Cannabis Compliance Challenges and How to Overcome Them

The cannabis industry has experienced remarkable growth and state-based legalization, but understanding and following compliance requirements can be a daunting task for businesses in the sector.

There are various regulatory requirements that cannabis businesses must follow, such as licensing, testing, packaging and labeling, and marketing restrictions. While these regulations are already strict, they become even more difficult to comply with due to the lack of standardized regulations across states.

But there are ways to ensure cannabis compliance, including through the creation of a strong compliance program, hiring a team who knows the rules, developing strict internal controls, and using cannabis-specific ERP applications to make the process easier.

What Are the Regulatory Requirements for Cannabis Compliance?

Operating a legal cannabis business means following state-specific regulations, including licensing, testing, packaging and labeling requirements, and marketing restrictions. This section outlines these requirements generally, but you should always check with state laws.

Licensing

The licensing process typically includes a background check, fingerprinting, proof of financial responsibility, and facility and security plans. Depending on the state, the license can cover cultivation, manufacturing and processing, distribution, retail sales, and testing laboratories.

Testing

Mandatory testing by state-approved labs ensures product safety and quality. This process typically includes sample and batch testing for pesticides, microbial impurities, heavy metals, and residual solvents. Labs can also outline potency and cannabinoid profiles for a product.

Packaging and Labeling

Cannabis packaging must be child-resistant and tamper-evident to prevent accidents involving minors. Labels should always include the product name and type, THC and CBD percentage, net weight or volume, batch number, expiration date, ingredients, and usage instructions. Depending on the state, edible packaging and labeling requirements may be more or less strict.

Marketing Restrictions

Typical marketing restrictions include cartoons or mascots that may be popular with minors, advertising near youth-centered facilities, and making false health or medical claims. Restrictions may also apply to online advertising (including social media and sponsorships), and event promotions. Each state will also have specific regulations you should check.

The Main Challenges of Regulatory Cannabis Compliance

Cannabis businesses struggle with inconsistent regulations, with 37 states and the District of Columbia allowing for the medical use of cannabis, and 21 states and the District of Columbia allowing a mix of recreational adult use, with diverse THC and CBD limits, licensing procedures, fees, and zoning requirements.

Cannabis laws and regulations are constantly in flux at both the federal and state levels. While cannabis remains federally illegal as a Schedule I substance, many states are adjusting their cannabis laws, pointing to potential federal legalization and decriminalization.

As more states adjust their cannabis laws and federal legalization remains a possibility, businesses must adapt their operations, update compliance programs, and manage increased risk. For multi-state cultivators, these changes can lead to complex and overwhelming operations that usually require a team of state-specific legal and compliance experts.

How to Develop Effective Cannabis Compliance Programs

Despite widespread regulation variances, the cannabis industry can tackle compliance issues. Here’s a look at how cannabis businesses can remain agile in a changing industry landscape:

1. Hire Experienced Compliance Professionals

In the complex cannabis regulatory environment, hiring experienced compliance professionals is key. For example, Velosio’s experienced staff understand and prepare for changes in cannabis laws, help cannabis businesses streamline the compliance process, and help them avoid violations and penalties.

Hiring professionals experienced in the cannabis industry can offer valuable guidance on best practices and help businesses adapt to constantly changing regulations.

2. Implement Rigorous Internal Controls

Creating clear policies and procedures can help cannabis businesses ensure consistency in complying with different state regulations. Regular audits and reviews help identify any compliance gaps and ensure ongoing compliance with regulations.

We outlined how cannabis businesses might leverage SilverLeaf’s product built specifically for the industry. Read more about how their multi-dimensional platform can help you stay on top of cannabis record-keeping and audit trails.

3. Use Cutting-Edge Tech to Streamline Compliance

Technology can significantly streamline cannabis compliance processes. Compliance software and tools, like Metrc (Marijuana Enforcement Tracking Reporting & Compliance), help track and manage licenses, permits, and monitor regulatory changes in a centralized cloud platform.

Additionally, setting up cannabis-specific ERP applications can help cannabis businesses stay agile, reduce manual errors, and streamline the compliance process. Integrating cutting-edge tech like this across operations connects cannabis compliance with other business functions, enhancing overall efficiency and effectiveness.

The Importance of Ongoing Training for Cannabis Compliance

Ongoing employee training ensures regulatory cannabis compliance and enhances operational efficiency. It’s important for employees to understand industry-specific regulations, and federal and state laws, and implement best practices to reduce violations and penalties while focusing on accountability.

Navigating the frequent changes in cannabis compliance regulations requires staying updated with cannabis laws and regulations on the state and federal levels. Knowing the law helps businesses adapt to changes, maintain a competitive edge, identify new market opportunities, and build strong relationships with key regulators and industry associations.

Final Thoughts

The complex world of cannabis compliance requires flexibility. With inconsistent state-level legalization and ongoing changes to cannabis laws, businesses face significant challenges in maintaining compliance.

Don’t let these complexities hold your cannabis company back. Reach out to our expert team today to help you navigate cannabis compliance rules, and the latest cannabis laws, to ensure your business remains compliant and competitive.