Commercial Cannabis Insights
Why do I want my compliance and risk officer(s) to achieve a risk management certification? A certified compliance officer is better equipped to effectively develop a comprehensive plan to achieve your business objectives. They are trained to spot high-risk activity prior to non-compliance or misconduct. They are better able to understand how to enable all employees to make informed risk-based decisions.
The EVALI cases in 2019 were certainly a common topic of discussion. After reading this report I would like to highlight a few of the reports interesting conclusions: 1) in states where marijuana policies were in effect, a statistically lower number of EVALI cases were seen, 2) EVALI incidents were about 40% lower in states that allow recreational marijuana use, 3) contaminants found in marijuana vaping products were problematic.
Operators must not only manage the day-to-day challenges unique to the industry, but they must also find ways to improve performance while reducing costs if they wish to remain competitive. While profitability and market share are the ultimate goal, maintaining compliance in an ever-changing regulatory environment puts additional pressure on companies looking to carve out their piece of the pie. Unfortunately, the pursuit of profits and the desire for a competitive advantage can sometimes lead to hasty decisions that result in unnecessary operational risk. The good news is that with the proper planning, processes, and systems in place, managers and executives can significantly reduce the operational risk associated with their business.
How does a Risk Officer help company Directors understand the risks to the business? The role of the risk officer is a trusted advisor to keep the board informed of risks so the directors can make reasonably informed decisions. Risk officers provide information to the board on many topics, including information needed to execute their duties as outlined in their job description, challenge management assumptions, advise management on strategy, build value, ensure leadership, and understand regulatory complexities of corporate transactions.
Like most things in life, you can think of risk management and compliance on a spectrum. We have three basic areas of the spectrum. In the middle, we find most operators who want to avoid deficiency notices, fines, and enforcement. They’re interested in managing risk and compliance, but may not have spent the time or resources to master the process. For all of you who are looking to develop and implement a compliance program or seek to improve the program you already have, this article is for you.
How can I interview a compliance or risk officer and figure out if they are the right candidate? Ask these 3 questions: How will you protect our business? How will you enable others to do their jobs? How will I know if you will implement a risk strategy that works for my business?
The Cannabis Act has explicit rules for the packaging and labeling of cannabis products to ensure that they do not take on an appearance of something that might be enticing or appealing to young persons. The rules are comparable in the U.S., even if they vary slightly by state law. One situation where both jurisdictions can learn from each other's mistakes occurred in 2020. A raffle held at a Canadian youth hockey tournament contained a prize consisting of several cannabis products. The winner was an eight-year-old boy who was participating in the tournament.
Commercial cannabis businesses tend to focus on preserving compliance with regulations in order to satisfy licensing requirements; however, managing risk holistically involves more than looking at the regulations. Read this real-world case study of a commercial cannabis enforcement action and learn how to protect your business from potential penalties.
In highly regulated industries, most companies reduce the risk of civil and criminal exposure by taking a risk-based approach that shows the company’s intent to comply.
In the United States of America, commercial cannabis businesses must be aware of the Internal Revenue Service (IRS) requirements for Form 8300 when receiving over $10,000 in cash for a single or related transaction. To reduce your civil and criminal risk exposure, start your risk-based approach to Form 8300 compliance today with a risk assessment, system of control, and looking at the past.
Compliance enforcement actions have long been used by regulators to push a licensee to comply and when severe enough, can be detrimental to the future success of a business. Commercial cannabis businesses may suffer disruptions in supply chain, loss of reputation and revenue among other things. A formalized risk program denotes a commitment to compliance and is strong evidence that the company did everything it could do to prevent non-compliance.
If your commercial cannabis business has an ATM on-site, you need to know about the money laundering risks that you are exposed to. This article describes the ATM risk issue, red flags to be aware of, and controls that you can put in place to mitigate the risk.
Compliance and risk management are two distinct functions that should be unified by one risk management strategy. A risk-based approach is a common risk management strategy in highly-regulated industries that optimally facilitates compliance while also mitigating other risks. A properly implemented risk-based approach creates a broader level of protection for the business, employees, and investors from reputational, administrative, civil, and criminal penalties.
In what appears to be the first penalty levied against a financial institution banking commercial cannabis businesses, Live Life Federal Credit Union has entered into an administrative order with the National Credit Union Administration (NCUA) for failures related to its cannabis banking program. As Live Life Federal Credit Union emerges from this administrative order, and more lessons are learned, cannabis bankers will be more empowered to make the appropriate risk-based decisions when it comes to managing their MRB portfolios.
In highly regulated industries like cannabis, it is important to demonstrate your ability to manage the identified risks as they change over time. Take two investment options that are similar in every way except risk management: an investor would choose the company that can distinctly demonstrate their ability to manage their risks into the future. An investor values risk management because it increases confidence in realizing the future revenue stream.
Risk and compliance professionals know that operating a highly regulated business is difficult. But in the cannabis industry it is exceedingly difficult because of jurisdictional variances and rapidly changing regulations.
Implementing a risk profile does not have to be overly complicated. Risk professionals who know how to communicate their company’s risk profile in a clear, concise manner can best help their senior managers and board of directors make the best risk-based decisions to move their business forward safely.
For commercial cannabis businesses to succeed, risk management should be incorporated into every employee’s job. This helps every cannabis operator reduce public harm, increase public safety, and maintain a sound licensed cannabis market that is profitable to operate in. Risk management isn’t built in a day, but the sooner you start, the sooner everyone gets to do their job.
Maintaining compliance in the commercial cannabis industry can be daunting, considering how highly regulated the industry is and how quickly rules change. A compliance risk assessment will help your commercial cannabis business focus resources on the regulatory risks that matter most to your business.
Cannabis banking requires a benchmark for cannabis operators growing cannabis so that the yield from a grow can be monitored for reasonableness. This allows cannabis bankers to reasonably predict transaction patterns to determine the risk of money laundering and inversion/diversion to the illicit cannabis market.
Building a strong culture of compliance is essential to most businesses, but especially important to cannabis operators managing a rapidly changing regulatory landscape with increasing regulatory expectations.
Jontae James, CEO of NatureTrak, will provide a view for both the cannabis business and the ancillary cannabis business on how to accomplish the transparency necessary for both sides to prosper with risk-based due diligence. In this episode, Jontae provides an example of diversion of cannabis product and inversion of funds in a hypothetical grow scenario, and describes where specific points in the track and trace system are more vulnerable to those looking to divert and invert cannabis product.
Jontae James, CEO of NatureTrak, will provide a view for both the cannabis business and the ancillary cannabis business on how to accomplish the transparency necessary for both sides to prosper with risk-based due diligence. In this episode, Jontae explains what information a commercial cannabis business could provide to help the vendor or ancillary cannabis business meet their regulatory expectations.
Jontae James, CEO of NatureTrak, will provide a view for both the cannabis business and the ancillary cannabis business on how to accomplish the transparency necessary for both sides to prosper with risk-based due diligence. In this episode, Jontae introduces key information to evaluate, like how much the commercial cannabis business expects to produce/sell, where the cannabis product is going, and who they do business with.