Why Audit? 

Written by Jenny Germano

This is a pretty fair question.

A compliance audit to some, is comparable to a visit to the dentist. Some people like getting their teeth cleaned and other's do not. The same goes for a compliance audit, and it can be a love hate relationship for some.  

I have been performing cannabis regulatory compliance audits for roughly eight years, starting back when I was an employee in the cannabis industry, to currently in my compliance support business. In the eleven years of working in regulated cannabis, one sure thing works in maintaining compliance in a licensed operation is an audit - understanding and fully knowing where you are at on the scale of compliance, and using the regulatory framework as a measuring tool to manage the risks. 

A compliance audit should be performed internally, weekly, or bi-weekly using a comprehensive check list, covering operational basics during a normal walk through of an operation. Companies should also perform a deeper dive into their facilities at least every month, doing an internal scrub at a minimum, to ensure compliance and addressing the gaps. Depending on the size of the operation, a compliance officer or team may be necessary to implement such tasks.

For the smaller mom and pops (like the operators I used to work for when I was an employee) a manager or assistant manager can also perform the internal audits. Additionally, utilizing a 3rd party auditor at least at a minimum annually is recommended, for outside “eyes” to evaluate the operations as it relates to compliance - someone who will audit your in-house auditors.

If your company is new to the industry or even if you have been operating for years, the best place to start is – to develop a compliance program. 

What is a Compliance Program? It is a roadmap for managing your risks in the licensed regulated cannabis operation. 

What goes into a compliance program? A company plan for how compliance will be implemented in the business, the assessed areas of risks, how they will be managed and what other areas relating to compliance will be included in the program.

Here are a few examples of what could go into a compliance program:

  • Internal Employee Training - All in-house training on procedures, policies and mapped out what employees get trained on, and how often.
  • External Employee Training - For example, like a State Responsible Vendor Training Program or a Food Safety Certification, or an OSHA certification. Additional educational value from outside of the business. 
  • Standard Operating Procedures - Ensuring they are completed, updated, and maintained, and employees are trained on all SOPS. 
  • Safety Program - This could cover things like using equipment properly, or employee ergonomics, or proper sanitation guidance, storage of chemicals or PPE equipment and having a Hazard Communication Plan. 
  • Recall Plans - What will be the company processes if they get caught up in a recall or if something the company cultivated or manufactured gets a recall, and how to properly implement. What is the plan?
  • Management of Compliance - Who is responsible for the overall compliance of each license, how is the role defined, how often are internal audits performed, what is the software or platform being used to manage compliance if there is any. Who is auditing your auditors? 

Having a well thought out compliance program is a key factor in having a successful compliance culture and it promotes the health of the overall business in the eyes of the State and its regulators. 

Why a Cannabis Business should Audit:

  • A company should always be assessing the risks and managing them to implement the correct compliance tools throughout daily operations. This minimizes the overall risk.
  • To avoid hefty fines, suspensions or administrative holds or even worse losing the license to operate.
  • Mitigate the risks of a product recall and the potential of damaging your business or brand based on officially announced Public Safety Violations.
  • Going above and beyond of what is expected of your company and being the example of doing it the correct way. Good business vs bad business. 

The reasons for performing internal audits can go on and on and why investing in compliance overall outweighs the high costs of maintaining it.

Without compliance there is no business and because of that, you are in the business of compliance first before anything else. 

ICS Consulting specializes in Compliance based services, such as Third-Party State Regulatory Audits, State and Local License Application Support, Technical Writing, Standard Operating Procedures Development, Compliance Operations Training, Employee Retention Solutions, and Employee Onboarding. For more information on how ICS Consulting Service can help your Cannabis Business, book a free 30-minute consult and we'll help you map out your next steps to be successful in the Regulated Cannabis Industry.