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What June's Disciplinary Action Report Means For Your Cannabis Business Compliance

With the penalties ranging from hefty fines to the outright revocation of licenses and owners being restricted from ever owning another cannabis business in Michigan, the latest

A handcuffed man holds money

makes it clear that enforcement is a top priority for the CRA (Cannabis Regulatory Agency). The list of infractions ranges from METRC non-compliance and failure to report material changes to non-compliant sales and several other operational issues. Working with your cannabis attorney to ensure compliance is paramount for cannabis businesses to survive in this strictly regulated market.

One medical dispensary had to deal with two Complaints that led to the Cannabis Regulatory Agency's (CRA) decision not to renew their license. The first incident involved some employees caught smoking in an upstairs room, which is not allowed in a marijuana business. When the CRA looked into it, they found more problems. The room wasn't even included in the plans that the business had submitted to the CRA. Additionally, the surveillance video showed that marijuana products without proper tags were being moved and stored in this unreported room. Adding rooms to your active floor plan requires a Reporting Form, even if this room was already part of the building before. You can find more info on Reporting Forms in our blog on that issue from earlier this month.

A few months later, another Complaint was made against the same business when a part of the shop collapsed. Instead of notifying the CRA, the business secretly moved marijuana products in trash bags to a relative's office. Because of all these violations, the CRA not only refused to renew the license, but they also permanently banned the sole owner from getting involved in any cannabis business in the future.

Another company and its owner faced a similar fate after they broke regulations at both Medical and Adult-Use facilities by having way too many immature plants (44,592) in METRC, far beyond the allowed limit. They also uploaded plants in batches greater than 100 and couldn't prove they destroyed the excess plants. Later, during harvest season, a surveillance malfunction prompted a visit from the CRA, leading to the discovery of unmarked distillate in an unreported storage container without proper surveillance coverage, as well as various boxes lacking proper METRC tags.

The company claimed the products were produced from specific biomass on a certain date, but surveillance footage and CRA sampling events proved otherwise. Consequently, all licenses were revoked, and the owner was permanently banned from owning or working at any cannabis facility.

These cases above are only the most serious examples. Fines so far have been issued for packaging issues, late AFS submissions, for selling product under admin holds, and for being unable to provide video surveillance. Most of these fines have been five figures, further highlighting the crucial importance of compliance in Michigan's tightly controlled cannabis market. Various other companies faced penalties from fines to mandated changes to policies and operations.

Some companies have even been required to furnish all records for the past 12 months, and submit to monthly onsite audits from the CRA, and provide re-training for all staff members. These expensive fines and intense oversight can be avoided in the first place by working closely with your cannabis attorney and our compliance team here at Cannabis Counsel® to make sure you are adhering strictly to regulations to ensure your cannabis businesses long-term viability in the industry.

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