Earlier this year I traveled to Nevada, where recreational cannabis is legal, and asked someone to arrange a behind-the-scenes tour for me at a marijuana processing facility. I had never actually visited one and was curious what it would look and feel like.
I was ultimately connected with a very nice group of folks who allowed me to tour their facility. Because of that close-up view and some of what was shared with me, I’m thinking it best that I not reveal the company’s name. But they know who they are, and I offer my sincerest thanks to them for making this tour happen and giving me an inside look at how a state-licensed cannabis processor manages risk.
When I arrived at the facility, I was transported to a world of rigorous industrial hygiene protocols. I had to be completely covered and suited up to preserve the cleanliness of the facility. First, I was given a hair net; a pair of clean white coveralls came next; finally, I had to put covers over my shoes. The combination was admittedly not a good look for me.
Now dressed in my full body condom (that’s what it felt like), I entered the area where flower is actually packaged. A bunch of very nice people greeted me warmly — I guess in their business they don’t get too many visitors — and they seemed happy to explain what they were doing. They were packing products methodically and meticulously, making sure every detail was just perfect.
The next part of the tour was the kitchen, where a ton of dreamy creations were being created. Fine Belgian chocolate was being molded into sweet shapes, and there were lots of gummies displayed on drying trays.
The kitchen manager was an experienced chef, with lots of commercial kitchen experience. As he was showing me the various aspects of the kitchen, he showed me a tray of candy they were testing and experimenting with. He asked if I would like to try one.
My very first thought was, “I’m at work … I can’t do that.” But what came out of my mouth instead was, “Dude … how strong are those?”
He started laughing at me and said, “These are not infused. It would be totally illegal for me to give you any marijuana-infused product. Hey, you’re not trying to test me are you?”
No, I wasn’t. I swear. I was trying to learn, and I was also trying to not get baked in the middle of the day.
I had conversations with other employees during my visit and found out that they do not get any kind of free product as a perk of employment.
What struck me as remarkable about everyone in this facility was that they were following the laws and rules of Nevada even though there was no one there to see. I could have been handed an infused edible and no one would have been the wiser. Employees could certainly be gifted the occasional bag of flower here and there, and no one would see or care.
When my tour ended, I walked out into the Nevada sunshine and thought to myself, “These people really have their s— together when it comes to risk management.”
And here’s why I say that: The federal government still views this business as completely illegal. Attorney General Jeff Sessions made that clear this year. But he and his enforcers can’t be everywhere at once, so as Department of Justice officials decide how best to utilize their resources, they must prioritize. Local and regional enforcement officials must do the same. And who are they going to want to devote their limited resources to? Simple answer: those who aren’t following the rules.
Good risk management protects your business. It helps you anticipate losses and prevent negative events and it helps you to survive those events that you cannot prevent.
Risk management starts with identifying loss exposures — listing and documenting all the things that could cause your cannabis business harm — and the authorities can cause more harm than just about anything. They can shut you down and not think another thing about it. And when they are deciding who to shut down, they are going to focus on those who aren’t playing by the rules that have been established to guide the marijuana industry to be a safe and reputable one.
So as you go forward with your cannabis business, I strongly encourage you to evaluate whether or not you are in compliance with the rules that exist in your jurisdiction. Some of them may seem stupid but follow them anyway! Don’t cut corners and don’t try to take the easy way around the rules. That is a sure-fire way to end up in trouble that you can’t necessarily recover from.
Maybe just pretend that I’m going to show up at your door and write an article about how you run your business. What would I find in terms of your compliance with the rules and regulations that apply to you?
Brenda Wells, Ph.D. is the Robert F. Bird Distinguished Professor of Risk and Insurance at East Carolina University and the owner of Risk Education Strategies. She has published articles on the risk management implications of cannabis legalization and is a sought-after expert in the risk management and insurance field. She can be contacted at brenda@riskedstrategies.com.