Cannabis Compliance Mitigation
Cannabis Compliance is an ongoing process that requires constant effort to achieve. There’s no magic involved. Instead, experienced operators understand the need for continuous improvement.
The rules change from time to time, and so do the enforcement priorities, regulators, market dynamics, and competition. It explains why companies must make organizational-wide changes to standard operational procedures, management priorities, and employee training.
In the cannabis industry, planning for cannabis compliance is equivalent to preparing for a storm season; it does not need to be a scary experience, and with the proper measures, you will have blue skies. While many operators throw caution to the wind and only take action when something happens, that’s not the way. Seasoned operators understand too well that there’s a need to be more strategic than that.
Exhibiting Proactive Cannabis Industry Compliance
One of the standard practices in any industry, including cannabis, is to obtain insurance for distressing catastrophes. Like other heavily regulated industries, the cannabis sector can borrow a leaf from the standard best practices. One crucial thing about operational efficiency under heavy regulations is to take the initiative to obtain cannabis compliance certification.
All industries with heavy regulation, including pharmaceutical manufacturing, oil and gas, banking, hospitals, and nuclear waste, ensure solid foundational operations. They embrace flexible policies and procedures to enable them to evolve continually. They also put up structures to prove how their risk mitigation was before a disaster happened.
Regularity and Oversight
At 420 Accounting Services, we witness common compliance mistakes that companies can easily prevent and mitigate. Unfortunately, many operators get stuck in operations because of high demand while resisting compliance. To most of them, cannabis compliance is a complex buzzword they think they get right, yet they don’t operate at an industry standard.
Some of the most commonly lacking areas:
- Lack of attention to daily operational consistency
- Challenges in disseminating adequate education about regulations and rules across the company
- Lack of ongoing validation of compliance processes and personnel
A simple oversight in signing can show during an audit of year-deep records and books. Every missing signature can attract fines that can add up quickly.
Proactive Cannabis Compliance Involves Mitigation
Several cannabis companies are yet to establish operational sophistication, systems, and know-how to attain 100% compliance. That’s where mitigation plays a role for a business with multiple moving parts.
Risk mitigation is a regular expenditure in heavily regulated industries, and it prevents non-compliance costs and penalties. Regulated markets define their risk mitigation factors, which come into play when inspections, audits, and case files happen in a business. Examples of common mitigation factors are:
- Corrective measures taken
- Preventative measures take
- History of compliance
- Accuracy of standard operating procedures
- Training and education provided
- Seniority and position involved in violations
Regulators will, in most cases, consider the overall circumstances of non-compliance and deliberateness of violations. They also assess whether the aggravating factors would make the breach worse. These elements could spell the difference between being slapped with an affordable penalty and having the business shut down.
Why Tolerate High Risk?
Licensed cannabis businesses worth millions of dollars tend to accept a high amount of non-compliance risk tolerance. In our years of operation, we have yet to walk into a 100% complaint facility, which points to the level of risk the industry tolerates.
Most heavily regulated industries don’t tolerate more than a 24% risk level. As the cannabis industry continues to lay a foundation for solid standards, the risk tolerance level will decrease. That’s why 420 Accounting exists to strive to reduce the risk tolerance of cannabis businesses.
We provide proactive mitigation services, including inventory reconciliation, employee training reviews, SOPs, and in-depth auditing for the long-term success of businesses. We want you to be aggressive, not reactive to non-compliance. We invite you to start your cannabis compliance journey today.
Cost Accounting (IRC280e and 471)
We reasonably allocate costs out of expenses and adequately calculate your cannabis COGS. We also verify inventory value accuracy and perform cost accounting by thoroughly following the applicable regulations and limitations of IRC 280e and IRC 471.
State & Local Tax Filings
Cannabis tax filing requirements, rules and regulations cause many challenges for many cannabis operators. That is why you need knowledgeable experts to provide an in-depth guide on what is eligible to be taxed, whether on state and federal tax returns, or cultivation and excise tax forms. Our team of CPAs can help you with year end tax planning, tax preparation, and tax filing.
Licenses and Permits
As cannabis accounting specialists, we prepare and submit all the required documents by state and the corresponding local cities for obtaining any commercial cannabis license; from cultivation, manufacturing, distribution, to transportation, micro business and retail.
Internal Controls and SOPs.
We customize our industry best practice internal controls and SOPs to your cannabusiness’s specific needs, and provide your business with a process to assure whether your company’s objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies are all met.
Learn More About Cannabis Compliance
At 420 Accounting, we help cannabis businesses organize compliance remediation, analyze their liability, and launch operative legalized mitigation in crucial areas. Any cannabis business should receive the appropriate attention from operators and stakeholders alike. Compliance isn’t a four-letter word, and you shouldn’t treat it like one.
Your business will have a standardized and reliable product with a robust compliance protocol. If purchasers down the line, including consumers, can trust your product and rely on it to deliver the same standard each time, you’ll stand apart from the competition.
It’s crucial to learn more about cannabis compliance and how to go about it. Contact our team today to schedule a consultation.