3 Compliance Considerations for Multi-State Cannabis Businesses
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Operating a legal cannabis business in a single state means dealing with a complex maze of rules and regulations. Expanding the business to multiple states compounds the challenges because each has its own unique set of rules and regulations.
Whether you are thinking of opening a cannabis business in one state or planning to take your business to multiple states these are the core regulatory areas you will need to consider in order to stay compliant:
Requirements for testing cannabis products are extremely varied depending on the state. At one end of the spectrum. Oklahoma currently has no testing requirements currently while at the other end is Washington and Nevada which both have have thorough and prescriptive testing and labeling requirements.
Testing and label requirements generally deal with THC and CBD potency, but also may include items related to terpenes present or information about pest management systems. In some states, there may be regulations for cannabis-infused products that detail acceptable thresholds for how evenly-distributed the cannabis compounds are in the product. For example, many states have laws surrounding the potency of edibles contained within a package and topicals to ensure the accuracy of the disbursement of cannabis oil in the manufactured item.
The most complex testing regulations deal with contaminants. Contaminates can include pesticide residues, heavy metals, mycotoxins and microbiological contamination. Depending on the state, licensees may be required to test for some combination of specific contaminants that fall into these categories to ensure their product is within the acceptable thresholds as outlined in a given state’s laws.
Packaging and Labeling
Regulations governing how cannabis must be packaged and what information is required on the label, and in what order, varies dramatically. For example, many states require cannabis products to be packaged in child-proof packaging while others stipulate only that it be packaged in tamper proof packaging.
Most states require the cannabinoid profile of a product, disclaimer or warning statements, the weight or quantity, and some kind of tracking number to be listed on the label. If the products are sold through a medical marijuana program, labels are also usually required to include information about the patient the product is sold to and the dispensary it was purchased from. However, some states require additional information about testing results, pesticides used in producing the product, or dosage to be included as well. Some states allow for packages to be assembled within the stores, and some states require full original lab results to be stored and available if a customer requests to see more information.
Audits and Reporting
All states with legalized cannabis sales require businesses selling cannabis in any form to report how much product they have sold and the income those sales have generated for tax purposes. However, the frequency and format of these audits and reporting requirements vary widely. Oklahoma’s report is essentially a spreadsheet that is submitted once a month. Other states issue a state software and collect data into a state-contracted database, which requires the license holder to manually enter the data on a regular schedule. Regardless of license type, ensuring you are submitting the right information through the right channels on time is critical to staying compliant.
The rules and regulations governing the cannabis industry are so highly complex and so varied from state to state as to often make universal product types impractical. While my company, GrowFlow has decreased the pain for licensees within the cannabis space, many other company types are referencing state websites and looking for updates in regulations to make sure that their company is focusing on the issues that may be relevant in the future.