Chart of the Week: Top Regulatory Compliance Issues for Colorado Cannabis Companies

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By Becky Olson

With cannabis poised to take its place as one of the most heavily regulated industries in the world, compliance is and will increasingly be the name of the game for marijuana companies.

So how are cannabis businesses faring in this area?

In Colorado – home to the nation’s largest recreational industry and second-biggest medical cannabis market – the most common regulatory compliance infractions are related to physical inspections and security of business premises, according to exclusive data provided to Marijuana Business Daily from Adherence Compliance.

Twenty-six percent of all infractions are tied to physical inspections, with the top issue being a failure to achieve adequate visual coverage with surveillance cameras.

“Most facilities do not have enough cameras to satisfy the rules” and regulations, said Steve Owens, CEO of Denver-based Adherence Compliance.

Other top challenges in this area pertain to maintaining adequate logs of access to the surveillance system and securely storing recordings.

The insight into infractions stems from 326 regulatory compliance audits of medical and recreational cultivation operations, infused products makers and dispensaries/stores conducted by Adherence Compliance, which has audited over 11% of operational licensees in Colorado.

The second most common area of non-compliance relates to requirements for specific license types, such as cultivator, infused product maker and dispensary/store, where top challenges are things like keeping standard operating procedures up to date and maintaining pesticide application logs. Non-compliance with requirements related to inventory and financial data and records rounds out the top three categories of infractions.

However, the fastest-growing area of non-compliance is related to labeling, packaging and product safety.

Infractions in this category accounted for 7.7% of the total from August 2014 to December 2015, ranking as the sixth most common infraction type overall. However, during the last three months of that period, the category accounted for 13% of all infractions, making it the third most common issue during that time.

The top violations for both medical and recreational businesses include the size and conspicuousness of required labeling, and the absence of required statements on labels and packaging. Owens said that every single dispensary and retail store audited in the past three months has had non-compliance in this area.

“Each state has its own rules and requirements for labeling and packaging,” Owens said. “As each producer expands into other states, they will experience increased marketing and labeling costs due to state-specific requirements.”

Becky Olson can be reached at [email protected]

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