The Beginner’s Guide to California Cannabis Compliance + 3 Ways to Succeed!

Who is in Charge of California Cannabis Control?

The first question to answer on California cannabis compliance is: who’s in charge of enforcing regulations? The state’s Department of Cannabis Control (DCC) is charged with overseeing the cannabis market through “routine inspections and investigations.” 

When a facility is found to be non-compliant, the California cannabis regulatory agency’s staff first informs the licensee of the issue and provides instructions on how to fix it. Sometimes, they’ll issue a “Notice to Comply,” which outlines the specific violations found and provides a deadline for the issue’s correction. 

However, for more serious violations or repeated issues, compliance issues can become detrimental fast and subject to the following consequences – 

• Monetary fines – up to $5,000 per violation for licensees or $30,000 per violation of unlicensed persons.
• Order of abatement
• Embargo, a.k.a “preventing cannabis and cannabis product from being moved”
• License suspension
• License revocation
• Additional fines based on disciplinary guidelines

Now, to avoid fines that can reach up to $128 million for notable brands like Kushy Punch, it helps to take California cannabis regulation seriously from the start. So, next, let’s review the top ways cannapreneurs can ace compliance when learning how to start a cannabis business in California.

How to Start a Cannabis Business in California: Top 3 Ways to Stay Compliant

Mitigating risks is a large part of the entrepreneur’s process when starting a new business. For cannabis, that means learning as much as possible about California cannabis compliance before a mistake is made and it’s too late to recover. So without further ado, here are some of the top ways to ensure your cannabis business stays compliant: 

1. Include compliance in your business plan & SOPS 

What’s the best way to avoid a problem? Properly plan your operation to function with California cannabis regulations in mind. No matter what type of license you receive, every step of the cannabis production process is monitored and highly regulated through the METRC system. METRC stands for Marijuana Enforcement Tracking and Compliance, and one mistake can raise red flags. 

You will want to make sure that your business’s initial plans and standard operating procedures (SOPs) spell out your compliance and METRC procedures from start to finish. For instance, California cannabis packaging requirements are highly complex. Even down to the size of the CA compliant cannabis logo, which must be at least ½ inch by ½ inch in size. At the end of production, if you purchase labels or packaging that aren’t compliant, you could be stuck with reprinting costs, product recalls, and delayed sales, affecting your bottom line. 

2. Regularly audit 

Like taking a practice test, running your own internal audits are the best way to make sure that your facility is in compliance. These too can be outlined regularly within your operation’s SOPs, and you should also appoint a position or point person for compliance who is responsible for executing them. It can also be beneficial to bring in an outside third-party to review your processes in order to gain their expertise and ensure there are no blind spots or biases when it comes to meeting regulations. 

On the same note, there should also be processes put in place to keep up with ever-evolving and ever-changing regulations. The California cannabis regulatory agency often makes changes to guidelines and requirements, and being in tune with these changes is crucial for ensuring you don’t make a mistake. 

3. Hire an expert 

In addition to hiring a professional for internal auditing, it can be helpful to hire an in-house chief compliance officer or think about other ways to get into the California cannabis market that already have compliance figured out. Partnering with an already established infused product manufacturer or cannabis white labeling and private labeling are also becoming popular ways for new brands to enter the market with less risk, reduced costs, and advanced compliance processes. 

All in all, it’s not just California cannabis regulations that you’ll have to adhere to; there will be local and federal requirements like OSHA that you’ll have to plan for too. When you account for all of the moving parts and the cost it might take to monitor and stay on top of them, outsourcing production or partnering with an experienced contract manufacturer can often offer a higher ROI.