When we say compliance, what are the top five things that cannabis companies should think of? We have compiled a quick list of topics and knowledge that cannabis business owners need to know.
Top 5 Compliance Issues for Cannabis Companies
#1 Online Sales = Interstate Commerce.
Have you checked what you’re selling and where? Selling cannabis products requires you to be familiar with not only your state and local regulations, but also any area you are selling/shipping into. That’s a lot of information!
E-commerce and websales automatically put your company into interstate commerce. So, at the least, you must be familiar with your state and local regulations as well as the federal regulations that are relevant to your type of product and business.
#2 Product Storage and Delivery.
Are you shipping/storing in a legally compliant manner? Some states have specific regulations when it comes to transporting cannabis – CBD and THC.
Most people assume that storing and shipping finished products doesn’t make them subject to these regulations. That is not true in every state and jurisdiction!
#3 Tell me You’re a Good Cannabis Product without Telling me You’re a Good Cannabis Product.
Marketing is one of the biggest parts of starting any products business. People spend huge portions of their budget to brand and market a product.
Cannabis makes that process more complicated because your hands are tied when it comes to what you can claim a product can do. It’s a struggle to be able to say “My product is going to solve this problem for you!” when you can’t say that your product will solve any problem without potentially triggering a warning letter from the FDA or similar state agency.
#4 No Law DOES NOT mean it’s Legal.
You need more than traditional sources of law to try and predict how your state/locality views your product. Many cannabis operators choose to believe that if something is not specifically prohibited by law, it is allowed/legal. This is not true!
So many of the newly created cannabis rules and regulations contradict existing law. Many times there is no law regarding a new cannabinoid or product type.
In order to have a chance at predicting how law enforcement or regulators will view a new cannabinoid (i.e. Delta-8, THCP, etc) or new cannabis product, we have to look at memo’s from the Attorney General, the Governor’s office and FAQ’s on law enforcement websites.
#5 Business Partnerships are a Marriage.
Do you have a prenup (aka an operating agreement?) Are you using employment and independent contractor agreements? If not to any of the above, you are leaving yourself open to a lot of drama and headache if/when things go awry.
Everyone is happy until someone cheats or until someone wants a divorce. Do you know what will happen in your partnership if one of your partners wants to leave?
Does anything differ for CBD companies vs THC companies in regard to the above list?
All five of the above issues are true for both CBD and THC.
However, while THC has to deal with a lack of federal legalization, CBD has to deal with a regulatory void. Often, states that legalize THC products have lengthy and complex regulatory schemes. Very few states create the same thorough standards for CBD and other cannabinoid products that fall below the 0.3% THC concentration limit.
Neither situation creates an ideal market for cannabis operators. Institutional knowledge and strategic partnerships are necessary elements of your team to successfully operate in the cannabis space!
Cannabis is not an industry where you can “ask forgiveness, not permission.”
Licenses to operate in most states, above or below 0.3% THC, are expensive. Criminal exposure exists. The industry is ripe for litigation, especially in the areas of product liability and customers experiencing unintended side effects.
This is why we helped create Cannabis Complete, a comprehensive, online database for all your cannabis compliance issues. This huge database covers all cannabis laws in the USA on a federal, state, and local level. If your company is interested in access to this tool, contact Morgan Davis today.
If you’re not engaging a cannabis legal expert from the inception of your business, you are leaving yourself and your business exposed.
If you need help with your Cannabis Business’ legal protection, we’re here for you.