risks but also from violating other laws that might lead to severe consequences. For example, violating the California labor codes — part of the laws in California — can lead to a lawsuit that may eventually cost you a fortune.

The California labor code provides that employees are entitled to a 30-minute meal break per five hours of work. This means an employee can potentially sue you with a PAGA lawsuit claiming that they have been deprived of meal breaks — a violation of a labor code. As trivial as this may sound, the lawsuit may eventually attract serious penalties to your business.

In this scenario, you can avert such lawsuits by providing proof that the employee clocked in and out for their meal breaks so gathering such evidence won’t be an issue. You can also automate your payment system to sort out necessary employee payments to ensure you stay compliant.

4 – Select POS software with purchase limit alerts and built-in ID

As part of cannabis regulations, different states in the U.S have different purchase limits. This means that you are not legally allowed to sell more than a stipulated amount of cannabis and its related products to a customer within a stipulated time.

For instance, both medical and recreational consumers can only purchase one ounce of cannabis per transaction in the state of Alaska. The limits are different in California where medical cardholders are allowed up to eight ounces per day, while recreational buyers are constrained to just one once daily.

If your dispensary does not pay attention to these purchase limit regulations, there is a high risk that you will be found to be violating the law and face dire consequences. Since it cant be difficult to manually track transaction limits, you can leverage POS software to set up purchase limit alerts.

Using POS compliance technology provides you with this very important feature. You can customize your system settings to alert your dispensary whenever a transaction goes beyond the stipulated purchase limit for a customer so, it becomes easier to set up your system to maintain your cannabis compliance anywhere you are in the United States.

Using a system with built-in ID features can also help you combat looping. Looping occurs when cannabis buyers purchase up to their limit, lay it off somewhere, and return for another purchase. It is usually done as a way to bypass the transaction limits.

With the built-in ID feature, you can link a customer profile to the transactions carried out by that customer. That way, you can easily detect the number of products a particular registered customer has purchased and set purchase limit alerts on their profile. So, no matter how many times they come, you will not be able to sell more to them if they have already reached their limit.

5 – Create customizable clock-in surveys

Clock-in surveys can help you ascertain some important details that enable you to maintain a compliant working environment. You can customize your clock-in surveys to obtain different information from different employees for different analyses and purposes.

For example, you can customize a clock-in survey to confirm that a new employee understands and remembers the compliance regulations applicable in your company. You can automate the survey to run for an employee’s first week at work to help them get accustomed to the regulations.

You can customize another clock-in survey to ascertain that your employees are up to date with the most recent legislative changes in cannabis compliance rules. This kind of survey can be automated to run at intervals, say once every 3 months.

Such clock-in surveys help you ensure that you leave nothing to assumption or chance. It goes a long way in keeping the consciousness of cannabis compliance very much alive in your dispensary.

6 – Hire a compliance manager

Given how important compliance is in the cannabis industry, it makes sense for you to prioritize ensuring that your dispensary is as compliant as possible. One of the most effective ways to do this is by hiring a compliance manager.

Notwithstanding, it is great to automate your operations to ensure compliance, it is also not a bad idea to employ a compliance manager to oversee your compliance-related issues.

Part of what a compliance manager does is to help you develop, implement, and review your internal operational policies to ensure they match the current compliance demands. In case any changes are made in compliance regulations in your area, your compliance manager will be devoted to enforcing those changes to keep your dispensary from violating the new rules.

Stipulating policies and regulations might not be sufficient. You may need someone who is committed to enforcing these policies among your employees. This is where employing a compliance manager can pay off.

With a compliance manager in place, you can focus on your business, its growth, and development while you can rest assured that you are not at risk of dispensary fines as a result of violating cannabis compliance regulations.

Tommy Truong is the Director of Partnerships at KayaPush; the cannabis software helping dispensary owners manage their employee HR, scheduling, and payroll. KayaPush also integrates with leading dispensary POS systems.

Tommy loves hot sauce, fried chicken, and running with his Boston terriers.

Member Blog: How Cannabis Dispensaries Can Navigate The METRC System

by Gary Cohen, Cova Software

Cannabis dispensary owners must bear in mind that this industry operates under strict laws and regulations that set their business apart from conventional retail operations. State governments must balance public health and safety with the business needs of the regulated community, and that requires complete tracking of all marijuana products from seed to sale. Most states have already switched to METRC, the largest traceability system helping dispensaries from coast to coast stay compliant with the law. The goal of METRC is to easily retrace the steps from sale to seed and facilitate transparency in the legal cannabis industry. This post will help you understand better why METRC is required, how it benefits everyone, and how can you navigate the system while using the right technology to stay compliant.

What is METRC & Why it is Needed?

Marijuana Enforcement Tracking Reporting Compliance (METRC) is a cloud-based, state-mandated platform used by 15 states in the U.S. It facilitates real-time tracking and tracing of cannabis plants and products from seed to sale. METRC was first adopted by Colorado and early reports in 2014 indicated that this regulatory monitoring technology allowed for accurate quality control and ensured that the safety of the end consumer was prioritized.

In all METRC states, cannabis stores and dispensaries must use the system either directly or integrate it with their POS. All data about your dispensary is safely stored in the cloud and is only accessible by you or the state regulatory authority. State regulatory authorities use data inconsistencies in METRC to detect any diversions from the mandated regulations and if they find any discrepancies, they could conduct an investigation and impose hefty fines.

How to Prepare for METRC?

To gain access to the METRC system, all employees working at your dispensary must get certified. The process involves training, studying the terminology and workflows, and then taking a 40 questions multiple-choice test. METRC uses RFID tags as unique identifiers to recognize and monitor all transactions, these are not reusable and must be purchased in batches or bulk by dispensaries.

Every dispensary must incorporate its own solution to work with METRC. One can navigate the system manually but it is a risky and time-consuming process, as it involves countless hours of data entry, auditing, and reconciling processes to deal with the errors that inevitably pop up. The most convenient way to implement METRC is to automate as much of the process as possible. Investing in a robust point-of-sale solution that integrates seamlessly with METRC will ensure complete compliance with state regulations.

What are the Daily Obligations?

METRC’s cloud-based software requires only an internet connection and computer or tablet to access and use it, and an advanced POS system can automate the whole process for you. METRC tracks all plants and products with Radio Identification Tags. The plant tag is used to track each plant from its immature phase through to the harvest, while package tags are available for harvest batches or packages of one kind of product. All these activities must be recorded by dispensaries and reported to state regulatory authorities on time.

METRC charges $0.45 per plant tag and $ 0.25 per package tag. The tags can be ordered directly from METRC’s online software system, and are custom-printed for each dispensary. These can not be returned once the printing process has begun, are non-refundable, and cannot be reintroduced into the supply chain. Recreational cannabis plant tags are blue while medical marijuana plant tags are yellow.

Manual or Automatic Reporting?

METRC is simply a reporting tool – an application that allows you to send data to the state to maintain compliance. In most states, reports about all activities must be submitted to METRC no later than midnight on the day they occurred. A cannabis-specific POS can facilitate reporting to METRC while providing a user-friendly interface. To get the best compliance solutions, look for a POS that offers 2-way integration. This ensures that reports are sent to METRC in real-time, manifest intake is automated, and inventory adjustments are automatically synced with the traceability system.

Manual reporting will require you to log in to your online METRC account at the end of every business day to enter all data from every single transaction and activity that occurred. This is a time-consuming option that can also result in errors, increasing the risk of compliance infractions, fines, or worse, loss of retail license. Automated reporting with a cannabis-specific POS solution will make your life easier as it integrates seamlessly with METRC and automatically sends all your inventory adjustments and sales transactions as they occur in real-time. Also, if there are ever any connectivity issues, all saved data automatically sync once you are back online.

METRC has standard operating procedures in all states, and dispensaries don’t have a choice but to comply with them. But dispensary owners do have the option of selecting the right POS system that can help their employees navigate the METRC system more efficiently. Download your free copy of ‘A Complete Guide to METRC Compliance for Marijuana Dispensaries’ by Cova, to learn in-depth about the different levels of POS integrations with METRC, how to work best with the system, and state-specific METRC differences.

Gary Cohen is the CEO of Cova Software, the fastest growing technology brand in the cannabis industry. Cohen’s focus has been driving the company’s overall strategy, including its vision, go-to-market plan, and strategic development. Since joining the cannabis industry in 2016 and launching Cova commercially in 4q17, Cohen has led Cova to dominate the enterprise sector for dispensary Point of Sale, while forging client relationships with hundreds of single-store retailers across North America.

In solutioning the POS platform, Cohen & the Cova team have met with over 1,900 operators and leveraged expert knowledge to provide retailers the support they need to get a license, pass inspection, launch a store, and improve operations. Cohen leads seminars on retail technology, compliance, business operations, and cannabis banking laws at the industry’s largest events, including the NCIA and MJBizCon. As Cova has become the predominate thought leader for cannabis retail tech, Cohen has established himself as a leading voice educating cannabis entrepreneurs as they build their own successful brands.

Member Blog: Cannabis Partnerships – The Importance of Building a Successful Business

By John Shearman, VP of Marketing, Cannabis, Applied DNA Sciences

The grass roots of the cannabis industry fostered, often through necessity, a strong sense of community and encouraged innovation and sharing of techniques and methods to cultivate the various strains of cannabis. Learning from what has come before and working together in a sense of community is still as applicable today as the industry becomes more commercialized across the globe. The pioneers of this community have evolved into a more diverse group of entrepreneurs, across many dimensions that provide a rich base of skills and knowledge that has been shared and cultivated into a matrix of businesses and relationships.

Applied DNA Sciences entered into the cannabis space in 2018. We joined NCIA and exhibited at our first NCIA trade show, Cannabis Business Summit & Expo, in San Jose that year. I wasn’t sure what to expect and the type of conversation that may occur. The doors opened on the first day, and our molecular spaying chamber attracted attendees, which led to an engaging discussion about the platform and its benefits. The surprising aspects were the various businesses at the show, researchers-PHD level, cultivators, processors, dispensaries owners, new license holders, state government, and others. They also represented a range of how many years they are involved in cannabis, from over 20 years to just getting involved, and there to learn. This first show demonstrated how important it is to be very engaged in the industry and associations like NCIA, but equally important are the partnerships that you need to form to provide solutions that are required to meet the needs of industry and consumers alike.

Partnerships form across many aspects of the cannabis business. While our technology may have been at first intimidating, as we shared our vision with this expanding network we have been fortunate to find businesses, entrepreneurs and subject matter experts who share our passion about what this industry needs to become. We have teamed up with several companies ranging from cultivation specialists, software platforms providers, business and government consulting entities, just to mention a few. The key to these agreements is the complementary nature both entities can provide to address business needs such as regulatory compliance, material and product traceability, brand differentiations, IP protection, risk mitigation, anti-counterfeiting and diversion, proof of origin, and a host of others.

As the industry continues to grow we know not every partner will remain static in their business goals, or even if they can survive the ever-changing landscape of regulation or the fluctuations of the market. The key to strategic alignment however comes from working with partners who share the vision of what the industry can be; safe for everyone, transparent in both chain-of-custody and financials, and most importantly accessible for those who need it. Companies in this space must be nimble, adapt to both the present conditions but remain steadfast in their ultimate goals.

So you think you found a strategic partner, who shares your vision. Now what? The complicated patchwork of U.S. legalization does not make your next steps as easy as it should be. Especially when you are considering moving your brand or differentiated products into new states and territories. The great hands-on experience, craftsmanship, and care of what makes your product special cannot be transported beyond the narrow lines of where it has been licensed, so often you are rebuilding or replicating with a partner in a new market. Possible of course, but often met with unforeseen issues in supply chain control and distribution. Even in the case where you are using technology unrelated to the physical product (cultivation systems, seed to sale, or logistics), each state or even county may require a different tracking system, API, or competing system to connect with. The multifaceted mosaic that makes up the community of growers, farmers, and entrepreneurs in the cannabis community is a hotbed of passion and innovation, finding opportunity is not the problem, translating this to success is the work.

Outlining a list of mutually agreed-upon goals and milestones is critical to success. Establishing a set of metrics to evaluate the progress of the partnership allows for quick adjustments if required. A critical tactical approach that may seem insignificant is to have a set weekly status call to help with relationship building and reviewing the progress plan will help keep the momentum moving forward. Also, having executive leadership involved provides quick decision-making, adjusting strategies, and deploying both human and financial resources effectively against prioritized engagements.

The cannabis industry is maturing each year and will see faster advancements when regulations sort out over the next several years. It’s essential to establish your partnering strategy now, so you can get critical relationships in place with solid execution plans and prepare to implement your joint solutions with minimum friction.

John Shearman is Vice President of Marketing and Cannabis Business Lead at Applied DNA Sciences, and has over 30 years of deep enterprise and advertising agency experience across all marketing, sales and IT disciplines. John’s experience allows him to advise on structuring sound strategies that address business goals and objectives. His extensive technology background stems from working with several leading technology companies throughout his career. John spearheads Applied DNA Sciences Cannabis vertical leading the vision, strategy, and product development for this emerging market. John also oversees the marketing for the entire company driving the marketing strategy for its other core verticals.

Member Blog: High Five – The Top Ways an Integrated Cannabis Technology Solution Supports your Business

by Daniel Erickson, Director of Product Strategy, ProcessPro

Anyone involved in the cannabis industry is well aware of its exponential growth and the corresponding pressure for companies to increase performance, enhance quality, optimize operations, and maintain data integrity and control. In this complex environment, reliable technology and the use of disparate and manual systems not only affects profitability but also creates a competitive disadvantage in the market. Progressive cannabis companies are finding the potential that a single, comprehensive business system can bring to their operations to streamline processes. An integrated enterprise resource planning (ERP) solution’s features and functionalities support cannabis businesses in five key areas.

Cultivation Management

Cannabis ERP software with cultivation management functionality enables cultivation, manufacturing, and dispensary operations to manage, log, and report on every movement of individual plants throughout the entire supply chain in one platform, tracking growth and production to assist with regulatory compliance. Greenhouse recording and package IDs management within the solution can include recording activity costs, quality checks, audit trails, inspections, strain tracking, harvesting techniques, plant health, growing conditions, and batch yields. Evaluation of this data helps determine ideal conditions for maximum plant growth and yields to improve productivity as well as provide information to run a cost-efficient operation.

Regulatory Compliance

The highly regulated cannabis industry requires companies to maintain detailed, accurate, and real-time records to mitigate the consequences of non-compliance with state regulators, auditors, and law enforcement agencies. Constantly changing state laws and specifications require businesses to keep pace with these developments as well. It is predicted that federal legislation for the cannabis edibles market will closely align with current FDA regulations in the food and beverage market, and adopting the current manufacturing practices utilized in those industries can make the transition seamless for proactive cannabis manufacturers.

Cannabis ERP tracks, measures, documents, and reports on compliance initiatives including licensing requirements, waste disposal protocols, transportation records, compliant packaging and labeling, and tax payments – accommodating multiple locations, jurisdictions, countries, and intra-industry verticals. A solution with integrations to state government-approved software, such as METRC, Biotrack THC, and Leaf Data Systems, helps to ensure reporting is accurate and timely.

Seed to Sale Traceability

Critically important to the cannabis industry, tracking of accurate inventory and locations of valuable cannabis products mitigates theft and controls regulatory risk. A cannabis technology solution provides real-time seed-to-sale visibility of the supply chain by managing and automating transactions and lot tracking and traceability capabilities – ensuring security and accountability by utilizing user-based software permissions to validate employee transactions.

Inventory control monitoring tracks appropriate stock levels, monitors shelf life, and documents product loss due to damage, shrinkage, and accidental or purposeful destruction. To facilitate production and purchasing, the integrated functionality of material requirements planning (MRP) allocates the use of resources to ensure there are sufficient raw materials and ingredients to meet customer demand. An ERP solution helps prove the chain of custody, establish and uphold safety standards, increase accountability, and limit factors leading to compliance and health risks – reducing the possibility of unsafe products entering the marketplace.

Formula and Recipe Management

Comprehensive and tight management of formulas and recipes is essential in this consumer-driven market in which product quality and consistency in regards to taste, texture, appearance, potency are correlated to a company’s brand. Cannabis ERP maintains raw material data, production notes, versions, and revisions within each Bill of Material. The solution should also calculate nutritional information to include ingredients and allergens to produce accurate labeling, reporting, and product packaging necessary for consumers of cannabis edible products – providing traceability and a documented labeling history to identify items quickly in the event of a product recall. To support new and innovative delivery methods and products, research and development functionality within a cannabis ERP solution streamlines new product development and introduction into the market. The ability to experiment and test in a sandbox environment without affecting current production allows for easily transitioning approved products to live production.

Reporting and Analytics

By gathering data from all areas of the business in a centralized database, cannabis software makes it possible to analyze what is working within the operation and what is not. In the area of cultivation, adjustments to nutrients or other conditions can improve yield and lead to improvements in financial performance. Businesses can benefit from the ability to track consumer purchasing fluctuations in regards to holidays and seasonal trends to help navigate supply chain challenges and forecast demand. When data is collected throughout the life cycle from seed to sale, businesses are able to identify patterns, predict trends and changes in consumer taste, and help plan for the future – allowing companies to make data-driven business decisions.

Integrated features such as cultivation management, regulatory compliance, seed-to-sale traceability, formula and recipe management, and reporting and analytics offer a competitive advantage for cannabis businesses. In the dynamic cannabis marketplace, the functionality available in cannabis ERP provides the technological tools that companies need to thrive in a world with increasingly tighter profit margins and regulations.

Daniel Erickson, Director of Product Strategy, has been with ProcessPro since 1999. As the Director of Product Strategy, Daniel focuses on driving overall market success by ensuring products meet both current and future market demands. Leveraging his extensive understanding of process manufacturing, the unique business trends of this industry and information gathered from market analysis, customer feedback and regulatory compliance, he drives product decisions. Daniel has a passion for connecting the benefits of ProcessPro’s ERP solution and analytics software packages to batch process manufacturers and helping to effectively solve their key business challenges. Daniel has held a variety of positions within ProcessPro, including implementation, account management, product consulting, product management and sales, which has provided him an aptitude for manufacturing and the nuances within the food and beverage, nutraceutical, personal care, pharmaceutical, cannabis and chemical industries. His diverse experience with the customer base and within ProcessPro provides a strong foundation for his position.