100% of Cannabis Businesses are out of Compliance

cannabis compliance

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Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback(at)cannainsider(dot)com to get started. Now here’s your program.

One aspect of the cannabis that is growing leaps and bounds is compliance and for good reason. Cannabis is perhaps the most regulated industry in North America and the cost of fines and penalties can be large, but the cost of having to stop business temporarily can be much greater. To help us understand the hot topics around cannabis compliance I’ve invited Steve Owens of Adherence Compliance on the show today. Steve, welcome to CannaInsider.

Steve: Thank you Matt.

Matthew: Steve to give us a sense of geography, can you tell us where you are in the world today?

Steve: I’m located in Denver, Colorado today.

Matthew: Great. And how did you get into the cannabis industry? What’s your background?

Steve: I have a few friends that are in the industry and my background is a Bachelor of Science in Finance and International MBA. I’ve got about 15 years of experience in management consulting and enterprise software delivery. And then most of my experience is in telecommunications with companies like Verizon, AT&T and satellite providers as well implementing large scale enterprise software systems. So I had a couple friends come to me in industry and they said how would you take care of compliance and they basically put the manuals in front of me, and then I evaluated basically the regulations, came up with a codification model if you will and then went through and pulled out all the regulations and came up with a prioritized checklist of everything to go through. And in the end we came up with some, about 300 questions per auto type. So we have medical dispensaries, medical cultivation, medical MIPs, and then also the retail side as well with the stores, cultivation centers and MIPs.

Matthew: Yeah it’s a funny thing, you know, looking at business in terms of offense and defense, you know, everybody is so focused on the offense piece of sales and rightly so. I mean we need sales. It’s the oxygen and blood of a business, but defense is so important too, and it can just as easily derail you and derail your revenue. So it’s something I feel like it’s not as much emphasis on but you know if you integrate it into your business, you know, it’s a healthy thing to do and it’s something that a lot of your competitors aren’t doing. So you know you could do that, it could be a value proposition for your business.

Steve: Yeah. I definitely agree with that.

Matthew: Steve, give us an overview. What is Adherence Compliance?

Steve: We are a software and data company that’s focused in the regulatory and financial compliance in the cannabis industry. We offer software as a service and we also do specialize consulting services and develop specialized consulting programs for our partners. Our clients are license owners, banking partners, certified resellers, insurance providers, investors, things of that nature. And then we have a couple of different programs with our compliance app. Our Score Compliance App as we call it. We have a reseller program where we will sell a compliance business in a box if you will, and we’ll ship an iPad for a designated state be it Oregon, Washington, Colorado, what have you, and then they can basically start doing compliance audits in that state.

So it’s a way for a resellers once they’re certified and they go through our training process or for consultative businesses that are already out in the industry that want to add an additional line of revenue to their practice. We also do custom programs. So we’ve developed compliance programs for our banking partners going through AML, Banking Secrecy Act and what have you there with FinCEN requirements. And then also with insurance providers we work with them as well and develop custom programs to do stuff like on-site underwriting for cannabis businesses. And they utilize our software and our customized checklist to basically go through and do that.

And then finally compliance data. We’ve got a couple of exciting partnerships coming up in the beginning of January which we’ll be doing a couple of press releases on, but this is where we feel the focus of our company is is with the data because at the end of the day, after 326 or 328 now, audits we’ve provided in Colorado, we’ve got a lot of statistical information, more than 120,000 data points on compliance data for Colorado. So statistically we know where these businesses fail, and we know where they need to focus their time, efforts and revenue to get within compliance. So overall that’s what we do, and then we’re expanding into various states, all states that serve medical and retail licenses.

Matthew: Yeah there’s a big data component to this and we’re going to touch upon that later. But before we jump into that and the statistics you have, can you tell us a little bit about the white paper that you wrote addressed to the Colorado Marijuana Enforcement Division? What are some bullet points from that that we should know about?

Steve: Yeah the Marijuana Enforcement Division is part of the Department of Revenue and they’re the licensing and program administration authority for the State of Colorado. And they have a stated goal of 100% auditing these businesses within the next three years. There’s approximately 2,800 or more licenses in Colorado, but only about 35% or so have actually had licensed premise inspections by MED officers. So you’re looking at 65% or some 1,700 licenses that have never been visited by the state regulatory authority, and I think it’s because the process is very manual, very paper driven, and so essentially to go ahead and audit these businesses effectively, they need to automate the process, standardize it and then come up with a automated solution if you will on how to basically go through and audit these businesses effectively, gather the information they need and then to use the information to make the compliance call turn Colorado better.

Matthew: So Steve what are the top compliance infractions you see regularly? The things you see day in and day out?

Steve: That’s a great question Matt. I think the most frequent one we have now is labeling packing and product safety. So what we see in the industry is you have large scale MIP providers, and these guys produce edibles, concentrates, what have you, but they will ship product to a store or dispensary. And when they ship that product it is the store’s responsibility or the dispensary’s responsibility to make sure that that packaging and labeling is compliant. So they have their required statements as needed, like the ethicacy statement, the pregnancy statement. You know driving while impaired statement, so there’s required statements that we need to have on these products here in Colorado for medical and the retail sense.

So essentially these MIP providers aren’t following the compliance regulations. Either the font size is too small. It’s 1/32 vs. 1/16. They’re missing the required statements on there. They don’t have the unlawful for the use outside of Colorado statement. So they’ll ship these products to these stores and dispensaries and they do it via transport manifest. Once that store or dispensary accepts that, transport manifest is intake in the METRIC system, and collects it on their side, then they assume that liability and they assume that risk. So there is not a client that we have right now in a store or a dispensary that passes labeling and packing and product safety. Every single client we have right now gets an infraction because they carry some of the largest MIP providers out there that are missing these things. And we’re trying to do our best to educate these large MIP providers and let them know that you know they’re transferring liability and they’re transferring risk to these other licensees, and then we want to make sure that public health and safety is hugely important in the industry and that’s a foundation of labeling, packaging and product safety.

Matthew: Wow that seems pretty basic for 100% failure rate, just having the wrong font size on a container, a MIP. If you’re hearing MIP for the first time, that’s a Marijuana Infused Product. So what happens if someone gets caught with one of these infractions? Is there a; during an audit is there a financial penalty or what happens?

Steve: There can be. There can be. One of the things with the Marijuana Enforcement Division, they will come in and you may have an MED officer that will let you know it’s not compliant that you need to correct it or you could have an MED officer that would actually write up a violation and then they would basically provide you a notice of a violation. You would have to do a response to the violation and then you could go down the show cause hearing process that’s currently backlogged. We can talk about that in a little bit, but that’s the process that you would go down and then you would be looking at a fine and a penalty and perhaps you know a meeting or a hearing with the attorney general or the assistant attorney general for the State of Colorado.

So that is some of the issues that you run in when you transfer these, and then if they find multiple infractions, and then they add labeling and packaging to it as well, I mean at the end of the day it’s public health and safety. So I mean you have a citation level, a violation level and then public health and safety. And public health and safety is what we try to avoid here in Colorado to make sure that you know the health and safety of the public is indeed in place.

Matthew: In terms of cultivators, do you see something that cultivators typically do, not moving away from the MIPs companies, is there a lot of ways that the cultivators are typically out of the compliance that you see regularly?

Steve: For cultivation yes. A lot of them on the rec side we see holes or missing areas in their standard operating procedures. They won’t have the required information on the detailed application log. Every time they do an application of chemicals or pesticides to the plant itself they have to fill out this detailed log and it’s very specific on the components of the information that it requires. If you look at it, it needs to cover Department of Agriculture, EPA and State of Colorado requirements, and you have to make sure all of that stuffs there, all the way down to the applicator number, you know, the EPA registered applicator number and things like that.

So we see that as a huge infraction and then also tagging plants in METRIC is another issue that we see a lot as well. Here in Colorado once a plant is bigger than 2” X 2” in the pot or the bucket that it’s growing in and once it’s taller than 8 inches tall it’s technically out of the clone stage and then into the veg stage. And then you have to affix the RF ID tag to the plant itself and then mandate it’s state tracking. And we see a lot of this happening where you’ll go into a room that is early veg and the plants aren’t tagged yet just because they’re falling behind in processes and things like that, but if the MED were to visit they would put all of that plant matter on administrative hold and then more than likely you would have to destroy it. So we see that across the board at cultivation centers here that if anything runs afoul or the testing results aren’t correct or if you failed contaminant testing which is occurring more and more often here with the product recalls in Colorado, then they basically do administrative hold on plant and then you have to go through the whole destruction process, video it and do the entire process.

Matthew: For listeners that are in other states that are wondering, you know, how much similarity there is between let’s say Washington or Oregon or now Nevada is coming online, I mean, is there a certain amount of overlap in best practices between the states in general?

Steve: No that’s a great question. What we’ve seen and we’ve probably codified about six states now, each state is a silo. Even the vocabulary is different when you go from state to state to state. I mean seed to sale is something that is common, but we see about 20% that is applicable here in Colorado that would be applicable in California, that would be applicable in Washington, that would be applicable in Oregon. It’s also the different regulatory agencies that you have. Here in Colorado we have the Marijuana Enforcement Division which is part of the Department of Revenue. Up in Oregon we have the Liquor and Control Commission which manages the cannabis industry. Washington is 502I, and then also you have the Liquor Control Board in Arizona that runs it. And then it’s the Department of Health and Public Safety I believe in Nevada that runs the Marijuana Enforcement Division if you will or the regulatory authority.

So not only is it despaired or disjointed in each state as a silo if you will when it comes to compliance regulations, they’re run by different groups within the state as well. So that’s something that we see that you know unfortunately we can’t have a common standard set of regulations because each state is evolving at their own pace. And some states like Maryland come in to Colorado to review what we’re doing here to get a better idea of what’s worked and what hasn’t worked, and those people are doing a great job. Oregon is doing a wonderful job with their inspections upfront before the stores open and things like that and also business readiness checklists. I think they’ve really learned on some of the mistakes that have been made previously in a couple of the other states, but yeah unfortunately it’s very disjointed and then each state is a silo.

Matthew: When you go in and do an audit for the first time for a MIPs company or a cultivator or some cannabis company where do the scores kind of; what’s the Bell Curve of scores? What’s the average score? Where do most people fail and what’s the reaction to how they’re graded by you?

Steve: You know that’s a great question. We’ve recently went through, as I said before, we’ve done about 328 audits here in Colorado. On those we’ve done 78 audits for medical dispensaries, 106 for medical cultivation, 18 medical producers which are MIPs, 44 retail stores, 69 retail cultivation and then 11 retail producers or MIPs. Of that there’s been over 4,000 infractions. We know the average infraction per audit is right around 14 to 15 infractions per audit and then the average score is right around 84% when we look at that. And then on top of that each audit section we have we’ve broken it up in to logical sections across all states.

So if you look at it you have licensing, the license premise. You’ve got specific questions related to the audit type itself. So if it’s a retail producer, you’re going to have very specific questions to that audit type. Transport to warehousing, marijuana testing, business records, labeling and packaging, product safety, enforcement and discipline. So we also look at previous enforcement actions and discipline history because if you have been in trouble before in a license capacity, you’re more likely to get another audit or inspection or have more frequent audits or inspection because of your previous history. So that actually counts against you in our format that we have.

We also look at local procedural federal agencies which high level IRS things like 280 structuring, anti-money laundering questions and things like that. We also look at detailed inventory, OSHA requirements, Department of Agriculture. It’s a pretty holistic process. I mean going through and doing about say 280 compliance points for a medical dispensary. It gives you a really good snapshot of what the compliance culture is and then for an MED officer, regulatory authority, when they walk in, you know if everything is upfront and the person or the business is; has their facility binder with all the required information in and they have their standard operating procedures and everything is right there ready for review for the investigators, it makes the compliance and the audit process so much easier. But if you are not organized and you’re not ready when they come in, then they roll up their sleeves. They call their counterparts at the regulatory authority and then they do a more thorough and deeper audit.

So we’ve gotten a lot of information. We know the top labeling and packaging, product safety. I talked about that. There’s missing statements. So that would be the number one thing there. We know with licensing it’s undocumented financial ownership interest. So essentially some of the businesses have loans or they’ll have a percentage ownership with somebody that’s outside of the state of Colorado and at this point right now in Colorado that’s technically not legal. So it would not be a compliant thing. Same thing with business records, missing required business records, on and offsite. There’s different requirements there as well. So we really have a lot of information and a lot of data on this and statistically we can tell these businesses where they’re going to fail and then for us banking partners, insurance partners and also investors now you want to know what you’re buying. You want to know what you’re buying for the license itself, and then we also have our score which replicates across to a value.

So if you score in the 90s or higher, you have good degraded compliance. If you score in the 80s, we couldn’t refer you for a bank account. We couldn’t refer you to one of our insurance partners. If you score in the 70s, that’s medium to aggressive closure risk. So we kind of have a classification model too for investors that will value a business based on their score because at the end of the day a license is a privilege to sell, cultivate or manufacture marijuana, and if you’re not a compliant business, the value of your business significantly lowered.

Matthew: You mentioned you statistically know where a business is going to fail just because you have so many data points now for all these different cannabis companies. Can you give that information to us in an easy to digest format so we can understand where most businesses do fail or where they’re failing or what the risks are?

Steve: One of them, the biggest area and most businesses I would say about 80% have issues. But if you look at inventory, and we’ll just take Colorado as an example, you’ve got your physical inventory which is your on-premise inventory. You’ve got your inventory in a point of sale system and let’s just use Biotrack as the example. And then you also have METRIC which is on the company, it’s fairing well but it’s the state mandated inventory tracking system for chain of custody here in Colorado, and then you’ve got your accounting system which could be QuickBooks or Xero, but those are four disparate systems that I need to keep reconciled every day. Every single day I have to make sure that physical matches point of sale, point of sale uploads correctly into METRIC and then the METRIC information obviously I want to make sure I have that in my accounting records so I can pay my taxes, excise tax, etc.

So if you take Colorado, that’s a challenge for any business to manage four despaired systems. So one thing we see here in Colorado is inventory is probably the most challenging thing. You know the inventory system METRIC can go negative. So a package could go down to 0g and then enter into negative grams if you don’t use first in/first out accounting. So things like that can happen where the inventory gets. And as you can imagine as time progresses you’re moving further and further away from compliance, acceptable compliance limits. So you’re deviating further and further and further away from being compliant.

And then for your inventory it’s your revenue, revenues, deposits, deposits, taxes, everything is all wrapped up in your inventory. So at the end of the day the inventory is the most critical thing and then it’s chain of custody in Colorado. So if you’re missing more than 3g for this, you have to notify METRIC and do an adjustment and etc. So it’s a very detailed process that you have to go through, but that’s one of the areas we see where businesses need to really invest in a full time inventory manager and make sure that they’re inventory is spotless because of the regulatory implications of it.

The other thing too, transport and warehousing. We see common issues in basically the transporting of products. Sometimes we’ll see a car that doesn’t have Colorado plates. Well it’s got to have Colorado plates because it has to be registered with the Colorado DMV. So they will be doing transports that have an out of state license plate, that’s technically non-compliant. So we know that transport and manifesting we have to make sure that things are appropriate there. For marijuana testing, do you have all the required batch testing for that as well. So we can kind of go through it and we have some areas with signage and advertising. These businesses do really well. They don’t really have a lot of problems there. Local procedural, we don’t see many issues there, however you will see a city and county piggy backing on a fine that the state might give. So the state might give a $10,000 fine for some occurrence or some infraction and then the city/county can go out and duplicate that as well.

So for these businesses out there that are operating you have to be proactive, you have to have a proactive mindset and have a company like us come in and really evaluate everything that you’re doing and then provide you a list that you can use to correct those infractions immediately. And then it also shows when you get auditing accomplished by a third party entity such as us, you know, that’s not owned by a dispensary. We’re not involved in any licenses or anything like that. We’re an independent third party, but once you bring us in and we start doing these things for you it also speaks volumes that you’re acting within good faith of your license which is a requirement of a license itself. So that’s some of the things that we see overall.

Matthew: Would you say there is a effective enforcement by the MED right now?

Steve: That’s a great question. I would say they have significant challenges. If they want to; if the MED wants to audit the remaining 60%+ of these businesses that are out there, I mean they’re in disparate locations. They’re spread out geographically all throughout the state. There’s 2,800 licenses and growing daily. There’s new areas like Parachute, Colorado that are just opening up and things like that. I don’t see them catching up unless they use some type of automated solution where they can go out there and statistically evaluate everything on a common level.

So until they can; with the process they have right now they would have to probably triple their staff and I don’t know if they have the budget for that, and then on top of that you have to train the staff, and then the regulations are growing every six months. So we’ve got about two hundred pages or so each for medical and rec. So it’s not something that’s easy where you can send out a criminal investigator to one of these marijuana businesses and they know what they’re looking for right. They need some type of whole training and process and everything to go through.

So I see the challenges they have ahead of them is huge but you know it’s not something they can’t overcome if they look at this programmatically and understand at the end they really just want to collect the evidentiary data, store it and then go through and do these audits as fast as they can. And then on top of the regulatory component, so here in Colorado we have three levels of audits. And you have a level one that will incur on application and licensing and it also occurs when the folks at the MED go through and do a remote check of your inventory for METRIC and they look for certain flags, you know, for any adjustments, repeated adjustments, destruction of plants, burning of tags. You know they look for common things like that, and that’s a level one audit that they do actually off-site.

A level two audit is when the MED officer, criminal investigator would show up and then do a license compliant audit at your license premise, and then level three is where they bring in the Department of Revenue. And then the Department of Revenue will go through your books as well to make sure that you’re properly doing everything as per Colorado requirements. So there’s different levels of audits that the MED has to do, and then they’re doing I think a good job on the level one audits and working with METRIC and getting statistics because there’s a lot of information that METRIC has. We just don’t hear a lot about it. But working with them to get the level one audits done, those throw up the red flags. They do the level twos and the level threes, but as you can tell, I mean 60% or more haven’t been visited by licensed investigators So it’s challenging for them unless they address it and go after it from a programmatic fashion.

Matthew: When I met with you recently you were carrying around a tablet that helps you to create your compliance reports for your clients. Can you tell us about that, what you’re doing with the tablet and then what your clients receive in terms of where they’re in compliance and out of compliance?

Steve: Sure. So we use iPads and that houses our SCORE app. Our SCORE app is; it stands for Statistical Compliance Risk Evaluator, but essentially our SCORE app, depending on the audit type. So if I go in and I show up at a cultivation or a retail cultivation center I will have a retail cultivation audit. Then when I go through and do them I would answer all the questions inside the iPad. It takes notes and photos as well. What we’ve really developed, and we’ve been in business since June of 2014 when we first launched, but we really developed the first statistical risk assessment of a cannabis license from a regulatory so the first risk score for the industry if you will, and that’s basically what these scores are.

So when we go through and answer the questions, you know, it’s obviously yes or no for the questions that we’re going through. If it is an infraction, if we find a plant without an RF ID tag, something like that, we can take a photo of it and we can also enter in notes. So if you have a specific infractions from a MIP provider, we can put the name of that MIP provider into the note and that comes through on the report. And then the report that we deliver, it’s basically set up in the categories that I talked about a little bit earlier with licensing, license premise, labeling and packaging, but we’ve got those 13 different subsections and then all of the infractions would fall within there.

We prioritize and rank those and then make sure that when you’re starting on the top one, you’re obviously going after the one that’s the most prioritized which probably would be public health and safety. So anything that interfaces with public health and safety is against licensing would have obviously a really heavy weight to it vs. seeing the size of a sign. The size of the sign wasn’t 12 X 12, it was 8 X 11, that’s technically not compliant, but you’re probably not going to get a fine or a notice of a violation for that.

So we go through and assess that, we provide the detailed compliance reports and then again they can utilize us to come in there and help them to improve their compliance or the list itself, the detailed compliance report that we provide. It gives them a list of everything they need to focus on, and then a lot of our clients will have us come in three to six months later again and do another audit or if there’s new updates, the regulations which we’ve just recently had, we’ll go through our clients and do another audit as well.

Matthew: It’s not all bad new with clients and scary audits. Do you have any examples of clients that were somewhat out of compliance and then turned it around and made it a strength for their business?

Steve: Yes. We’ve had a client essentially they were going to lose their license because of over 24 months of METRIC violations in their software system and the inventory tracking system. We were able to intervene and then put an action plan in place and review that with the MED and then the MED gave us a stay, so we were able to; oh god, it took about ten days of work, but we were able to get so much progress on the correction of inventory and reconciliation of inventory which here in Colorado is required on a daily basis, that we were able to put a plan in action in place that would help this client come out of where they were at. And then in this case, in a lot of cases for these businesses out there, a shutdown is almost the death penalty because they don’t; they don’t have a lot of cash to basically continue on and do operations when they’re closed. So they’ve got to keep the doors open, they’ve got to keep product moving and stay compliant as possible.

So we’ve saved a couple of licenses out there definitely in this industry which is great. And then for a lot of our clients a lowest score we’ve ever seen is a 41.6. This would have been immediately shut down if it was visited by MED regulator, but fortunately we were called in first and we were able to get them on a path to compliance, and they are much better for it. They’re operating really well. They score in the high 80s on that which is a considerable improvement. They almost doubled their score at least. So we’re out there making I think a difference out there and we’re trying to legitimize the industry as best we can and then we also have baking partners.

These are banking providers that will accept a cannabis business, and they enter in the proper SIC code and all that information, but so what we can do is if one of these businesses scores in the 90 or if you have a business or licenses that score in the 90s, we’re able to refer you to one of our banking partners to set you up with a bank account so you can start doing everything legitimately because you know the banking industry and everything else that’s going on now, it’s moving forward at a snail’s pace. There’s small banks, really really small banks that are dipping their toe into it right now.

The large banks are staying away because of the federal mandates that are out there. But for the small, smart banks they’re putting in compliance programs where they do their due diligence upfront. Because obviously if a cannabis business is doing money laundering or something like that, then the bank could be held liable. The bank could face criminal action. So there’re very very intelligent banks that are stepping into the market to kind of develop these compliance programs and perhaps set up five to ten initial accounts and then they enter suspicious activity reports as needed you know on these things as far as their banking requirements. We’re able to kind of make a difference there and try to legitimizing the industry as best we can.

Matthew: Now we talked about the big data component a little bit. Is there anything else in that area that interests you or think people would want to hear about in terms of understanding how big data and these cannabis statistics you have connect?

Steve: Sure. So if we look at an audit event that we have and let’s just say we’re looking at a dispensary and we know the dispensary had seven infractions and they scored an 87.6, we go through and look at the various categories and we see that it had one infraction in licensing, one infraction in license premise, but it had two in labeling and packaging and one in business requirements. We’re able to kind of go through and for a business that essentially has any issues for business records required it’s very specific on the documentation that you need to have onsite for six months and then three years offsite for businesses like that.

So what we can do, across when we look at our data we know that 17% of the infractions come from a licensed premise. We know that about 11 to 12 percent of the infractions come from inventory and inventory issues. We know now that with labeling and packaging pretty much they’re not failing the entire section of label and packaging, but they are getting infractions and they are getting public health and safety infractions which are a little bit more weighted than the other questions that we have as per MED guidelines. So we definitely have information like that, and then the average scores as well. Going into a business and scoring it in the 70s, we can statistically say that yes, if the MED officer came in, you’re probably looking at least $40,000 to $50,000 in fines. And right now when we go through that as well as when we go through these questions we know that from METRIC reconciliation, if you don’t reconcile METRIC at the close of business every day here in Colorado, you have, you’re subject up to $10,000 a day per occurrence that you don’t do it.

So if you didn’t update METRIC on one license for say five business days and the MED came in and audited you and found out that information, technically they could give you a fine of up to $50,000. Now would you pay that, not necessarily, you might be able to go in front of the attorney general, plea down to get it to a certain level and then they’ll put you on like a six to twelve month, probably twelve month probationary period where you’re not able to get in trouble. You can’t have any more infractions, you know, and things like that. But if you have an open dumpster in the back of your facility that doesn’t have the lock on it and there’s marijuana fan leaf or marijuana product in the dumpster, that’s a public health and safety issue where they can shut your facility down, and then that will cause you grievance there, and possibly you will have a show cause hearing. You will have to go through that entire process. That’s going to be more impactful, you know, shutting your operations down for a significant amount of time.

So we’re able to go through and if any of these infractions, if they have specific infractions that we know about we know that those are do not do right. And then if you’re on probation here in Colorado and you have more infractions you can get what they call the death penalty where you’re ban from the industry up to eight years. So yes, so statistically knowing what we know and knowing where the biggest infractions are for each specific section that we do track, you know, we’re able to help these businesses statistically improve.

Matthew: Steve in closing I know Adherence Compliance is growing rapidly, are you seeking any outside investors at all?

Steve: We are. We’re basically going through the process right now with investors, also equity partners and investment banks. So yeah there is significant interest. We’re doing, as I said, the preliminary rounds. So if anyone is interested in learning more, they can always reach out to us and we’d be glad to provide a review of; a detailed review of kind of what we do, our investor deck and things like that.

Matthew: And how can listeners reach you? How do they find out more about Adherence Compliance and then if they want to reach out to you as an investor, how can they do that?

Steve: Sure. You can open up Bing or Google and type in Marijuana Compliance or Marijuana Audit and I believe we show up first in the top one or two in the search rankings. Our website is www.adherence-corp.com and if they want to reach us 720-616-3900 is our business line.

Matthew: Steve, thanks so much for coming on CannaInsider today we really appreciate it.

Steve: Thank you.

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Steve Owens is the founder Adherence Compliance. He has audited hundreds of cannabis companies and not one has had a perfect score. Hear detailed information about all the ways your cannabis business can be out of compliance and what you can do now to bring your business back into compliance and limit your exposure to harsh penalties or even closure of your business.

Important Update:
What are the five trends that will disrupt the cannabis market in the next five years? Find out with your free guide at: http://www.cannainsider.com/trends

Key Takeaways:
[1:49] – Steve’s background and how he got into the cannabis industry
[3:32] – What is Adherence Compliance
[5:53] – Steve talks about the white paper he wrote
[7:01] – Steve discusses the top compliance infractions he sees the most
[10:30] – Steve talks about cultivation infractions
[12:34] – Are there common best practices between states
[14:41] – Steve talks about reactions and scores to compliance audits
[18:52] – Steve gives some data points on where most businesses are failing
[22:31] – Is there effective enforcement by the MED
[25:39] – Steve talks about the compliance reports a client receives after an audit
[31:24] – Steve talks about big data and cannabis
[35:22] – Contact details for Adherence Compliance

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The Five Disruptive Trends Shaping The Cannabis Industry Now