How to Prevent Theft at your Cannabis Business – Dan Williams, CEO of Canna Security

Dan williams CEO of Canna Security

In this interview with the CEO of Canna Security Dan Williams, we will learn about the gaping holes most cannabis operations have in their security plan, the top ways employees and criminals steal and the latest and greatest in cannabis security (Hint: Seal Team 6 is involved)

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Key Takeaways:
[1:23] – Geographies Canna Security serves
[1:51] – Dan explains his background
[3:02] – The different security strategies employed
[6:57] – What most security plans are lacking
[17:18] – How to make a business inviting but secure
[21:48] – Dan talks about ensuring you have employees with integrity
[23:30] – Dan discusses licensing
[29:20] – Dan talks about the exciting security technology coming online
[33:34] – Dan talks about meeting Seal Team 6
[35:57] – Contact information for CannaSecurity

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday and Wednesday look for a fresh episode where I’ll take you behind the scenes and interview the leaders of the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. Do you know that feeling when you sense opportunity, when you see something before most people and you just know it will be successful, then you're ready. Ready for CannaInsider Consulting. Learn more at www.canninsider.com/consulting. Now here's your program.

An issue for cannabis dispensaries and cultivators alike is security. Security of plants, employees, cash and more. Today we’re going to talk with a cannabis security expert, Dan Williams, CEO and co-founder of CannaSecurity. Welcome to CannaInsider Dan.

Dan: Thank you Matt.

Matthew: Dan to give us a sense of geography, can you tell us where you are in the world, but also where CannaSecurity operates?

Dan: Sure so CannaSecurity America or CSA is currently located, our headquarters are in Denver at the heart of the cannabis world here. And we currently provide services to 12 states.

Matthew: Okay. And which is the biggest? I take it Colorado I’m guessing.

Dan: Colorado and Washington are out two biggest states, but we’re quickly expanding. It looks like Illinois and Nevada and Oregon are going to be next up. We are in New Jersey as well, and we’re going to be in New York. And then on the West Coast, obviously Washington and then California.

Matthew: Now what’s your background? Were you in the security business prior to founding CannaSecurity?

Dan: Sure. So prior to this myself and one of my business partners both worked for a company called Envision out of Louisville, Colorado. They were a startup about ten years ago with proprietary camera systems. And our first large client was Chipotle Mexican Grill. And we were put in charge of putting all their security systems into all their locations nationwide. And after that that company quickly expanded to do work for Einstein’s, Pizza Hut, Dunkin Donuts, Qdoba, Burger King, McDonalds. You name it in fast food, and we were managing the installation of systems around the country anywhere from up in Alaska as far as Hawaii.

Matthew: Now help us understand how we should be thinking about security at dispensaries and cultivation facilities and even processors. I mean people think oh security, I’ll get some cameras in there. The doors will have a big lock and a safe, done.

Dan: So our biggest task here is to make sure that any system that’s installed in a legal facility anywhere in the country is compliant to any regulations that are set by that state’s regulatory commission. Now that can either be the Health Department, The Department of Revenue, The Department of Consumer Protection. It really just matters, you know, how many resources that that institution has to commit to regulating cannabis. So it does differ by state. And in part we really have to keep upu on how those regulations change on a state by state basis because they’re changing daily as this industry is evolving, and really coming into the light here.

Each state wants to adopt its own set of regulations that usually are fairly severe and heavy. In Colorado for instance the rule making committee was formed five years ago. We were established in 2009, and it was at that point that the rule making committee said what do we need to do to make, you know, security up to par so essentially people aren’t going out and buying a camera system, you know, at Wal-Mart or Home Depot or something like that and throwing it up. That really wouldn’t do the job. And we were part of that rule making committee to write those for Colorado. It ended up being a 12-page document that really read like a technical document.

And what it usually entails is where cameras have to be located, what types of cameras, what types of DVRs you have to use. Certain postings for secure areas where only authorized personnel are allowed, off site video backup which means the cameras in real time over the internet, video stream, there are views to our offices here and we have camera servers here. The point of that is if a burglar were to come in and, you know, smash your DVR with a crowbar, we’d be able to see who that person was and at least have an idea of what happened there. On the other side is theft deterrence. You know, the real reason why these facilities need to have security is for theft.

You know, we’re dealing with a very valuable product that’s very small and can easily be stolen. Ninety percent of the burglaries that we see are internal. And so we have personnel in different facilities, or say our clients do, between growers, bud tenders as they call them, and any point within that chain it’s easy to steal a product, and we’ve seen it happen time and again. And it’s our job to try to minimize that through the use of different procedures. And offer now, you know, camera systems, alarm systems and then door access systems which are key cards. And then the physical security side which are the security guards, the armored transport, anything along those lines. And then we also come in and can review the facility for security protocols and then put those into place utilizing those systems.

Matthew: So you’re only as strong as your weakest link and if you’ve seen weak links in security plans, where are they typically? What do you see is the most often where an owner of a cannabis business thinks they have everything covered, but they have a big gaping hole in their plan?

Dan: Usually it’s during the trim process. When the product is harvested all the plants need to be trimmed to get all the leaves and stems off so that they’re ready for production, and then they go into a drying phase prior to being sold. And typically in order to be able to get through the entire harvest as quickly as you can in the trim process, that work is done through third parties or sub-contractors. Here in Colorado we have several companies that offer part time or temp work as trimmers. So you could bring in 10-15 different trimmers to get everything trimmed and start the drying cycle.

You know, that being said there’s all kinds of ways to try and limit the amount of theft there. We’ve seen everything from obviously products being pocketed to for instance having a handful of cannabis in your hand and wearing latex gloves and pulling that glove off and so now you have cannabis within the glove, throwing that in the garbage can. That garbage can then gets thrown in the dumpster and then around 2 a.m. the person pulls up and does some dumpster diving to get it. Even be put in wet/dry vacs that are within the room. So we try to set up those trim areas as best we can to deter that.

One way that we do that is we place chairs in a circle, usually have your plants in the center of the circle and your trimmers on the outside of the circle. And then four cameras on each corner of that room. So for instance we’re able to see in front and behind every single one of those trimmers and see the entire procedure as it happens. Usually we like that to be monitored if we can so that we can see things happen in real time before there is loss. But there are different ways that we’re able to limit that, and that’s just an example.

Matthew: So there is a ton of physical cash at dispensaries, and when robberies occur or theft occurs, you know, if we were to look at maybe a hundred instances of theft or robbery on video and then do a post mortem and say, well what could have prevented this would be a strong practice of X. What would you say that would be?

Dan: Well we usually don’t see the sophisticated criminal. You know, the Mission Impossible, Tom Cruise bling out of the ceiling type of thing and safe cracking. We usually see what’s called smash and grab. Smash and grab typically is when brute force is used. More grow facilities are broken into than dispensaries. That’s usually because they have a lot more product on hand. We would typically see that somebody is working on the inside to tell somebody else when they just harvested. Because any criminal would much rather have you do all the work for them, and wait until the end of that growth cycle where everything is sitting there drying or packaged the day before it’s going to be transported and then break in.

It’s mostly people breaking through doors, running inside, trying to grab it and run out. We’ve seen everything from a guy down in Boulder using a rechargeable sawzall which is a large rotor, hand held saw that can cut through metal. They cut through the top of a tin roof in a warehouse facility, and he actually did belay down on a rope into the facility with a duffle bag on his back. He filled the duffle bag with cannabis and then run to the exit doors thinking there was one of those emergency bars, exit only, so that you would be able to open it from the inside to exit. He didn’t anticipate that all of the doors were deadbolted, and he essentially dropped himself down into his own cage. So all the alarms were going off. He had no way of getting back up the rope. And they found him inside sitting Indian style in the middle of the room waiting to be picked up.

We seen a middle aged couple pull up on rice rocket motorcycles in the middle of the day dressed as ninjas. Run into the dispensary equipped with ninja swords, take a large jar of cannabis, put it in their backpack and take off on their motorcycles. They were later caught. And you know, you have to wonder how these people come up with this sometimes. You know, they’re sitting in a room and they’re watching TV, and they say hey I’ve got a good idea. Let’s give this a shot, it will be worth it. Especially since nowadays, you know, the price of cannabis since it’s so readily available in legalized states has gone down so much.

We are seeing a new target and that’s cash. As you know the banking system hasn’t allowed checking accounts for people in the industry because the FDIC mandates that cannabis and the sale of it isn’t federally legal. So they’re not allowing checking accounts. So what you have is an abundance of cash on hand. Many people are bringing that home and stuffing their mattresses which is never a good idea. There is actually an incident reported in the news a few weeks back about criminals waiting outside of his house because it just became known that he was taking home 10s of 1,000s of dollars every day and putting it in his house. So there’s all kinds of new ways to deal with that.

What we’ve done is we have new fully up armored Mercedes Benz sprinter trucks. Since we don’t have to have your typical, you know, bank trucks that are heavy steel and are made for lots of coin and heavy objects to be placed in them, we’ve chosen to go a different route there and have lightweight fast vehicles that we can use that aren’t adorned with, you know, the word cannabis all over them. It’s called the Inclandestine or kind of low profile. They pull up and we have cameras all over the vehicles. They’re uplinked to our dispatch room here. All of our guards are either ex-swat or ex-military. That can be anyone from Marines to U.S. snipers, Delta Force. And we’ve, actually Josh Rey who is in charge of our physical security division which is called the Cloverton Group. It’s loosely named after the Pinkertons who were the first private security company here in America in the 19th Century.

The Clovertons have their own procedures in place. And Josh was ex-swat, and his job was to train and create procedures for the swat teams around the country. We believe that since cannabis is kind of dictating its own needs at this point which is exciting, you know, we see all these new products and new services strictly dictated by the needs of the cannabis industry. And these were in over 80 pages on different procedures of picking up and dropping off either cash or cannabis based on the function of our different clients. For instance the need to pick up cannabis at a grow facility and be able to securely drop it off at the dispensary.

So our guys pull up to a grow facility. Let’s say that we have, you know, 50 pounds of cannabis to pick up. We go in with sealed containers that have GPS within each container should anything happen and they leave the vehicle, still tracking them. Part of our traceability, and traceability is a word that really comes up a lot in cannabis, you know, or seed to sale. You hear that a lot. Knowing exactly where your product is at any given time. We use police body cameras to record the transaction from the facility for the product to be placed in the container then back to the vehicle. We have cameras inside and out of the vehicle, then through GPS that vehicle is tracked from point A to point B where we then drop off the product.

If anything should happen in between point A and point B, we do have procedures in place there to be able to handle that. And somebody was asking us the other day, you know, are there other industries that have kind of that level of uplink camera systems and everything else so that, you know, we’re able to account for anything that we transport and I’m sure there are. I’m sure there’s plenty. But the answer is I don’t think there are any that are written just to move pot is what it comes down to. You know, it’s a fun industry and we are growing with it, and I’m sure we’re going to see a lot more of that.

Matthew: So there’s some dispensaries where you walk in and you’ll see a dispensary employee behind bulletproof glass, and there’s a Kevlar reinforced wall around that. I mean how do you strike a balance where it’s inviting but also secure and safe?

Dan: You know we were working in a facility on the East Coast, and they wanted razor wire around the facility. You know, pretty much everything they could have, you know, up to possibly having a gun turret on top of the…, you know, and we said we want to have the facility be secure, but you don’t want to scare people away. And we believe that really sends the wrong message here. So in terms of what we’ve seen on a crime level, I think we’ve seen actually four armed robberies where, you know, the guys come in with hoods on and have a gun and say, you know, give me the money and the product. And that’s been over five years, probably you know, a couple of hundred different burglaries. It’s very rare that that happens. We almost never see it. And in three out of those four times it was an inside job. So the people that were working there actually knew those people that were coming in with the guns.

Matthew: Oh my god, that’s crazy.

Dan: And in one case they even texted them a minute before they came in and said we’re outside, are you ready. You know, kind of just really blatant kind of behavior like that. We’ve never seen anybody get hurt during any of those burglaries. We’ve always instructed our clients, should that happen, give them everything. You know, life is too short to risk that and that of your employees. And nowadays there’s actually insurance. CannaSure is one of the companies that is doing it. That’s offered for incidents just like that. So it’s seldom that we see that.

And when we see, you know, the bulletproof glass, and the Kevlar reinforced rooms we don’t really see a need for that. A panic button or a panic pendant is a good thing to have. Training for your employees, and CSA does offer training for this, on what to do in a high risk situation. How to handle yourself, for instance, don’t try to be the hero. You know it doesn’t pay off. Usually they’ll come in and they’ll leave. Let them leave. We’ve talked to some clients who want to have, you know, a manned shop where you come in and one door locks behind them, and then they have to be released into the next room, and if they’re leaving you can lock them into that room. We don’t endorse any procedures like that. It doesn’t make a lot of sense. It’s best to get them out of there and get them on their way.

Some of the things that we do though for instances is if we have a license plate that we can get off of our cameras, we’re fully licensed now to be able to do license plate searches, comprehensive background searches, and that’s not through web services like Intellius, and there’s a few other ones out there, which are called spider searches. They essentially go out and they grab information everywhere. These are using national databases where we can do a search and find, you know, 15 degrees of separation. We have access to traffic cameras. Like I said reverse license plate lookups. So if we’re called into a burglary and we can get that license plate, chances are we can tell you where that vehicle is before you finish filling out your police report.

So that is neat. And there’s a lot of different technologies at our disposal these days, especially in the security side. You know people ask oh well, you guys are a cannabis company. We say well, you know, we’re a cannabis company and a security company. So you know we represent both sides of that spectrum.

Matthew: So it sounds like screening employees is a huge part of this given what you’ve said about inside jobs, and you know theft from employees. What are some best practices for making sure you have employees with integrity?

Dan: Well you know, we understand that everybody has a background. We’re more concerned with felonies. We’re more concerned if it was a misdemeanor, what type of misdemeanor it was whether it was theft oriented or threatening or assault for instance and things like that. We’re not looking for people who have you know, 15 outstanding traffic tickets. Those things can happen, or you know, the college stories.

Matthew: Sure. Especially in this industry.

Dan: Yeah sure, it’s going to happen on spring break. You know we always believe that, you know, you should hire the person not the resume. And that’s how you create the building blocks. We do encourage all of our clients to run at lease criminal background checks, and we do them here. I think they’re about $70 for a comprehensive, national background check. And we’re also able to give advice based on that background check of any concerns. And we do that prior to hiring any employee. So that would be part of the vetting process.

Matthew: So there’s people all the time that reach out and talk about they want a license for cultivation or they want a dispensary processor, but they don’t really understand it’s more than it’s more than just submitting an application for a license. Can you help us understand how you partner as part of the extended team to someone who is submitting an application for a license to be the security partner and what that means?

Dan: Absolutely. So different states during the licensing submission process, they ask for a full plan that usually includes a full business plan, financing involved, floor plan layouts, electrical production numbers, it’s comprehensive. And on the security side of what we do as consulting for new licensing clients is we’ll actually create that entire security plan that usually entails a floor plan that lays out where your cameras are, where your motion sensors, your door sensors, your panic buttons, everything else depending on either the needs and the budget of our client or what the state is asking for. Because many times the state will ask for the degree of security they want. For instance that can be IP cameras which can be a little bit more expensive, fully networked systems.

So we lay all that out. We outline the products that will be used as well as the procedures that would be put in place. And the point of that is, you know, during that submission process you really want to shine. You want your submission to be as strong as it can so that it looks much more professional than other people considering, they’re considering, so you know, it basically gets to the top of the deck. And that’s where we can help.

Matthew: That’s a great point. So your job when, you know, submitting an application for a license is not necessarily to check all the boxes which you must do, but it’s also how do you look relative to the other people submitting for a license in contrast.

Dan: Exactly. Yeah you know, there’s a lot of new business owners entering the space that don’t believe that you have to have that high level of representation, and they often don’t get very far in it. I know that when the new regulations were released here in Colorado the way that Colorado stated it is that they wanted to kind of weed out the riffraff. No pun intended. But you know they want to see the people that are serious about what they’re doing, and they can be trusted, and that they understand what goes into it. And there is a lot of paperwork, there’s a lot of effort. I mean I think everybody assumes that millionaires are just sprouting up overnight the second you get into this space. That’s not the case.

It takes a lot of work. You have to know how to run a business, and you have to have follow-through on that. And the second that you believe that it’s just about knowing how to grow cannabis, you know, I think there’s so many professionals out there right now who’s expertise is in the growth and production of cannabis. They’re pairing with other business minded people to really make these businesses a success, and we’re seeing a lot of that especially in Illinois. We’ve seen a lot of new investors coming in. I know that on an investment level, it’s really turning into, well people are aware of where this is going and that it’s not going anywhere. You know we’re essentially in 24 states right now. You know I would say that within the next two years, three would be pushing it I think, we will see that federal legalization. And there is a lot of money to be had there. It’s just a matter of how you do it.

So as we see new investors come in, five years ago, you know, the average grow facility we would see would be 5,000 square feet. Now we’re seeing between 20,000 and 60,000 square feet. We have facilities up to 200,000 square feet which is the size of a small college campus. They’re huge, and they’re not retrofitting warehouses anymore. They’re building them from the ground up with in wall irrigation, remote environmental control. So they’re just built to produce cannabis efficiently. And that’s really neat to see and be a part of especially when we come in and we work with new constructions and new builds so that they’re secure during that build process, and seeing that happen is really exciting.

We just, well I should say in about five months we’re going to be releasing a product that ties in every sensor within your facility and between environmental controls, your cameras, your door systems. And there’s been remote access for these different systems available for years. Usually you have to log into one system at a time to control it. And we’re working with a company out of Israel right now that basically will tie all of those systems into one cloud system that you’ll be able to log into through a portal, a web portal and watch your cameras, allow access to a door for an employee, change the temperature in a room, and be able to do it all in one place. So we’re really excited about that. We’ve been beta testing it now, and like I said, you know, the industry is dictating its needs.

Matthew: You know looking ahead the next three to five years anything with technology, especially electronics, just seems to get exponentially better. What do you see that you’re most excited about that maybe that’s just in beta right now?

Dan: I think that’s probably what we’re most excited about right now is integrating all those different systems into one place. Especially bringing in the environmental control. I mean you could essentially sit at your remote office and watch your grow and you know, hit a button and CO2 would be dispersed into a room. You could change your lighting, watch your growers trimming and do everything remotely.

What we’re seeing now are owners with multiple facilities. Chains are being created of different businesses, especially here in Colorado. And that’s really neat because at first it was the independent business owner either owning a grow facility or dispensary and those had different functions. You know the growers would grow the cannabis, and the dispensary owners would run the business side and sell it. And now it’s vertically integrated here which means that if you sell cannabis, you have to produce it as well. And it’s called the 70/30 rule, which means 70% of everything that you sell you have to produce yourself. So you have to know how to do both.

That was the next change, and then with that we’re just seeing rapid expansion. Companies owning multiple grow facilities, each facility getting better and better and multiple dispensaries around the state. We’re going to be seeing that I think, you know, I believe in every state that we go into going forward.

Matthew: So just kind of rewind to what you were saying about, you know, everything being in one network so you’re talking about like an Ethernet or something where environment security camera, telephone all goes over Ethernet network and into one centralized location instead of having the multiple systems where you might have this closed circuit, you might have telephone, you might have environmental and they don’t really talk to each other in a way that’s meaningful or kind of Duck Taped together, but as you kind of bring them all onto the network, there’s some efficiencies that are gained.

Dan: Absolutely. So in the past for instance, for environmental control you would have one piece of software that you would login and control your environmental control or one piece of software for your cameras if you just wanted to watch those. And with this new technology that’s been created, we’re able to integrate everyone of those sensor controls within your facility to send a signal to one cloud based system. So you would be able to view them all in one place with one login and use all of them at once. And that’s when it really gets exciting. I think, you know, the technology is out there for separate independent systems that run extremely well. And now what we’re getting excited about is tying those all together to be able to speak to one another.

So for instance if you have a camera outage, and all of a sudden a camera goes blank, you would receive a notice and then your alarm system would be notified about that and possibly go into armored mode. And environmental control would be notified to watch for any changes in temperature. We had one facility where a large overhead garage door in the back of the facility was blown open during a major blizzard here in Denver. And all of a sudden the temperature dropped to 10 degrees and it destroyed the entire crop. So in a situation like that we would be able to know about it and you know, act quickly. So yeah when we think about all these different technologies coming into play it does get exciting, and especially how they can be applied to cannabis.

Matthew: Switching gears a little bit you recently had a trip to New York City and you met with Seal Team 6 I believe. Can you tell us a little bit about that?

Dan: Sure. Yeah so we met with Seal Team 6 who is starting a side private company called Blade. And we were contacted by them over a month ago to offer some of their service through CannaSecurity to our clients, and we met with them in person last Thursday. And we’re very excited to say that we’re going to be able to offer those services to our clients. Some of the services include extraction. I’m not sure how much we’ll need that here in Colorado, but what they’ve been talking about doing, and that service will be available this summer, let’s say that there were a terrorist threat to a building in New York they would be able to dispatch guys on motorcycles to weave through the traffic and get to a high level client, you know, get him out of his office, throw him on the back of a motorcycle, get him to the harbor and get him out of there either on motorcycle or by air depending if there was any, if the air was shut down or not, traffic control.

Some of the other services they’re offering are social media threat warnings or online threat warnings where they assess a person to see if there’s anything or any threats out there or anything being derived. And that’s not social threats, that’s physical threats which may come into play. They will also be doing training. We’d like to get them out here to Colorado to train some of our clients who would like to take a class, and we’ll be offering that for free, but what to do in high risk situations. For instance if people were to come in armed into your facility, how to best handle that. And you know, it’s really neat to see these different lines being drawn between different parties like Seal Team on the cannabis side. It’s great to see that awareness being shared now.

Matthew: Gosh that’s crazy. It sounds like Bourne Identity type stuff.

Dan: It does.

Matthew: Well Dan as we close, how can listeners learn more about CannaSecurity?

Dan: You can either come to our website at www.cannasecurity.com. That website is about to be replaced in a couple weeks. So don’t mind the bulkiness of it. You can also reach us at 888-929-4CSA (4272), or by email info@cannasecurity.com.

Matthew: Dan thanks for being on CannaInsider today.

Dan: Thank you Matt we appreciate it.

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