One of the Most Common Cannabis Compliance Pitfalls

Many posts on this blog revolve around expanding the definition of “compliance” in cannabis industry. It’s not enough to strictly comply with state cannabis regulations—companies must also consider other sources of relevant law. In this post, we’ll discuss one of the most common cannabis compliance pitfalls: overlooking local cannabis regulations.

Local regulations operate within the bounds of state law and therefore mirror the state regulations in a lot of ways. Sometimes definitions and sections of the state regulations are copied and pasted by local regulators into local cannabis regulations. This can lead to the false assumption that compliance with the state regulations equals compliance with the local regulations.

Local regulations tend to differ from the state regulations in key compliance areas, however. Some of the areas in which local cannabis regulations differ from state regulations, include, but are not limited to:

• Definition of owners/financial interest holders
• Mandatory disclosures
• Background check procedures and disqualifications

Differences in the local regulations are often attributable to the time period in which the local jurisdiction passed its cannabis ordinance. For example, its not uncommon to see the definition of an “owner” in a local jurisdiction reflect an older version of the state’s definition of “owner” that has since been changed. After all, local jurisdictions typically consult the state regulations (as well as the other local regulations) when creating their own. Other differences can be explained by local police department preferences for conducting background checks, for example.  

To avoid this pitfall, ensure that your compliance binder is location-specific. It should cover compliance with both the state and local cannabis regulations. Reach out to your local jurisdiction and ask if there any compliance inspection checklists they can share or other guidance on what their main focus is when it comes to inspections.  Also ensure that employees are trained on both sets of regulations.

Be sure to check out our free California Compliance Guide if you’re interested in learning more about cannabis compliance. Even if you live in a different jurisdiction, the principles discussed throughout the guide are invaluable in any jurisdiction.

© RYAN T. KOCOT, ESQ. 2021

DISCLAIMER: THIS INFORMATION IS STRICTLY EDUCATIONAL AND DOES NOT CONSTITUTE LEGAL ADVICE.