when white collars and green collars come together.
by liz gold
cannabizcpa.pro
mark slaugh’s company, icomply, is experiencing triple growth year after year. because as cannabis businesses get more sophisticated, their market’s regulators do as well.
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through a mix of packages and training, icomply is helping cannabis businesses stay compliant by allowing them to choose a level of protection. this ranges from do-it-yourself compliance guidance to more comprehensive offerings.
based in denver, slaugh founded the company in 2011 after years of leading cannabis industry associations and being heavily involved in drafting the state’s rules and regulations. the state was one of the first to allow legalize recreational use of cannabis.
slaugh said that back in 2009, when the federal government issued its memo stating it would not intervene in state affairs for cannabis, there were thousands of operations that popped up statewide in what seemed to be overnight.
“people thought this was signaling the end of prohibition in a way,” he said. “of course we still know it is still federally illegal to grow, cultivate, manufacture or sell marijuana. so in the context of federal law we were given guidance and having to write legislation very quickly in colorado to put these companies together.”
what he noticed was that these new cannabis business owners weren’t white-collar professionals, these were less risk-averse people who were willing to jump in and start a new business in a new field without any idea of what was going to happen.
as a result, within the first 18 months, 60 percent of those operators whittled out, slaugh said, and the lawmakers turned to the other highly regulated industries in colorado – casino and liquor – to create the state’s first set of rules.
“everybody thinks marijuana is this cash crop world where you can grow money on trees,” he said. “and certainly there is an aspect of truth to that considering marijuana and hemp are both cash crops and sell at a pretty good price per pound. what people don’t realize is that you can’t just jump in and sell cannabis and expect to make a lot of money. your state has to have laws in place that create a sense of economic viability and create a sense of regulatory control that really work for both the government and the operators and the communities in which both of those have to exist.”
while icomply focuses on cannabis businesses in a number of markets across the country, as well as internationally, slaugh said he’s in the political and legal business. this is because laws need to be passed; those laws and regulations have to get down on paper as part of legalization. then it becomes a compliance and licensing business.
“you’re starting to see more people go through a pretty rigorous process just to get a license, which also means getting a location,” he said. “so in your application process, you are building out your compliance, your compliance infrastructure, your do’s and don’ts, your policies, your employee training manuals, your training programs, your community integration plans before you can even get into growing, manufacturing and selling cannabis.”
slaugh said a lot of what his team does is help those in the white-collar world understand the green-collar world – including the cannabis history and community they may not be familiar with.
that can be a challenge, he said, as well as protecting your license, a multimillion-dollar valuable asset, often in strict regulatory regimes. he pointed to colorado, where there is a $100,000 price tag for license violations as well as the threat of being shut down for 30 days or getting your license suspended.
“there is the risk of noncompliance and the cost of that with regulators,” he said.
icomply also helps with a number of other risks, including product liability. “if you are using pesticides or get drift from other farms, you can have those products recalled or worse, make someone sick,” he said. “often times the first line of defense in a lawsuit for product liability might very well be the standard operating procedures.” in this instance, icomply would validate those sops and operational compliance with a history and paper trail, describing what is going on from a quality management systems standpoint.
to keep up with the ever-changing regulations and laws, icomply uses data mining tools that are updated by teams of attorneys in real time, said slaugh. and the company looks for long-term client engagements. “when we are engaged with a market, we are looking at a minimum two-year engagement to go through at least one set of rule changes on an annual basis with our clients.”
because of its growth, the company hasn’t had to do any marketing. and the types of clients who come to icomply are twofold – those who are reactive and are in hot water and those who want to be proactive about managing their compliance.
“some people learn after they bump their head, other people will continue to want to bump their head,” slaugh said. “then the other type of client – the professional level client. they are serious, generally well funded and they get the value of having a centralized corporate compliance infrastructure that can be scalable and work in multiple markets. they know they need a long-term partner to help them navigate not only the protection of the license after it’s won but how to achieve that next state and country.”
icomply has more than 400 compliance checkpoints, he said, but points to mismanagement of the day-to-day operational records that can typically cause the biggest problems.
“we’ve seen marijuana enforcement division officers go into locations and find 63 (shipping) manifests in a 12-month period that did not have signatures on them and charge a fine of $1,000 per missing signature,” slaugh said. “you can have audits like that for books and records that are not being paid attention to.”