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October 7, 2021

What Are The Risks of Regulatory Noncompliance for Cannabis Businesses Regulations

The risk of regulatory non-compliance can be broken down in lots of ways. These Are the top 5 reasons why operational compliance is important to protect your business:

  1. Reducing the possibility of fines, recalls, and disposal of products.

    This is the most obvious of all the reasons why a cannabis company needs to be compliant with operational regulations. When a company is out of compliance, they risk being fined for violations. If the violations affect public health then you run the risk of going through a recall. Then having to dispose of product and that obviously will affect your bottom line. If you are repeatedly out of compliance then you can even run the risk of being shut down and  permanently losing your license, probably the worst thing that can happen to your business. Following cannabis business regulations and health/safety guidelines (even if not required) is a sure way to avoid these kinds of things from happening. 
  2. Being compliant with regulations surprisingly helps with employee retention as well.

    All employees want to work at a company where they have pride in what they are making. Over the years one of the positive side effects of being compliant for getting certifications such as cGMP Certification, is employees want to stay at your company for longer. If an employee is constantly dealing with regulators and maybe doesn’t understand what is going on, or what is compliant and what is not, it is a hard place. Overall employees like to understand completely what is expected of them. They like to know they work for a legitimate and upstanding company. Something to think about when developing a compliance system and employee training. 
  3. Being compliant with cannabis business regulations also helps protect your brand.

    Usually when a company is out of compliance and they get fines, recalls, warning letters, disposals, etc. consumers hear about it. Many times there are press releases, articles written, or notices sent out to the public to make consumers aware there is an issue. Even health department and other regulator reports are available to the public. When you are out of compliance and something like this happens, consumers view your brand in a different way. This then can lead to an immediate drop in sales. A company’s reputation is very important and being compliant helps make sure your brand doesn’t suffer from something like this. 
  4. Being compliant with regulations will also lead to good relations with your regulators.

    When I was a regulator there were certain companies that I used to only go to on a Friday afternoon. Simply because I knew they were going to be in compliance and I wouldn’t get stuck there for hours on a Friday. Usually these companies were friendly, and I actually enjoyed going to visit them. This is the kind of relationship you want with your regulators. This kind of relationship leads to all other kinds of benefits as well. Many times with really good operators I would answer questions for them regularly. Whether through email or some even had my personal cell phone number. If you need quick responses and know your regulators really well you are able to solve problems and get direct answers much more quickly.
  5. Being compliant overall will also extend your business life length.

    For all of the reasons above you are far more likely to stay in business long term and run into far less issues if you are in compliance. Businesses that dedicate themselves to compliance and create a culture of compliance set themselves up for long term success. Eventually able to weather federal legalization. We highly recommend becoming compliant with federal standards as soon as possible. The earlier the better, and the more likely you are to create habits that stick.