Introduction
Hi there – Welcome to the Cannabis Workforce Initiative – Compliance: Seed to Sale Course.
My name is Anne, and I am here to guide you through an overview of what it means to be compliant in the cannabis industry, and – more specifically – how seed-to-sale tracking and traceability play a key role in keeping the cannabis industry compliant. Then we’ll wrap up with all the different job opportunities in the cannabis industry when it comes to compliance, as well tips on how to get started if you are interested in – a career in cannabis compliance.
On that note – let’s begin!
*** DISCLAIMER: THE INFORMATION IN THIS VIDEO IS FOR EDUCATIONAL PURPOSES ONLY. THIS VIDEO SHOULD NOT BE RELIED ON FOR TAX, LEGAL OR COMPLIANCE ADVICE.
Scene 2: What is Compliance?
Now, you might be wondering: what exactly IS compliance and what does it mean when it comes to being compliant in the cannabis industry?
The definition of compliance simply means “adhering to and meeting rules or standards.”
When it comes to the definition of compliance in the cannabis industry, and the reason why processes around staying compliant in the cannabis industry – can differ from state to state, it all really started with The Cole Memo:
The Cole Memo was originally drafted in 2013 by former US Attorney General James M. Cole, which represented a significant shift in the federal government to deprioritize the use of funds for cannabis enforcement at a federal level.
What this meant – was that each state would now be responsible for determining how to comply with state-legal cannabis operations when it came to items such as:
- keeping cannabis away from minors,
- preventing the distribution of cannabis across state lines, and
- ensuring that any cannabis grown, distributed, and sold would be done legally and compliantly.
It also meant that each state would also be responsible for determining the licensing process and what criteria would have to be met in order for someone to get a license to grow, distribute, and sell cannabis.
Additionally, in order for each state to efficiently track whether or not the cannabis inventory and sales happening in their state was being done in a compliant manner, they would need some sort of method to track – and trace – every cannabis plant and product being produced, sold, transferred or destroyed – and that was how the concept of seed-to-sale and state traceability came to be.
Why Compliance Matters
When it comes to compliance in the cannabis industry, the focus is on three main goals:
- ensuring public health and safety
- reducing the illicit market,
- and making sure that proper taxes are being calculated and collected by the state
Let’s look at each goal in more detail:
When it comes to public health and safety: standards and guidelines are put in place for items such as: – cannabis product packaging and labeling,
- lab testing for potency, and
- operating procedures in the event of a recall.
Dispensaries also need to have standard operating procedures to prevent minors from accessing cannabis – for example:
- training their staff to check for valid ID, as well as
- operating a compliant point of sale system that can automatically check if a customer’s ID is valid:
- that is – check if the customer’s ID is fake, has an expired ID, and if the customer’s date of birth indicates that they are at least 21 and over.
In terms of reducing the illicit market, this is where traceability and seed-to-sale software systems come into play. Many states use a traceability software system to keep track of all the cannabis that is being grown, distributed, and sold in the state. The most common traceability systems – also called track-and-trace systems – are METRC, Biotrack, and Leaf Data.
Cultivators, processors, and manufacturers who grow and produce cannabis products would then need a seed-to-sale software system to compliantly track and report all their plants and cannabis products to the state.
Dispensaries who sell cannabis products would also need a cannabis specific point of sale software system to help keep them compliant when it comes to items such as:
- Purchasing limits
- Equivalencies
- Taxes
- Inventory adjustments when it comes to destruction and waste
- Inventory transfers
- and of course: cannabis sales
All cannabis inventory adjustments, transfers, sales and refunds also need to be reported to the state, otherwise dispensaries risk getting enormous fines and penalties, or even worse – they could lose the license altogether.
Keep in mind that compliance is not just applicable for what happens inside a dispensary – it also needs to apply for what happens online.
That is why it is so important to use a compliant tech platform that is specifically designed for the cannabis industry. Dispensaries need to ensure that their online system is integrated with their point of sale system for accurate compliant reporting, or they can also choose to use an all-in-one dispensary software system where their online and instore systems are already fully integrated and working together.
Finally, when it comes to making sure that proper taxes are being calculated and collected by the state, this is also where cannabis specific seed-to-sale software systems are so important. Taxes are already complicated, but they are ESPECIALLY complicated in the cannabis industry with varying rules tax types such as:
- excise tax,
- destination tax, and
- even potency tax – where the tax amount varies depending on how potent a cannabis product is.
As you can see, compliance touches many areas of the cannabis industry, which also means many compliant-specific jobs in the cannabis industry.
Career opportunities in cannabis compliance
Compliance is not only necessary for the cannabis industry when it comes to
- ensuring public health and safety
- reducing the illicit market,
- and making sure that proper taxes are being calculated and collected by the state
It’s also great when it comes to creating new job opportunities in the industry. This includes everything from having a career in the quality assurance, lab testing, and the regulatory inspections department… to even working in the tech industry as a compliance officer or a developer building compliant seed-to-sale software.
To stay up to date on all things cannabis compliance when it comes to New York, be sure to check out the New York State Office of Cannabis Management website at cannabis.ny.gov.
That’s it for now. Thank you for joining us to learn more about compliance and seed to sale.