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Tuesday, June 28, 2016

The Importance of Regulatory Compliance for Caregivers - by Paula Givens



I am often asked by Caregivers what they can do to ensure they will be able to get a license when the state finally issues them. I tell Caregivers that the quickest path to obtaining a license in the future is by engaging in compliance NOW.  

Both the state and local municipalities will not issue a license to operate a cannabis business to anyone who has previous violations related to cannabis.   When full licensure comes to Michigan only those Caregivers who have been compliant with the Michigan Medical Marijuana Act (“MMMA”) and relevant local ordinances will be qualified for licensure.  

If city inspectors or the local police come to inspect your  grow, will the search of your facilities merely be an inconvenience, or will it be a total disaster?   When the police come to the door of a Caregiver they are looking for evidence of illegal activity.   Lack of compliance with the MMMA is the illegal activity the police are looking for. Caregivers who have embraced the need for a compliance program and who are operating within the fullest compliance of the MMMA and local ordinances have nothing to fear from visits by the police.  

What does a compliance program look like?  A compliance program is a written set of rules and procedures according to which Caregivers operate their business.  The purpose of the rules is to establish operational procedures that bring all aspects of the business operation into line with current regulations; presently the MMMA.   These are rules for the operation of the business that are ALWAYS followed.

In my view, a good compliance program guides Caregivers in how to comply with: 

The general business laws of the state;
The MMMA; and 
Any local cannabis ordinances.  

Caregivers whose businesses have been sanctioned for any reason risk being prohibited from licensure in the future.  As such, I believe that compliance with general business formalities is essential to operating a compliant Caregiver business.  I recommend Caregivers form and register a corporate entity and move away from operating their business as an individual. As the cannabis industry develops in Michigan most patients will  exercise the freedom to purchase their medicine from a local dispensary rather than directly from a Caregiver.  Dispensaries will demand that the growers who supply them are compliant business owners.  

The most important features of any compliance program are the provisions that relate to state and local rules for the cultivation, manufacture and sale of cannabis.   A good compliance program contains policies and procedures governing all aspects of operating a cannabis business in compliance with the state and local law, including access, security (alarm and surveillance), diversion, waste, business recordkeeping, testing, transportation, secure storage of product, inventory control, operating procedures, and labeling.  

The concept of regulatory compliance may be new to Michigan Caregivers, but for cannabis business owners in states like Colorado and Oregon the necessity for compliance is a daily fact of life. Most of the larger cannabis businesses in other states employ a Compliance Officer/Director of Compliance whose job it is to ensure that the business is operated in a manner in which every aspect of the business is legally compliant.  There are many successfully compliance businesses who perform this service as well.  

The robust regulation of cannabis that is forthcoming in Michigan will create significant business opportunities, but it will also create a small army of state inspectors.   These inspectors will make periodic visits to licensed cannabis businesses to ensure full compliance with the law.   Establishing a compliance program NOW, and becoming compliant with the MMMA and local ordinances NOW, will better position your cannabis business to become licensed in the future.  

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