(This story originally appeared in the April 2023 issue of MJBizMagazine.)
A state’s cannabis regulations can run hundreds of pages and contain even more rules.
But the regulators who create these rules and law enforcement officials who enforce them care the most about three things:
- Preventing diversion to the illicit market.
- The physical security of cannabis operations.
- A potential drain on law enforcement and community resources.
To stay compliant and maintain good relations with regulators and law enforcement, cannabis businesses should focus their security efforts around these three goals.
“In terms of diversion, they want to make sure that you have established standard operating procedures and processes that will prevent anything from happening internally,” said Anthony Vanderhorst, the security director at Florida-based multistate operator Jushi Holdings.
“From the physical security standpoint, the focus is really to stop external things from happening. When you put those two together, you really get that comprehensive plan.”
Outfit for success
Physical security regulations have to do with access-control systems, alarms, cameras and similar measures.
“The city’s biggest concern is they don’t want to have to deal with any losses that are going to occur from you. … They’re looking for a prevention program,” said Tony Gallo, CEO of the Texas-based Sapphire Risk Advisory Group, a consulting firm specializing in cannabis security.
“If you have an employee that’s stealing cash from you, it’s not going to bother (the police). … But if someone’s handing out cannabis to their friends, that’s a different story.”
In addition to insisting that cannabis businesses guard against internal vulnerabilities that could lead to diversion – such as an employee stealing product and then selling it – and preventing external threats such as robberies, local police officials want marijuana operators to be mindful of straining municipal resources.
“They don’t want to respond to a robbery, they don’t want to catch a robber, they don’t want to respond to someone breaking into your store,” Gallo said.
Many local government and police officials believe crime will increase when marijuana becomes legal in their area.
They worry a marijuana retailer will call police frequently to report both legitimate and false alarms, leaving other areas unprotected by police and vulnerable to criminals.
To allay those fears, Vanderhorst recommends that plant-touching companies have comprehensive standard operating procedures (SOPs) related to security, including how to address potential threats as they arise.
“Make sure that through your SOPs and through training – and through either in-house or third-party security that you’re going to provide – that you won’t be a drain on that community,” he said.
Fears ease over time
Gallo noted that what a police department wants to see from a cannabis store often depends on whether the store is in a new or mature market – and whether the police department is familiar with legal marijuana markets.
“Police departments in mature markets that are used to cannabis just don’t want to have to incur any additional costs because of problems that could arise at a cannabis facility,” Gallo said. “Police who are familiar with the industry want to understand, ‘What are you going to do to prevent diversion in my town?’
“On the other hand, we get a lot of towns that have never been involved in cannabis before, and we have to educate them,” Gallo added.
Whether a market is new or old, marijuana executives should also know that if they have multiple facilities, each one will need its own unique security plan.
“It’s always good to have a plan at each operation and look at them individually,” said Kyle Kazan, a former patrol officer with the Torrance (California) Police Department who turned marijuana legalization advocate and founder and CEO of Glass House Brands, a vertically integrated marijuana business in the state.
Observers also highlighted that while some security costs have come down over the years – such as prices for cameras and alarm systems – new markets tend to have more security requirements than mature ones, meaning that businesses will initially spend more money than expected on security.
Those costs can decrease over time, however, as police and regulators learn what is necessary to protect cannabis businesses.
Will there be a day when cannabis businesses won’t need as much security as they do currently?
“Absolutely,” Kazan said, “because in the future, it’s going to normalize like any other product out there.”
