Security expert Tony Gallo from Sapphire Protection walks us through how to protect your cannabis from external and internal threats.
What are The Five Tends That Will Disrupt The Cannabis Industry
(Hint: It’s not about legalization)
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[1:58] – What is Sapphire Protection
[2:24] – Tony talks about how he got into the cannabis space
[2:54] – Tony discusses the biggest threats to a dispensary
[4:46] – Tony talks about the security piece
[5:35] – Tony explains proper disposal of trash
[6:28] – Tony talks about armed robberies of dispensaries
[7:08] – Misconceptions of theft or robbery
[8:45] – What makes a good safe
[10:46] – Developing a winning security plan
[13:34] – Tony talks about camera placement
[14:56] – How to respond during a robbery
[18:05] – Ensuring security when you are not in the dispensary
[19:21] – Firearms in a dispensary
[22:49] – Making a location unappetizing to a criminal
[26:52] – Tony explains alert phrases and how they’re used
[28:25] – How do panic buttons work
[32:20] – Sapphire Protection contact information
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.cannainsider.com. That’s www.cannainsider.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.com to get started. Now here’s your program.
As cannabis sales cross the three billion dollar mark this year and begin their march towards the tens of billions by the 2020’s criminals are beginning to target cannabis dispensaries for robbery. Some dispensaries are particularly rich targets as many dispensary owners are not able to get bank accounts and thus have a lot of cash on hand. That is why I invited Tony Gallo of Sapphire Protection on the show today to help us understand how to properly protect a dispensary and when possible prevent theft and robbery. Welcome to CannaInsider Tony.
Tony: Thank you.
Matthew: To give us a sense of geography can you tell us where you are in the world today?
Tony: Well we’re located in the Dallas, TX area but we have cannabis clients from Oregon to New Jersey and basically everywhere in between.
Matthew: And what is Sapphire Protection exactly?
Tony: Sapphire Protection is a security consultant company that specializes in high risk businesses. Our clients are usually businesses that have a large amount of cash on hand and a very desirable piece of merchandise. Some of our clients are jewelry stores, pawn shops, and obviously cannabis business owners.
Matthew: And how did you get started helping clients in the cannabis space?
Tony: It was very interesting about two years ago I was asked to speak at a cannabis conference in Boston on security and at the time I really didn’t know much about the cannabis security and after doing some research about the industry I realized that it’s very similar to the ones I had been supporting for over twenty years. Currently now I speak across the United States on security in the cannabis industry.
Matthew: So at high level what are some of the biggest threats to a retail cannabis dispensary?
Tony: Well you know most dispensaries focus really on the wrong security threat when it comes to losses you know although robberies and break-ins are very important and need to be safeguarded I think they lose a lot of focus and this is common in a lot of retail companies. Where they spend thousands of dollars on cameras, alarms, and safes but they do very little on their biggest threat which is the internal theft.
Matthew: Right yeah internal theft. Well tell us a little bit about that.
Tony: Well you know most businesses have about 80 percent of their losses really come from internal theft. If you take the cannabis industry if you look at a dispensary it’s very much like a retail establishment. The safeguards and security procedures that they have in place are at a high level but when it comes to the actual employee when it comes to cash thefts or merchandise thefts there’s a lot of holes there. Same thing in the cultivations centers. If you look at a grow well there’s a fence around there, there may be some sort of guard agency, cameras, or alarms but a lot of times where the biggest loss you see in grow comes a lot of times from the trimming section or from the storage section and that’s really where policies and procedures come into play.
Matthew: Yes I’ve heard about theft in the trimming arena. It’s so easy to do there. I mean there’s even some trimmers that are surrounded by cameras and still you know I mean is a business owner going to go back and look at hundreds of hours of footage for a single split second when cannabis is stolen? I mean how do you, how do you properly address this without spending all your time on you know on the security piece?
Tony: Well I think like in any security program you have to minimize your exposure. I’ll give you a perfect example of a situation with a trimmer. There was a trimmer that what he would do is wear the latex gloves and as he was trimming he would palm a bud in his hand take off his gloves leaving the bud in the latex and through it in the trash. Well this company didn’t have good disposal procedures so at the end of the night that bag of trash was thrown in a dumpster outside and it was easy for him to come back and retrieve the buds that he had put in his glove. By having proper trash disposal procedures you would’ve minimized that risk where that trimmer probably would not have taken that chance.
Matthew: Good point so what’s proper disposal look like? What does that mean?
Tony: Well you for a proper disposal you want to use a clear trash bag so that you can see what actually is being thrown in there that is very common in any retail establishment. You want to put the clear trash bag into a dumpster that is secured at night where only access to the dumpster would be the company that would be removing the trash. You may want to have the dumpster in a location which there’s lighting or there might be a camera that’s also watching it. Preferably be inside the fence of a grow facility. So there’s a lot of procedures that come into security play that a good security consultant will identify when they do an onsite visit.
Matthew: And how common are cannabis armed robberies? Is that something that’s picking up, declining, or just sense there’s more dispensaries now is it that there’s more instances of it?
Tony: You know although as the industry increases the armed robberies are also increasing and we see it across the board, but the cannabis industry is still far behind other businesses such as convenience stores or jewelry stores or pawn shops. The fear I have is that as the industry continues to grow so will this particular exposure grow especially with the communication to the public of it having so much cash and so much marijuana at its location.
Matthew: Are there any persistent misconceptions about cannabis business theft or robbery that you run into a lot?
Tony: Well you know most robbers of a cannabis location are looking for cash. If you look at most robberies and you boil it down and no matter really what they’re doing they’re trying to convert either to stolen jewelry or stolen cannabis into cash and you know cash is king and that is what they want the most. So I think that a lot of times that it’s kind of a misconception in some ways when people think oh they’re here to steal the cannabis they’re really not a lot of times. Most robbers are there really to get your cash.
Matthew: Okay. So merchandise theft is probably more internal threat than an external threat is what you’re saying?
Tony: Well we’re seeing, we are seeing an increase in late, not late night break-ins who are focusing on the cannabis. A robber during the day usually will start with the cash whether it’s out of the register or the safe and then if he or she has some time they’re going to then move to the cannabis. You know one of the goals has always been to get the robber out of the business as quickly as possible and that’s really where a good safe is very important and you know most early cannabis owners who started their business made really poor safe choices which in the long run is going to hurt them over time and that’s one of the things that I’m seeing over the last two years now changing where business owners are really realizing the importance of a good safe.
Matthew: Yeah well what makes a good safe?
Tony: Well you know one of the things that when a lot of new dispensary owners opened up several years ago was that they realized that they just needed a way to secure the cash or their cannabis but did not really understand how a safe worked. So a lot of them went to Costco or to Academy or somewhere and bought a gun safe. Well the whole if you look at the word it’s a gun safe and it’s a great safe for guns. It’s designed perfectly for guns but it’s really not designed for a business location. Whether you’re a jewelry store or whether you’re a cannabis location. A gun safe really from a business line is not the right safe for locations but you’ll see them in a lot of dispensaries you know and even more so if you take, if you look at a gun safe from a purely business point of view and you look inside a gun safe you notice that it’s nicely done with felt which is for to protect the guns from any scratching or whatever.
What a lot of cannabis owners don’t realize is that when you put a product in that safe the felt actually is an insulator so as you would know cannabis needs to be at a certain temperature and as the temperature rises that cannabis will break down. So if your store is at 72 degrees, the inside of your safe you hope should be at 72 but with that felt now you’re running closer to 78 maybe 80 degrees. So not only is it a gun safe or a fire safe it’s also not the best safe to protect you from a break-in it also is damaging your product inside the safe.
Matthew: If you were to have a cup of coffee with a new dispensary owner that knows nothing about security, theft, robbery how would you orient their thinking so they have the best chance of developing a winning security plan?
Tony: You know again I see a lot of misinformed owners when it comes to security. It’s like building a house. If you ever built a house and contacted a plumber or an electrician chances are you’re not going to get the same level of quality or service as if you used a proven general contractor to help you with your design and your build out so I see a lot of times when I talk to a new dispensary or a grow that they don’t really understand security and they spend a lot of time understanding the other parts of the business but when it comes to security and they rely solely on calling up a local alarm company or a local camera company that really maybe doesn’t deal in their industry. But they don’t know what they don’t know basically. So one of the things I would always point out is just like they focus and make sure they have the right equipment to process their product or the right employees, they also need to make sure that they have the right security in place and not just picking up the phone and asking someone to design their security program.
Matthew: Okay so what does that involve I mean do you recommend security audits or something like that?
Tony: Well there’s several things I think that the first thing that a person who’s going to design their location should do is contact someone who understands how the floor plan should look when it comes to security is where the cameras should be placed. I’ve seen locations where they’ve placed ten more cameras than they really need in the store and unfortunately they miss three locations that they should have definitely had covered by cameras. More is not always better. What type of camera they should use? What kind of alarm system they should use and whether it’s a cellular backup? What kind of safe they should use? How they design for the dispensary? How did they design the flow of that location? Where did they place their emergency panic buttons?
So there’s a lot that’s involved when it comes to that and you know just again most business owners and that’s across the board have been doing this for thirty years. They’re not security trained and they shouldn’t be that’s not what they do, but they should rely on contacting someone whether it’s reputable security consultant to help them or a reputable camera company or an alarm company they should really do a little more research before picking up the phone and just calling anybody to put a system in their location.
Matthew: So is there a few spots where the cameras are pointed where they’re not helpful? Where are the spots where the cameras are typically not pointed but should be?
Tony: Well if you look where the cameras should be pointed one of the things that is a disservice from most state required laws is they really don’t specify exactly where all of the cameras should be placed. They do give you some recommendations. So obviously a camera should be facing your parking lot. A camera should be facing your front door as you walk into the building. Cameras should be facing where you dispense your cannabis. A camera should be facing your safe. A camera should be facing your register. So there’s kind of some set non negotiable places that cameras should be placed in your store and then again you have to look at the location and find out is there any emergency door accesses or are there any other avenues that a product or cash could be pushed out a window or something like that. I’ve been to locations where the store had a state of the art camera system and had a great safe and the bathroom window opened up in the back so you know that’s another avenue you need to look at.
Matthew: The weakest link yes okay.
Tony: The weakest link yes.
Matthew: Let’s say a robbery does happen. How should an employee or business owner respond during the actual robbery?
Tony: You know I’ve dealt with over two thousand retail armed robberies in my career and you know one basic fundamental rule comes into play and it’s the same way you should react if you’re approached on a street or in a car and that is you need to cooperate. Do what is asked of you. Don’t do any more. If someone asks you for the money in the register you give them the money in the register. You don’t need to volunteer that there’s money under the register or that there’s money in a safe nearby. But the goal is really to get the robber to leave. If they approach you in the street and they ask you for your purse, you give them your purse. But cooperation is the key. I’ve seen many times when people do not cooperate and the ramifications are much worse.
Matthew: Yeah they don’t cooperate but they really don’t have anything to leverage. They don’t have a gun or anything they just, their just yelling back or what do they do? What do you mean by that?
Tony: Well you know not cooperating would be if someone came and let’s take a dispensary and said give me the money in the register and your answer to that person is no I’m not giving you the money in the register or go away or throwing the money at that person or trying to resist if they’re breaking the cases and trying to get the cannabis out of the location. Cooperating is and that’s something that every employee should be trained on is what to do during a robbery. You hope it never happens but when it does happen that training is so valuable and so important for the employees to understand.
Matthew: How about immediately after the robbery takes place what should the next steps be for an employee or business owner?
Tony: I think immediately after a robbery takes places the very first thing you need to do is you need to lock the doors from the outside world and there’s two reasons. First of all the robber isn’t coming back but what it does is it sends a message to everyone that’s in the location that they’re secure. That someone else isn’t going to come in. It brings down the level of stress that’s after a robbery with not only the customers but the employees. So the very first thing you want to do is you want to take control back of your store and by locking the door you’re sending a message that no one else is going to come in and do any harm. The very next thing you want to do is you want to pick up the phone and dial 911 and you want to do that before you activate your alarm and the reason why is when you dial 911 and you notify the police you’re informing them of an actual robbery that occurred. They will respond much different than if they get a call from an alarm company informing them that an emergency alarm button has been pushed.
Tony: So the first thing you want to do is dial 911. The next thing you want to do is activate your alarm.
Matthew: So a business owner can’t be at his dispensary or her dispensary all the time. How do they ensure that the proper protocols are followed while they’re absent?
Tony: Again we go back to retail 101 how do you ensure your employees are following any approved policies and procedures whether it’s security or sales and you know you need to develop good checks and balance programs. You need to be able to send a message to your employee that what they’re doing could be reviewed and everyone should have those procedures. Cameras which you can view from your home need to be communicated to the employees that you have the ability to look at what’s going on in your store. How to define your opening and closing procedures. When to do your cash counts which would be reviewing the cash in the register. Is that something you do every morning, every night? Will you do unannounced counts during the day to make sure that the count is right? Maybe even showing up at the store with an unannounced visit and what you need to do is again going back and this is really coming straight out of the retail 101 is you need a perception of what could happen at that location so that employees understand the importance of following the proper policies and procedures.
Matthew: What place do firearms serve in a dispensary?
Tony: Well you know like I said I’ve been in retail for thirty years. I’ve dealt with robberies over and over again. I really see no place for firearms in a dispensary. I have seen too many high risk businesses close after someone was killed in their store. And here is the question you always have to ask and we can talk about guards, armed guards or we can talk about just having a firearm in the store. One question I always ask and I come across this all the time especially when I go to a jewelry store or a pawn shop location. If you’re carrying a gun are you willing to kill someone and that’s important to say to someone and it’s a harsh thing to say but it’s important to understand that because if the answer is I don’t know then you are putting yourself in harm. I’ve seen where the business owner has gotten the drop on that robber by pulling his gun but couldn’t pull the trigger and he was then in turn killed and again and if you cannot utilize that firearm for its purposes then it’s really a negative to carry a firearm.
The other thing is what kind of message are you sending? If you walked into a convenience store and there was someone standing there with a gun on his belt one of the things that’s going to come to your mind is am I in a dangerous place? Should I be coming to this convenience store? Maybe I should go somewhere else down the block. Same thing with a dispensary if you have someone and they’re walking around with guns in the store which actually is illegal to do you know federally to carry firearms in a cannabis location but even if you were or you would have known what message do you send to your customers from a business point of view?
Guards same thing you need to understand who your guard is. I believe that guards are great when it comes to as a greeter and I believe that also there is an advantage for them when it comes to keeping honest people honest. So if someone is going to come in the store and they want to do, they want to steal or they want to shoplift or something like that I think a guard has some merit. Also for allowing people to come in by checking ID’s or whatever I think there is some merit for the guard but when you bring in a firearm into that location you now send it up a notch. If someone is going to rob your store and they don’t realize, and you don’t have a firearm they’re going to rob your store with one thought in mind which is different than if you did have a firearm because then they know hey I’m going to rob this store but that guard has a gun or that manager carries a gun. Very first thing I know is if I’ve made a decision to rob your store I have to remove that individual who has the gun and I’ve seen times when the robbers decision guard standing at the front of the location with a shotgun before he even walked in very first thing they did was to shoot and kill the guard.
Matthew: Oh God. Now in terms of making the dispensary look unappetizing to a criminal that’s casing the dispensary to see if it’s got vulnerabilities is there anything you can do to the appearance or the structure that makes it unappetizing to a would be criminal?
Tony: I think one of the things that’s important is to send a message to anyone who’s thinking of doing something wrong at that location that this may not be the location you want to come to. My goal has always been as a security consultant is not to stop people from robbing your store or stealing from your store. It’s to make them go somewhere else and do that and here’s a couple of easy fixes for that. If you have a camera system you spend thousands of dollars on a camera system and when a customer walks in they have no idea you have a camera system and a lot of people say well look there’s the camera system and they point to this little black globe on the roof, on the ceiling most people don’t know what that really is or it may not click in their brain what that is.
So the first thing you want to do is you want to communicate that you actually have a camera system and the easy fix to that is you want some sort of visual deterrent. A monitor at the front door maybe showing the camera shot of just the front door so when I walk in I look up I see my face on camera it clicks in my mind that well there’s cameras in these stores.
Tony: A safe, a well designed safe, a safe that appears to not be able to be attacked very easily. Good customer service one of the biggest assets any company could have is good customer service. Are people really engaged with me? Are they asking me for help when I’m on the floor? How do I get into the dispensary? If I’m looking at a grow facility do they have fencing? Is there any other kind of security? There are various alarm systems now that basically works on a radar basically. It shoots an infrared beam and if you get close to the facility at night various things will happen whether it’s a light or an alarm or a siren or something. So what’s the perception of security at that location and how do we deter people because again my goal is for people never to have a problem more so than trying to catch it after there’s a problem.
Matthew: Great point ounce of prevention. Now with the cultivation facilities if, do we need to have razor wire when we have a fence or anything like that or that kind of makes it look like a concentration camp but then again there’s no customers visiting a cultivation center so is that necessary?
Tony: I think a good fence barbed wire or razor wire on the top is a pretty prudent thing that I would have at a location. Again some grow facilities are in an urban environment. Many of them are out there in the middle of nowhere. I have a grow in Washington state that really you’re only coming to that grow, you’re only driving down that road if you’re coming to that grow and again that has to send that message. So I could see, I would recommend some sort of good fence, some sort of wire at the top so people aren’t inclined to climb over. It’s not that expensive if you’re already using good fence. Some locations and cultivation centers where there is more people access you may even want to cover the fence with some sort of material so that people can’t look through your chain link fence to see what’s going on and then I have a client who has car barriers where if you come through the front gate just like you would at an airport or a rent a car or something like that there’s a barrier that would restrict you from leaving unless it’s approved.
Matthew: Interesting. What are alert phrases and how do we use those?
Tony: You know again that’s a very it actually costs nothing but the value of that is immense. So an alert phrase is a way to communicate to other employees that there is something possibly wrong in your store. If you have a concern with a customer not something an over concern where you’re pushing the panic button or you think something is going to happen right that minute but there’s a concern well it’s difficult to get the attention of everybody in the store all the other employees that you have a concern other than walking up to them or leaving wherever you might be and going to your manager or whatever.
So an alert phrase is something that would not alert a non employee but will alert the other employees to take notice. You might say your alert phrase might be Matt’s batteries came in today. Well everyone knows in the store that there is not Matt working there and no one ordered batteries but everyone knows that someone has said Matt’s batteries came in and their head should go up and they should look at that employee who said it and kind of get an idea of what they’re looking at that might have concerned them and from there you can establish are you giving good customer service to that person. Are you getting close to a panic button? Do you go to the back room and lock your safe or what security procedure does the store feel they need to do when that code phrase is said.
Matthew: Is a panic button go directly to police typically or to a security/alarm company? How do those work?
Tony: So a panic button is either remote or fixed to a counter. You push that button and that button then alerts the alarm company that you are in distress. The alarm company then will have their protocols whether the protocol is to contact the store and say you’ve pushed an alarm button is everything okay and then you have to have a code phrase to say yes everything is fine or does the alarm company immediately contact the police and that’s something that you work out with your alarm company on what you want to do. And the reason why you would do one or the other might be because you don’t want any false alarms by someone accidentally pushing the button. But that is another silent way one of the things you never want to happen is you never want any sirens to go off during business hours. Maybe at night when the burglary alarm goes off a siren does go off but during business hours you do not want a siren going off. So this would be a way to notify the alarm company silently.
Matthew: Many people are a little nervous to visit a dispensary for the first time. If the dispensary feels like Fort Knox and it doesn’t provide a comfortable experience to customers it’s really not serving its purpose so how do we find the balance between security and creating a welcoming environment?
Tony: You know that’s a tough question for most high risk businesses not just the cannabis industry. You need to send a message to people who want to do bad things but you also want to make the majority of your good customers that come into your store want to come back and want to enjoy the experience. Again it comes down to the perception really. What are you trying to communicate? I don’t think anyone is worried when they walk in and they see themselves on camera in fact some customers appreciate that.
If you look at there are new safe designs that come out. There’s a great safe that comes from a company called Rolland Safe that is a drawer management system and it’s a safe that you might, you could put right behind your counter which basically shows that the cannabis is being stored inside a safe but you can still utilize it to service the customers. That sends a message to people going well I can’t just come in with a big black trash bag and empty everything out of the safe that easily into a trash bag so maybe it’s not worth it for me to come here or are the cash drawers locked. Are you using drop boxes which is a small safe or a small device that you put under the register that you say once the cash in the cash drawer reaches a certain amount you want to take that money and put it in this little temporary safe and at the end of the night we remove that money and put it in the main safe.
Communicating that to the public I don’t think is a negative thing to people. I think a lot of people appreciate that. They understand the day and age where we are and what goes on and that kind of balancing act is a tough one. You know jewelry stores sometimes buzz you in and that’s a difficult thing to rationalize because if you buzz someone in and they’re a bad person how do they get back out but you see that sometimes in the city, in a city location or whatever. Again I think that you want to make your customer invited. There’s some beautiful, beautiful dispensaries nationwide that I have been to and it’s warm, it’s inviting, the people are good but again you want them also to realize that this is a business and that there are certain safeguards in this business that would prevent them from doing something wrong.
Matthew: Okay great points. Tony in closing how can listeners learn more about Sapphire Protection?
Tony: If you want to find out more about Sapphire Protection you can contact us our website is www.sapphireprotection.com. Our main number is 817-520-3315 and you can always reach us there or you can contact me at firstname.lastname@example.org.
Matthew: Great. Thanks Tony we really appreciate you being on CannaInsider today and educating us.
Tony: Thank you Matt.
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