The cannabis industry is booming, with legalization spreading across the United States and the world. As the industry grows, so does the need for businesses to ensure compliance with ever-changing regulations. As a cannabis business owner, compliance is the main catalyst to your success. Yet, when neglected, the cost of non-compliance is high, with penalties ranging from hefty fines to even revoking your licensure – and it happens more often than you would think. Don’t be intimidated – instead, get prepared. When done correctly, mastering compliance for your cannabis business is easy and extremely beneficial to your brand.
What’s a Cannabis Compliance Audit?
A cannabis compliance audit is a comprehensive deep dive into a cannabis business’s operations, procedures, and paperwork that ensures compliance with local regulations. This type of audit is usually performed by a third-party auditor who has experience in the cannabis industry and has a wide range of knowledge about your area’s unique legislation.
The goal of the audit is to identify any potential areas of non-compliance and provide recommendations for corrective action. In essence, your compliance audit is a glimpse into the health and performance of your business. The auditor will review your business’s license, permits, and other bookkeeping to address a few key questions, such as: Is your business operating efficiently? Are your minimum legal requirements being met? Are you meeting health and safety standards?
Why Do You Need a Cannabis Compliance Audit?
While there are numerous reasons why you would want a compliance audit for your cannabis business, these are just a few of the major reasons you should be aware of:
1. To Avoid Negative Blowback
Before anything else, the fact is that the cannabis industry is heavily regulated – and failure to comply with compliance standards can result in hefty fines or even the loss of your business license. In recent times, regulators have increasingly cracked down on businesses that aren’t compliant with local regulations. The bottom line is, the law is the law, and even as we approach federal legalization, compliance will become even more crucial.
2. To Prevent Problems
What’s more, a cannabis compliance audit can help you identify any areas where your business is not in compliance, allowing you to correct these issues before they become more significant problems.
3. To Entice Investors
By performing a cannabis compliance audit, you can demonstrate to regulators, investors, and customers that your business takes compliance seriously and is committed to operating within the bounds of the law.
4. To Run a More Profitable Business
From employee training, to establishing SOPs, and more, staying compliant can be a major value-add for your business. By setting up best practices in compliance in your business early, you’re setting yourself up for continued success down the line.
How Is a Compliance Audit Performed on Cannabis Companies?
During your compliance audit, an experienced auditor will take a careful look at multiple areas of your business to ensure you’re operating under best practices. The auditor will examine your business’s operations, procedures, and documents to ensure compliance with all applicable regulations.
They will also look for any potential areas of non-compliance and provide recommendations for corrective action. During the audit, the auditor may conduct interviews with employees, review documentation, and observe business operations to gain a comprehensive understanding of your business’s compliance posture.
What Does a Compliance Audit Checklist Entail?
A compliance audit checklist typically includes a list of items that the auditor will examine, taking a deep dive into each area of your business. This list can vary depending on the type of audit and the specific regulations that apply to your business based on your position in the cannabis lifecycle.
However, some common items on a cannabis compliance audit checklist may include:
- Business licenses and permits: The auditor will examine your business’s licenses and permits to ensure that they are up to date and that you are authorized to sell cannabis products.
- Inventory tracking and management: The auditor will review your inventory tracking and management systems to ensure that you are accurately tracking your inventory and that your systems meet regulatory requirements.
- Security and surveillance systems: The auditor will review your security and surveillance systems to ensure that they meet regulatory requirements and are capable of deterring theft and preventing diversion.
- Employee training and background checks: The auditor will review your employee training and background check procedures to ensure that you are hiring qualified employees who are authorized to work in the cannabis industry.
- Recordkeeping and documentation: The auditor will review your recordkeeping and documentation procedures to ensure that you are properly documenting all transactions and that you are maintaining records in alignment with regulatory requirements.
- Packaging and labeling requirements: The auditor will review your packaging and labeling requirements to ensure that your products are properly labeled and that your packaging meets regulatory requirements.
In addition to these common items, a compliance audit checklist may also include specific regulations that apply to your business based on your state or local jurisdiction. It’s important to work with an experienced auditor who is familiar with the regulations that apply to your business and can provide a comprehensive audit that covers all relevant requirements.
If you’re looking to add value to your business, stay ahead of local regulations, and safeguard your brand for years to come, a compliance audit is an essential step in the right direction. Ready to take your business to the next level? We can help. Here at MJstack, we’re experienced cannabis industry professionals that can help prepare your brand for success. Reach out today to learn more and get a FREE consultation!
