So you’ve decided to open your first dispensary. Congratulations!
Opening a dispensary offers an incredible opportunity to get involved in an emerging industry with huge growth potential. According to investment and financial services firm COWEN, cannabis sales are projected to hit 80 billion by 2030.
There’s no doubt that opening a dispensary is an exciting business opportunity—but there’s also no denying that it presents a unique set of challenges you might not expect when launching a small business. The retail cannabis market is heavily regulated, and if you want your dispensary to succeed, you need a solid compliance program in place to make sure you’re following all applicable local and state laws.
But how, exactly, do you make sure your business operations are compliant?
At Flowhub, it’s our mission to help business owners navigate the evolving landscape of cannabis law to ensure their dispensaries are compliant with all applicable local and state regulations—and build thriving businesses as a result. This is why we put together this compliance checklist—to answer your frequently asked questions about how to open a dispensary and make sure all your operations are (and stay!) compliant.
Now, keep in mind—because cannabis isn’t federally legal, laws and regulations vary from state to state. This compliance checklist is a great jumping off point to make sure your dispensary hits the right compliance marks and adheres to a general set of rules—but before you open your dispensary doors and start serving the public, make sure you do your research on any state-specific laws or regulations you need to incorporate into your compliance procedures.
Disclaimer: Flowhub is not in any manner providing legal services or legal advice. You are solely responsible for consulting with legal counsel to ensure your business complies with all applicable laws, and we recommend you do so.
First-time dispensary owner’s compliance checklist
1. Prepare all requirements for obtaining the necessary licenses and permits to operate a dispensary.
Each state and local jurisdiction has different requirements—but if you want to own and operate a dispensary, you need to have the proper licensing and permits. The order in which you complete the requirements for obtaining your licenses and permits also can vary from state to state. For example, in California, your state license cannot be obtained until you’ve first been approved for a municipal license.
To help with your research, please refer to your market below for links to initial instructions on how to start your dispensary application:
- AK - Alcohol and Marijuana Control Office
- AZ - Arizona Department of Health Services
- CA - Bureau of Cannabis Control California
- CO - Colorado Department of Revenue - Enforcement Division
- FL - Florida Department of Health Office of Medical Marijuana Use
- ME - Department of Administrative and Financial Services Office of Marijuana Policy
- MD - Maryland Medical Cannabis Commission
- MA - Cannabis Control Commission
- MI - Department of Licensing and Regulatory Affairs
- MO - Missouri Department of Health and Senior Services
- MT - Montana Medical Program
- NV - Department of Taxation
- OK - Oklahoma Medical Marijuana Authority
- OR - Oregon Liquor Control Commission
2. Keep all licenses and permits up to date.
Getting your licenses and permits in order is step one—but you also have to keep your licenses and permits in order. Once you’re approved for the proper licenses and permits, make sure you stay on top of the renewal process. Most licenses and permits are valid for 12 months, but do your research and keep track of when you need to apply for renewals.
3. Make sure all licenses and permits are accessible.
Once you have all the necessary licenses and permits in place, you need to make sure they’re easily accessible. Your state or local jurisdiction has the right to do a compliance audit and ask for your business documentation at any time—so make sure you have it on hand (no tossing your permits in a filing cabinet and forgetting about them!).
4. Make sure all products are properly tested.
If you plan on or are required to grow your own flower, or manufacture your own products, it will be your responsibility to send your product to a licensed lab to be tested for potency, homogeneity, and for harmful and toxic substances like heavy metals, mold, and mildew. Requirements on what to test for vary from state to state. If you are not producing your own flower or manufactured products and are buying instead from a 3rd party vendor, remember to obtain all previous testing information for labeling purposes. Additionally, you will need to ensure that you have reported all required testing as “passed” to your state-mandated track-and-trace program.
5. Make sure all products are properly labeled.
Label requirements vary from state to state, but all labeling must clearly display the amount of THC in the product. Packaging for manufactured products like cartridges, edibles, oils, and topicals are required to have total dosage and serving size information directly on the packaging before it is transferred to a retail facility. Additionally, retailers must display various information depending on state and local regulations on labels that are printed at the time of sale. Here are some examples of what kind of information might be required on your labels:
- Warning Statement
- Date of Sale
- Package ID
- Cannabinoid Range
- Physician Name
- Net Weight
- Tested Status
- Strain Name
6. Make sure all products are packaged properly before leaving the store.
Pay attention to your local regulations about packaging requirements. Some states require additional childproof exit bags if the original packaging is not already childproof. You may also want to look into pre-packaging cannabis flower.
7. Have a standard operating procedures guide.
Processes and procedures are important for any business—but they’re especially important in the cannabis industry. Having dispensary standard operating procedures (SOP) is a great way to document your processes—and makes sure each process (like your opening and closing procedures or disposal and waste management) is up to compliance standards.
8. Thoroughly vet your new hires.
In order to run a compliant dispensary, you need a trustworthy and dependable staff. Make sure you properly vet any potential employees during the hiring process. Check references, confirm employment history, and run any necessary criminal background checks required by your state. Some states require that all employees that directly handle cannabis be certified or badged in order to work in a dispensary. Be sure that all potential new hires have completed any certification required by your state.
Also be sure to have detailed employee standard operating procedures that outline how you recruit, hire, onboard, train, review, reward, and fire employees.
9. Have an employee compliance checklist.
When you’re starting out, you may not have a board of directors, compliance officer, or human resources manager — but you still need to make sure that every employee understands how to do their job in compliance with all applicable laws and regulations. Having an employee checklist that outlines exactly what each employee has to do (and why!) is a great way to get everyone on the same page with compliance.
10. Invest in dispensary employee training.
In order for things to run smoothly (and compliantly), your staff needs to be up to speed on product information, compliance issues, operations, and customer service. Invest in workforce development and make sure your staff has the training they need to succeed.
11. Put someone in charge.
Depending on how active a role you take in your dispensary, you might be the one managing day-to-day operations—but if you’re not, it’s important to designate that responsibility to a senior member of your staff so there’s always a manager present.
12. Make sure you’re in compliance with seed-to-sale procedures.
While the procedures vary from state to state, every state requires that dispensaries account for all cannabis products from seed to sale. As a dispensary owner, you have to keep meticulous records of inventory, sales, and disposals—and then submit that documentation to the state. A dispensary compliance management system software can help you automate the process of tracking your products and submitting any necessary documentation to your state’s tracking system. But while it may be appealing, understand the downside of dispensary seed-to-sale software. And how to choose the right marijuana dispensary software.
13. Be prepared for audits.
Just like any other business, dispensaries are subject to regulatory audits. If you want to stay one step ahead of the audit process (and avoid hefty fees and penalties for non-compliance), schedule regular internal audits. Cannabis taxes are different from those of a regular business. They're subject to Internal Revenue Code 280E. Keep detailed records, create an audit checklist that outlines the audit guidelines for your state, and make sure each part of your business is in compliance with your state’s regulations (and that you have the documentation to prove it). That way, when you have to submit to a real regulatory audit, you’ll be ready—and will pass with flying colors. To streamline your inventory management and regular auditing procedures, Flowhub's mobile Stash App™ is built to help you easily audit your inventory, all from the palm of your hand with prebuilt workflows.
14. Have a dedicated check-in area.
Customers should have to check in with a security officer or receptionist and show identification before they’re able to interact with budtenders or purchase cannabis. A check-in area that’s separated from the sales floor allows you to control the flow of consumers in and out of the dispensary—and makes sure everyone who makes a purchase has been properly vetted. Check out the dispensary check in SOP for more help.
In some markets, like in Colorado, identification must be checked twice: once at the door and a second time at the register.
15. Check every single ID.
In order to purchase cannabis, consumers need to 21 years of age or older (If someone has a medical card, that age drops down to 18). If they can’t legally buy a beer, they can’t legally purchase recreational cannabis. It doesn’t matter if a customer looks 21 or 61—in order to stay compliant, a staff member needs to check the ID of every single person who walks through your doors. Flowhub's mobile Greet App™ is an efficient safeguard and tool for electronically verifying each ID, and automatically puts the customer in the queue to be helped. This ensures that you're flagging underage, invalid or suspicious ID's every time a customer comes through your dispensary doors.
16. Invest in a video surveillance system.
While the actual requirements for systems vary from state to state, every state requires dispensaries have 24-hour video surveillance. Make sure your video surveillance system has clear access to your entrances and exits, your check-in area, the outer perimeter of the property, your sales floor, and other areas where transactions may take place (like a stockroom or office).
See the safety and security SOP template for help documenting your process for keeping your employees, products, and customers safe.
17. Invest in an alarm system.
Another system you need at your dispensary? An alarm system. Make sure you have an active alarm system in place to protect your staff and inventory—and assign each employee a unique alarm code so you can keep track of who activated and deactivated the alarm system (and when).
18. Store your cash securely.
There’s a ton of cash that changes hands in the dispensary business—and you need to make sure you’re compliant with how you’re storing that cash. Your safe should be out of sight from consumers, secured to the floor, and only managers or owners should have access to the security code. You should also have a plan to minimize the amount of cash on the premises at any given time. Check out these cash management tips for dispensary retailers to learn more.
19. Never sell more than the legal purchase limit.
Every state has a legal purchase limit for medicinal and recreational cannabis. Make sure you know your state’s limits—and never sell more than the legal purchase limit to a customer in a single day. Some states have individual limits for patients within a certain time period. Some medical only states will require your dispensary to track how much these patients have already purchased in their allotment, and accurately know how much they can legally purchase without going over that allotment.
20. Don’t let customers touch the product.
You wouldn’t want someone to touch your food before you eat it—and it’s the same thing with cannabis. Most (but not all) states allow you to remove flower from its container for customers to examine before making a purchase. Feel free to let customers smell the flower, but don’t let them touch it.
21. Sell flower in sealed, tamper-resistant packaging.
The rules for labeling and packaging vary from state to state, but all states require that cannabis flower is contained in a sealed, opaque, tamper-resistant package (like a canister) before leaving the dispensary premises.
22. No giveaways.
“Buy one, get one free” might be a successful sales tactic in the retail world, but it’s a no-go in cannabis. Dispensaries are prohibited from giving free product to customers—so make sure every piece of cannabis that leaves your dispensary has been paid for.
Stay compliant with Flowhub
Compliance is one of the biggest challenges for dispensary owners. And while this checklist definitely addresses some of the most common questions, you need more than a checklist to keep your dispensary in compliance.
At Flowhub, we work with hundreds of cannabis business owners to make compliance simple with the country’s leading point-of-sale software for dispensaries. Want to learn more about how Flowhub can simplify compliance? Get started today!