As our Los Angeles marijuana business lawyers can explain, it’s not the first time pot shops have been subject to inspections. It’s just that officials handling it in the past typically gave companies a heads-up – often several days of notice – before showing up. But according to recent reports, there has been a surge of drop-in, no-notice inspections. The 24-to-48-hour heads-up is no longer something your company can count on.

Given that even minor transgressions or oversights might compromise your ability to keep your doors open, it’s imperative that licensed California cannabis businesses be ready for a DCC inspection out of the clear blue sky.

Prime Targets of California DCC Inspections

If a company isn’t following state marijuana law and guidelines to the letter, DCC can issue citations, fines, and even license revocation. As this new aggressive inspection campaign is under way, it’s unclear how nit-picky inspectors are going to be, but we do know the agency has expressly stated there are a few major compliance rules on which they’ll be devoting a heavy focus. Those include:

• Compliance with Track & Trace. Companies need to be fastidious about maintaining their METRC compliance records. That requires plants/batches to be correctly tagged, placed in storage, and submitted into the track-and-trace system. Our L.A. marijuana lawyers know it’s a tedious process about which many clients grumble. However, slip up on this front and it’s likely to cause problems during an inspection. Even seemingly inconsequential requirements like ensuring all tags are clearly visible to anyone within a certain radius of the plant can result in a track and trace violation.
• Property modifications. If you intend to change or update the physical facilities out of which you operate, you must obtain the DCC’s prior approval. This could be anything from knocking out walls to simply moving a certain part of your business operations to a separate side of the building. This is likely going to present the biggest headaches for growers, given that their government fees and size caps are based on their canopy square footage. Manufacturers, meanwhile, will want to make sure they aren’t overstepping the bounds of license by producing products that haven’t been previously disclosed/approved by the state DCC.
• Property access. Your premises needs to be secure. Retail facilities obviously allow patrons to enter off-the-street, but supplies should be adequately secured and there should be numerous protections in place for off-hours. Meanwhile, access to cultivation farms, manufacturing facilities, and lab sites should generally be limited solely to authorized personnel. Businesses should have proper gating, locks, cameras, and alarms.
• Workplace safety. If there are potential on-the-job hazards, they need to be addressed immediately – because of unannounced inspections but also just for the safety and well-being of your staff and customers. No doubt this is a unique industry with special considerations, but state Cal/OSHA workplace safety requirements still apply.
• Records. California cannabis companies can be compelled at really any point to turn over records they are required to keep – from certified lab test results to METRC records to auto insurance records to employee contracts to surveillance videos (which they must keep for a full 90 days). Businesses also need to have their license properly displayed on site.
• Transparent cultivation processes. Cannabis farmers are held to a high standard of accountability when it comes to providing DCC with detailed plans on practices ranging from light and energy consumption to managing pests. If your current operations deviate even in the slightest from the blueprints and plans that DCC has, the inspector is going to catch it. Make sure if you make changes to run it by your cannabis business attorney to see whether you need to submit a review request before pushing full steam ahead.

In a recent DCC informational pamphlet entitled, “What to Expect When You’re Inspected,” the agency conceded that establishing a cannabis company in California is complicated and often very challenging. The agency vowed to work with businesses that may not be compliant to make corrections within a certain time frame. Usually, you’ll have 30 days to respond to any citations. If you don’t already have an attorney on retainer at this point, it’s a smart move to get one before responding to a DCC citation. Ideally, if you work closely with a cannabis lawyer on a regular basis, you can avoid running into most of these issues in the first place.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

“What to Expect When You’re Inspected,”Canna Connect, DCC Inspection Checklist

cannabis businesses through the Adult Use of Marijuana Act, which went into effect Jan. 1, 2018.

But just because a state has legalized cannabis does not mean there is a marijuana free-for-all with no rules or consequences.

For example, Colorado voters passed Amendment 64 in 2012, allowing for personal recreational use of marijuana for adults over 21. Sales began in the state in 2014. But recently 26 legal cannabis businesses were shut down by authorities in Denver.

All of the operations were either store fronts or growing facilities operating under the Sweet Leaf name. While the operations were licensed and legal, they had been under investigation for the past year on suspicion the businesses were exceeding individual sales limits set by the state. Colorado regulations restrict possession to one ounce or less of marijuana per adult.

Police said they were monitoring eight of the 26 sites for the past year. The investigation culminated in a raid of the targeted locations and suspension of all related operations in the state under the same name. The company owns one location in Oregon which was not affected by the raid.

Authorities arrested 12 people in connection with the case. During the ordered shut down, the businesses will not be allowed to sell or produce any cannabis products. In the meantime, the investigation is ongoing and the city scheduled public hearings until the matter is sorted out.

This is the first time Colorado marijuana businesses have been raided since legalization, according to a report from the Associated Press. The state, including Governor John Hickenlooper, has been vocal about protecting its cannabis industry from federal meddling. Attorney General Jeff Sessions has made it no secret that he does not approve of state cannabis legalization, and wants to uphold marijuana’s standing as a Schedule I narcotic on the Controlled Substances Act, 21 U.S.C.

However, such protections do not extend to businesses who are suspected of violating the state and local regulations.

This is where the guidance of our Orange County attorneys for cannabis businesses comes into play. Our lawyers have years of experience helping set up collectives and create business plans that will not only be successful, but also keep you in compliance with the state and local laws. And should you find yourself charged with violating one of those laws, our criminal defense team is by your side with a comprehensive understanding of the industry and how to best defend out clients.

This story out of Colorado should be a cautionary tale to commercial marijuana businesses currently setting up shop or turning in license applications in California, as well as businesses in other states that are already established. An owner’s work isn’t over once they meet the guidelines to begin operations. It is essential to know the law and ardently follow those laws to keep your business above board. It may be tempting to cut corners to secure higher profits, but such actions can be much more costly in the end.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients, defendants, workers and those facing criminal marijuana charges. Call us at 949-375-4734.

Additional Resources:

Denver Shuts Down 26 Legal Pot Businesses, Makes Arrests, Dec. 14, 2017, By Kathleen Foody, Associated Press

More Blog Entries:

Report: Colorado Marijuana Laws May Not Be Safe, Feb. 5, 2017, Cannabis Business Attorney Blog

Nipton is a small historic mining camp located in the remote Mojave Desert. After the camp was abandoned it was left as a ghost town. The Los Angeles Times reports that it cycled through eight private owners before being sold to American Green for five million dollars. American Green, a cannabis company, plans to turn the town into both a retreat for cannabis enthusiasts and a distribution center for larger manufacturing operations. The Cannabis business isn’t the first buyer to believe that Nipton is on the brink of revitalization. Gerald Freeman – who bought the town for $200,000 in 1985 – spent more than one million dollars on solar panels, restoration, shade trees, and organic farm projects. According to CBS News, Freeman’s widow, Roxanne Lang, sold all eighty acres of Nipton to American Green. The company hopes to inspire a “Green Rush” to the historical Gold Rush site. Can a Cannabis Business Succeed Where Others Have Failed? American Green is certainly not the only business looking to corner a piece of the vast cannabis market in California. Stat News reports that startup capital is “pouring into” the industry. The Los Angeles Times reports on one study that estimates the California cannabis market will bring $5 billion per year to California industry. The history of both the Wild West and the Gold Rush are brought to mind in examining the new, untamed, and potentially highly-profitable market that has been created. And yet, cannabis entrepreneurs are business owners. If they expect to succeed, they must have strategic plans for profitable operations. Legal compliance, tax liability, and other considerations must be addressed in order to achieve business success. This is particularly true in a market that could easily become oversaturated. So what will become of Nipton? That depends entirely upon American Green. With successful strategies for marketing, operations, and sales, it could revive the area to levels not seen since the Gold Rush. Of course, there is the equally real possibility that it could languish, as did seven owners prior to Gerald Freeman. Freeman managed to turn a respectable profit of $3.3 million on his $1.2 million investment. American Green could expand that growth exponentially. It is worth noting that Nipton must first incorporate before it begins any cannabis operation. Currently, the land is located in an unincorporated area of San Bernardino County, which prohibits commercial cannabis operations in its unincorporated areas. California’s imminent sales of recreational marijuana can bring all sorts of business opportunities to industries and geographical areas in need of revitalization. Like Nipton, cannabis business ventures must be well-planned in terms of legal compliance, business strategy, and market needs. A marijuana business lawyer can help cannabis entrepreneurs access capital, form strategic plans, and build a profitable business from the ground up. The Los Angeles Cannabis Law Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734. Additional Resources: A Tiny California Town May Become the Eco-Friendly ‘Epcot of Cannabis’, August 4, 2017 by Janet Burns, Forbes.com More Blog Entries: California Leads U.S. in Cannabis Sales, April 8, 2017, by Cannabis Law Group