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Is Your Marijuana Business Compliant? Understanding the Challenges of Federal and State Regulations

Introduction

Cannabis is now legal in over 30 states for medicinal purposes including 9 states for recreational adult use. Identifying logical alternatives to the challenges legal cannabis businesses face due to the changing laws and compliance can be difficult.

 

There are many procedures to stay compliant with the regulations of the state laws for commercial cannabis businesses to thrive ranging from retail stores, cultivation, and lab testing. Local activism is necessary to create a safe environment for cannabis businesses to continue growth and profit in the future of cannabis legalization.

 

The many implications of the challenging environment of the legal cannabis businesses includes concrete product contamination, misbranding of product potency and ingredients, insufficient packaging, illegal cultivation raids on federal land, and many other violations of the regulations in place to protect consumers and businesses.

 

Cannabis entrepreneurs and professional workers in the industry need to be adaptable to the changes in the law. These changes can happen at any moment. HighUp’s products and services enhance workflow management reducing human error and keeps track of state cannabis regulations.

 

The Challenges with Crackdowns with Illegal Grow Operations in Legal States

 

Despite recreational cannabis legalization in California with Proposition 64, marijuana businesses are still under danger of raids due to the challenging environment of the legal marijuana business.

 

This has been a big problem throughout California as law enforcement continues to crackdown on unlicensed marijuana operatives on federal land.

 

Unlicensed dispensaries without proper permits and licenses also are targeted for federal raids, which has been an ongoing problem for California for many years.

 

The red flags that alert law enforcement about illegal cultivation operations include faulty electrical wiring and unpermitted structural modifications in commercial spaces.

 

For example, on January 16, 2018 local Apple Valley law enforcements and San Bernardino County Sheriff Deputies discovered in a commercial building in the block of Pioneer Avenue on January 16 over 340 marijuana plants. Apple Valley prohibits commercial cannabis activity.”[1]

 

Even with the implementation of recreational cannabis legalization in California, the majority of many municipalities and cities remain hostile towards allowing legal and regulated cannabis businesses into their towns in states, such as Nevada and California.

 

Regardless of the implementation of recreational cannabis, local officials decide on whether on not they want cannabis retail stores or cultivations in their town. These cities need to consider lifting the sales ban, because cannabis businesses and local businesses are missing out in millions of dollars in profit.

 

The indirect outcome of the cannabis ban in these cities resulted in the thriving black market cannabis consumers are turning back too with competitive prices and availability of high quality cannabis products.

 

Equip your Cannabis business with HighUp

 

Dealing with Pesticides: The Importance of Lab Testing for Cannabis Products and the Consumers

One the downside of legalization, an allegation of tainted cannabis flower with pesticides and fungi is becoming an issue for the consumers, growers, and the government alike in states with legal cannabis. Growers are using illegal pesticides with chemicals that are harmful to the human body.

 

Therefore, with legalization comes innovation of testing facilities in labs that test the THC content and also harmful chemicals on cannabis dried flower and other cannabis infused products.

 

Cultivation facilities and retail stores, selling cannabis and infused products, should be mandatory by law to test their cannabis products in labs for mildew and fungus. Growers of cannabis and retail dispensaries are more aware of risks associated with selling tainted products and production of cannabis products are subjected to being recalled by the state government.

 

The responsibility of the Denver Department of Environmental Health is to ensure the safety of cannabis consumers by inspecting samples of products for pesticide use. For example, the Denver Department of Environmental Health stated that one cannabis infused edible company, Mountain High Suckers, had products that were recalled due to

“the presence of potentially unsafe pesticide residues found in product samples.

 

The recall affects 99,574 individual units of 50 different medical products and six different recreational products. The recalled products are marijuana infused edibles consisting of suckers, lozenges, and powdered candy (POW).

 

The recalled products were derived from contaminated plant material purchased from Western Remedies and Rocky Mountain Farmacy, two cultivation facilities in Denver. Samples of these marijuana infused products had residual levels of Imidacloprid and Myclobutanil, pesticides the Colorado Department of Agriculture has determined cannot be used legally on marijuana in Colorado[2]”.

 

Compliance laws as a result of legalization prevent false advertising in cannabis products and puts the responsibility for cannabis cultivators and manufacturers of cannabis products to implement lab testing to protect the consumer’s health.

 

Another example of why we need standard cannabis compliance laws across the business includes the class action lawsuit filed against a Vape company, Brass Knuckles, in California owned by Rapper Xzibit, also known as Alvin Nathaniel Joiner.

 

 

It is necessary to take preventative measures to by implementing a standard of cannabis product testing through lab testing, because the product explicitly contains false advertisements in the front label of promoting “lab tested, contaminant free with no polyethylene glycol or glycerin”.

 

Once again, consumers of legal cannabis can potentially get sick from inhaling mold and fungus from diseased cannabis plants. In the lawsuit, the plaintiff states that he retained the well-known cannabis testing lab Steep Hill to conduct laboratory tests on two flavors of the Brass Knuckles product, which revealed detectable amounts of pesticides, including bifenazate, etoxazole, myclobutanil, trifloxystrobin, permethrin, bifenthrin and carbaryl.

 

On the other hand, the complaint alleges that the levels of contamination exceed the “Action Level” set forth for each of the observed residual pesticides by the California Code of Regulations, Title 16, Division 42, section 5719.

 

According to the complaint, the lab tests allegedly also revealed total cannabinoid potency between 59 percent and 77.3 percent for the products tested, but that many competing vape cartridges have substantially higher potencies, with tested results between 86 percent and 95 percent.[3]

 

Therefore, there needs to be a compliance standard in place for product testing across all states with legal recreational and medical cannabis.

Unlike California, after the implementation of recreational cannabis in Nevada, cannabis products need to pass thorough lab tests to ensure consumer safety. Under part 5 of the Enforcement Structure for the Governor’s Task Force on the Implementation of Question 2: The Regulation and Taxation of Marijuana Act Final Report indicates the procedures for cannabis testing labs by stating, [4]

 

The Goal is to give laboratory compliance enforcement a structure so that repeated violations or exceptionally egregious violations result in actionable enforcement against offending laboratories and to be responsive to the needs and issues of consumers, non- consumers, local governments and the industry.

 

Therefore, Nevada law emphasizes strict enforcement of the state cannabis industry to ensure quality control with reliable cannabinoid and terpenoid potency testing as specified by Nevada State guidelines.

 

Packaging Products in Compliance with Federal and State Laws in California

In the end, we need to understand that recreational cannabis legalization creates a standard of regulations for cannabis products for safety reasons, in order to protect the consumer.

 

As the direct result of recreational cannabis legalization in California, cannabis businesses need to follow new emergency regulations to prevent product contamination after July 1, 2018 by inserting child safety packaging and mandatory THC warning labels in accordance to the Federal Poison Prevention Packaging Act.

 

For example, packages cannot be alluring by copying existing food brands to prevent small children from accidentally consuming cannabis products. As a result, cannabis retail operations in California had to discount their products and change their packaging to remain compliant with new California state regulations.

 

The Issue of Banking and Cannabis

Despite the power of individual state rights of a legalized and regulated industry under the 10th amendment, federal prohibition remains as cannabis is still classified as a schedule one drug under the DEA scheduling in the same category with more dangerous and addictive illicit substances, including heroin and cocaine.

The federal government is still opposed to the cannabis industry with the recent comments from Attorney General Jeff Sessions under the DEA’s Schedule 1 drugs.

 

Therefore, banking remains problematic as under law banks cannot provide cannabis businesses, growers, cultivators, and dispensaries with accounts due to cannabis being federally illegal.

 

Banks remain reluctant to provide banking for legal cannabis businesses. Cannabis businesses are forced to carry large amounts of cash, because banks refuse to deposit money from legal cannabis businesses.

 

Cannabis businesses have to find alternatives for banking to ensure safety of their employees handling cash.

 

The Solution: HighUp an SOP Software Product for the Cannabis Industry

 

Change in state and federal regulations is a common issue in the cannabis industry. In many legal medical and recreational states, cannabis is tracked from seed, to cultivation then packaging and final sale.

 

The solution to solving the issues of cannabis businesses keeping up with the changing state and federal laws is to emphasize the importance of Standard Operating Procedure (Herein referred as SOP) software products designated for the cannabis industry.

 

HighUp is such software. It is an all inclusive management platform that allows employees to undergo widespread onboarding and training to efficiently understand cannabis compliance laws.

 

The more common knowledge employees in the cannabis industry have lessens the confusion that will occur in the aftermath of changes in state regulations of cannabis laws.

 

HighUp delivers real time visibility as a one stop service to manage workflow dealing with product performance, quality changing compliance, and accreditation in the cannabis industry.

 

HighUp’s software will ensure cannabis businesses peace of mind by reducing regulatory compliance penalties. This product will track and improve cannabis business operations under cannabis regulations.

 

Conclusion

The ripple effect of Colorado and Washington State's historic vote to legalize cannabis proves that the people want cannabis legalization and the legal cannabis business is a highly profitable with room for growth.

 

The shift of public opinion over cannabis use is changing as more states will consider legalizing cannabis in the future. Voters in many of the recreational and medical states decided to end the War on Cannabis, in order to reduce the harmful effects of incarceration rates and violence in the community.

 

As a Schedule 1 Controlled Substance under the DEA, the cannabis business remains vulnerable without cannabis being federally legal with standardized regulations across all states.

 

Thousands of jobs have been created due to cannabis legalization from testing laboratories to manufacturers. Undermining state regulations in the cannabis industry will result in closure of the business.

 

However, HighUp is a product designed for the cannabis market, because SOPs ensure businesses will run smoothly for effective management of all employees. Standard operating procedures ensure that all employees in a business are in compliance with all regulations at all times.

 

HighUp’s products and services utilize performance by taking the guess work out of everyday operations. Running a smooth operation in compliance with all laws and regulations ensures profitability and growth for cannabis businesses.

 

Many cannabis industries are operated as small businesses. They need guidance so that business operators can focus on the main task at hand, which is serving retail customers, growing plants, manufacturing consumable cannabis products, testing products, and maximizing profits.

 

Small cannabis business owners do not have time to read through the ever changing state regulations.

By utilizing a service that provides details of updated SOPs, like HighUp, business owners will be able to cut through red tape.

By simplifying the day to day operations of cannabis businesses with a seamless comprehensive SaaS Platform, businesses can save money because they can prevent potential violations that incur financial penalties and even closure of the business.

 

 

 

[1] See more information about Marijuana grow in commercial building raided in Apple Valley: https://www.sbsun.com/2018/01/17/marijuana-grow-in-commercial-building-raided-in-apple-valley/

[2] "Mountain High Suckers Voluntarily Recalls Marijuana Products Due to Pesticide Residues." City and County of Denver. Department of Environmental Health, 30 Dec. 2015. Web. 10 May 2016. <https://www.denvergov.org/content/denvergov/en/environmental-health/about-us/news-room/2015/mountain-high-suckers-voluntarily-recalls-marijuana-products-due.html>.

[3] See more information about the Brass Knuckles lawsuit: https://www.wilsonelser.com/news_and_insights/insights/3125-cannabis_consumer_class_actions_are_being_filed?utm_source=Mondaq&utm_medium=syndication&utm_campaign=View-Original

[4] See more information about Nevada’s compliance and regulatory laws: https://tax.nv.gov/uploadedFiles/taxnvgov/...Marijuana/NVRM%20Reportv1.25.pdf

 

Posted in Business on October 19 at 09:17 PM

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