Marijuana Business Magazine November December 2018

How to Avoid the Sweet Leaf Trap A t its height, Sweet Leaf was one of Colorado’s largest vertically integrated cannabis businesses and considered a pioneer in the marijuana retail chain concept. Now, the company is a cautionary tale for other marijuana retailers. The city of Denver stripped Sweet Leaf of its 26 municipal licenses in July, alleging the company’s top brass propagated an illegal sales scheme called “looping,” which allowed some customers to make multiple purchases in one day that combined to exceed the legal sales limit. In October, the company’s owners made a deal with Colorado’s regulatory agency to pay more than $2 million in fines, sell their remaining business licenses in the state and drop their appeal of the charges. The case has put marijuana retailers on edge and underscored the need for strict compliance with customer and patient sales limits. That can be accomplished with tech- nology and compliance training. In some medical marijuana markets, compliance with sales limits is made simpler by state patient databases or regulations that dictate where con- sumers shop. Sales are associated with patient identification numbers, and their purchases are deducted daily or in real time from their limits. Tracking sales in adult-use markets, however, is complicated by consumer privacy concerns and fear over high- profile data breaches – think Yahoo, eBay, Equifax and Target. Experts – some of whom asked not to be identified – provided the follow- ing tips for complying with customer and patient sales limits. Confirm a Customer’s Identification Multiple Times Identification, such as a government-issued ID and or a medical ID card, should be confirmed at the point of entry, at customer check-in and when the customer pays for the purchase, retailers in multiple states said. The employees who check IDs should look for: • Date of birth. • A valid expiration date. • A photo that confirms the identity of the customer. Technology and compliance training are needed to adhere to customer purchase limits and avoid ‘looping’ practice By Joey Peña EXECUTIVE SUMMARY Sweet Leaf was one of Colorado’s largest vertically integrated cannabis retail chains before it lost 26 municipal licenses for allegedly engaging in an illegal sales practice known as “looping,” where cannabis consumers purchase more than their daily or monthly limits. The Sweet Leaf case has put retailers on edge and underscored the need to comply with sales limits. Retail executives and technology experts shared these strategies to comply with customer and patient sales limits: • Train team members to use technology and manual processes to confirm a customer’s identification at the point of entry, customer check-in and the point- of-sale counter. • In adult-use markets, require same-day return customers to provide receipts from their earlier purchases. If they cannot provide a receipt, do not make a sale. • Use a point-of-sale system that provides compliance safeguards and consumer privacy protection measures. • In medical markets, lean on seed- to-sale tracking software and state patient registries to adhere to patient-purchase limits. November/December 2018 • Marijuana Business Magazine • 79