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Lessons Learned From a Failed Cannabis Compliance Check

Published on March 16, 2017 · Last updated July 28, 2020
Taken in Toronto, Ontario

In the legal cannabis industry, it’s incredibly important to pay close attention to local and state regulations to make sure that your shop is always in compliance. Because we’re lucky to be working in the world of legalized cannabis, it’s our duty to show the world that these products can be safe, smart, and well regulated.

When a store fails a compliance check, it’s worth taking a moment to step back and examine why the infraction occurred. Beyond that, take their shortcomings as a lesson for your own cannabis business, and use that knowledge to ensure that your business won’t make the same mistakes.

Failing Compliance Checks Can Shutter Your Business

One of Washington state’s more prominent cannabis retailers, Lux (formerly known as Stash Pot Shop), announced that it would be closing doors for 15 days starting March 13 due to a failed compliance check. In this instance, it came to light that two former employees failed to enforce the state identification checking standard when selling cannabis to undercover Washington State Liquor and Cannabis Board (WSLCB) officers.

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The Washington State Liquor and Cannabis Board regularly works with underage investigative aides to ensure that cannabis shops do not sell cannabis to minors. Businesses cited for a Sale to a Minor face a 10-day suspension and a $2,500 fine for the first penalty, a 30-day suspension for a secondary penalty, and may face license cancellation for a third violation within three years.

The Washington state identification checking standard requires the following:

  • Identification MUST be valid (not expired) and show:
    • The bearer’s date of birth,
    • The bearer’s signature (except US Military ID – see below)
    • A photograph of Bearer

Examples of acceptable identification:

  • Driver’s License, Instruction Permit, or ID card issued by any US state, territory, or district
  • Driver’s License, Instruction Permit, or ID card issued by any Canadian Province
  • Valid Washington State Temporary Driver’s License
  • US Armed Forces ID card (encrypted signature acceptable)
  • Merchant Marine ID card issued by the US Coast Guard
  • Official Passport
  • Washington State Tribal Enrollment card.

The WSCLCB may consider mitigating circumstances and allow for some negotiation regarding penalties.

Lux had already faced a $500 fine for a previous infraction involving standard ID checks. As this was its second infraction, the shop faced a 30-day suspension, which it negotiated down to 15 days and a $3,100 fine. A third violation within a three-year period could result the loss of the business’s cannabis retail license.

Why It’s Crucial to Comply Every Time

When navigating the uncharted territory of regulated legal cannabis, staying in compliance is not always easy. For those who are in a similar situation, building a new cannabis business in an industry that’s just starting to feel established, avoiding a violation like this can mean the difference between staying afloat and falling behind.

Take this as a lesson and take the time to train your employees, emphasizing absolute compliance with state law. Ensure that your employees recognize valid (and invalid) identification, and require that employees always check ID.

“One of the most common complaints are from people who are obviously of age, not wanting to have their ID scanned. Unfortunately, while a ‘we card everyone under 47’ policy works at liquor stores, bars, etc., scanning every single ID that walks in the door is the only way retailers can truly safeguard their business,” Lux owner KC Franks echoed in a press release on the closure.

How to Turn a Negative Into a Positive

Lux has taken these infractions with a grain of salt, using what could be perceived as a negative and turning it into a positive. During the 15-day closure, Lux is offering compensation to its employees to volunteer and give back to the community. Employees will be volunteering at St. Luke’s Parish serving food to those in need, as well as volunteering for a new cleanup program called “Beautify Ballard.” The location will also be holding a Customer Appreciation Sale on the day it re-opens, March 28.

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The location has reacted admirably, choosing to turn this embarrassing oversight into a positive PR move by giving back to the local community while simultaneously taking care of its employees. Its Customer Appreciation Sale also acknowledges its compliance oversight to its patrons and thanks them for their patience and loyalty during its temporary closure.

This is a classic “making lemonade out of lemons” situation from which other cannabis businesses can learn. By being open and honest with the public, Lux makes it easier to forgive the business for its missteps, and locals can rally behind the dispensary for its perception of learning from its mistakes and striving to be better in the future.

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Lisa Rough
Lisa Rough
Lisa is a former associate editor at Leafly, where she specialized in legislative cannabis policy and industry topics.
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