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5 Consequences for Non-Compliant Marijuana Dispensaries

January 30, 2018

Part of legitimizing the cannabis industry across the nation is ensuring that cultivators, distributors, and retailers are all abiding by standard compliance regulations. Often times when a compliance infraction occurs it is completely unintentional and must be rectified as quickly as possible. However there are non-compliant marijuana dispensaries that blatantly disregard state cannabis regulations.

The California Bureau of Cannabis Control is committed to enforcing the new regulations and have developed protocols to handle cannabis business that violate compliance. In this article, we’ll cover these procedures as well as some of the consequences non-compliant marijuana dispensaries will inevitably face.

Notice to Comply

If a minor compliance infraction has been committed, the cannabis retailer will receive a notice to comply. These are typically given during an inspection by the agent of the Bureau and this must be return within 15 days describing how the violation has been corrected.

Non-compliant marijuana dispensaries that do not return the notice to comply within the allotted 15 day period or fail to correct the violation are subject to further disciplinary action. In some cases the notice to comply may even suggest ways to fix the compliance issue. This is essentially a warning and cannabis retailers can avoid costly fines by submitting the correction soon after it’s issued.

Citation for Violation

The next level of disciplinary action is an actual citation for the compliance violation. If issued a citation, non-compliant marijuana dispensaries will be required to follow the orders of abatement or pay administrative fines up to $5,000. Contesting fines is allowed but if the administrative fine is unpaid within 30 days the cannabis retailer business license can be suspended or revoked.

When contesting a citation marijuana dispensaries must submit a request for a hearing within 15 days of when the citation was issued. An informal conference will be held with the licensee to determine whether to affirm, modify or dismiss the citation and any associated fines.

Interim Suspension

For more serious infractions, the Bureau of Cannabis Control could file a petition for interim suspension on non-compliant marijuana dispensaries business license. In this case, cannabis retailers will be notified 15 days in advance of the hearing for petition to suspend.

If non-compliant marijuana dispensaries are issued an interim suspension, the business must post a notice of suspension on the premises. This notice must remain on the premises for the duration of the suspension period and if damaged or removed the licensee must notify the Bureau within 24 hours.

Revocation of License

The worst case scenario for any cannabis retailer is a revocation of a business license. Having your marijuana business license revoked could potentially shutdown your dispensary indefinitely.

Major disciplinary action such as license revocation will typically only be enforced if there was willful intent to operate outside of compliance regulations. Revocation could also be implemented if there has been multiple infractions with no attempts to make compliance corrections.

Three Tiers of Disciplinary Action

There are three tiers of disciplinary action that have been established by the Bureau of Cannabis Control. Each tier has minimum and maximum disciplinary action. Tier 1 is for compliance infractions that have the potential to be harmful such as failure to maintain records, or unauthorized storage of inventory.

Tier 1 Minimum:  revocation stayed, 5 to 15-day suspension, a fine, or a combination of a suspension and fine.

Tier 1 Maximum:  revocation

Tier 2 is reserved for violation with serious potential for harm, involve greater risk, or disregard public safety. For example, failure to comply with track and trace reporting, selling to minors, or exceeding patient sales limits all classify as tier 2 infractions.

Tier 2 Minimum:  revocation stayed, 15 to 30-day suspension, a fine, or a combination of a suspension and fine.

Tier 2 Maximum: revocation

Tier 3 is recommended for non-compliant marijuana dispensaries that willfully violate laws or regulations pertaining to commercial cannabis activity. These pertain to situations where dispensaries are conducting commercial cannabis activity with unlicensed cultivators or failure to notify the Bureau of discrepancies, theft, or product loss.

Tier 3 Minimum:  revocation stayed, 45-day suspension, a fine, or a combination of a suspension and fine.

Tier 3 Maximum:  revocation

All fines will be base on the State’s retailer fine formula:

Gross Cannabis Sales divided by Number of Days Open in Calculation Period = Average Daily Sale Amount

Average Daily Sale Amount multiplied by Number of Days of the Suspension = Potential Fine Amount