Top Canna-Biz Challenges Today

1. Regulatory Hurdles: Stay up to date with state jurisdictions. Violations can result in significant legal and financial consequences.
2. Access to Banking and Financial Services: Many financial institutions are hesitant to work with cannabis companies due to the federal illegality of the drug in the United States. This makes it challenging for cannabis businesses to access traditional banking services, loans, and credit lines.
3. Taxation Issues: Cannabis businesses often face high tax burdens, primarily due to IRS tax code 280E, which disallows many ordinary business deductions for companies engaged in the trafficking of controlled substances. This can significantly impact the profitability of cannabis businesses.
4. Quality Control and Safety Concerns: Ensuring consistent product quality and safety is crucial, but maintaining quality control can be challenging, as the cultivation and production processes are subject to risk of contamination. Stricter testing and quality standards are often required, which can drive up operational costs.

Why Comply?

1. Legal Obligations: Cannabis businesses operate in a highly regulated industry with a patchwork of state and local laws. Compliance with these laws is not optional but mandatory. Failing to adhere to security regulations can result in fines, loss of licenses, and even criminal penalties.
2. Product Safety: Proper security measures help prevent theft, contamination, and unauthorized access to products, which could compromise their quality and safety.
3. Preventing Diversion: Diversion refers to the illegal transfer of cannabis products from the legal market to the illicit market. Strong security measures can help prevent diversion, which is a serious concern.
4. Consumer Trust: Security compliance can enhance consumer trust. When consumers know that a cannabis business takes security seriously, they are more likely to trust that the products they purchase are safe and accurately labeled.
5. Insurance Requirements: Failing to meet insurance company requirements can result in higher premiums or denial of coverage.
6. Operational Continuity: Security measures help protect a cannabis business from operational disruptions due to theft, vandalism, or other security breaches. These disruptions can be costly and damage a company’s reputation.
7. Compliance with Seed-to-Sale Tracking: Effective security measures ensure accurate tracking and prevent unauthorized access to sensitive data and fit jurisdictions.
8. Preventing Fraud: In the cannabis industry, where cash transactions are common due to banking challenges, security prevents internal and external fraud, including theft, embezzlement, and counterfeiting.