5 Quick Steps to Becoming Compliant (That You Can Implement Right Now)

Episode Transcript

Intro: [00:00:00] Welcome to the KayaCast, the podcast for cannabis businesses looking to launch, grow, and scale their operations.

Tommy: Compliance in the cannabis industry can be very, very complicated. Every seat has their own rules. And the regs are usually 200, 300 pages long. Where do you start? Tim Gunther from, I Love Compliance joins us today to talk about best practices around compliance. Tim has worked in the cannabis industry for over nine years, helping countless companies across the country. Save hundreds of thousands of dollars in compliance. It was a fascinating conversation. There was so much that I've learned about things that you can do immediately to be compliant. I hope you guys enjoyed this conversation.

Tim, thank you so much for joining us today.

Tim Gunther: Now, Tommy, I appreciate the invite and I'm always happy [00:01:00] to see a fellow Compliance HR and all the other things that people love in cannabis, not.

Tommy: You've been helping companies in the cannabis industry for nine years now. You've seen it all. What are some common compliance violations that occur in our industry?

Tim Gunther: Yeah, it's funny is, um, what people don't understand about compliance in cannabis is if they actually read the regulations and just see what the minor things are, they can stay out of trouble. For example, one of the most common ones is video retention. And every state has a requirement saying it's this many months or how long you have to keep it. Um, and no one's doing checks on their video on a regular basis. Monthly, just making sure they can go back 60, 90, 45 days. And so these regulators are coming in and they're essentially going to video and they say go back 90 days. And all of a sudden, it's a blank screen. Okay, [00:02:00] go back 89 days. uh, KayaPush, uh, KayaPush.

I'm not I'm not very good at it, uh, but I think I got it right. And the other thing I want to just point out is that even though it says, you know, you know, that compound is about 10, 000. dollar fine that you don't have available.

Tommy: Wow.

Tim Gunther: if you're missing four days. That's potentially, they can fine you 40, 000, right? So that, so when you look at that and what you're doing by not taking the preventive action. Um, inventory is probably the, the area that every Canvas regulator will, will come down on every operator and, and, and come after you on. And really, inventory is not complicated. You have to have a system in place. Um, a very common thing is, is regulators, especially on a, when you have seed to sale tracking. We'll come in with a list of, here, here's all the [00:03:00] ones you have in your inventory, which means they know, if you have one item left, you probably can't find it. And they give you a hand, they say, I want you to find these 15 items, and they go through, I can't find it, can't find it. By the time they're done, they've got 12 of 18 items they can't find. Again, uh, because they don't have systems in place to do that, uh, it's a common one. Um, one of the funniest things, even with MSO's is change of ownership. People do not read the regs. And in Massachusetts alone, one major NSO got fined 250, 000 twice for not showing a 10 percent change in ownership through the, through the proper channel. And they have tons of lawyers and all that, but no one double checked what was in the reg to say, Hey, to do this, we have to do these three steps. Those are the little things. Like when you think about this business. Um, the gotchas are the simple things and, you know, everybody thinks [00:04:00] regulators are their foes.

If you get to know them, uh, you can really understand what they're looking for, uh, from that perspective. But those three are, like, very common and it's very easy to do. Um, and the other is just, is in certain states you're required to show documentation that people have read and signed off on things. So, showing up and the regulator says, hey, you have 20 employees, I'm pulling your name, your name, and your name, show me their training records and show me they signed off on this. And most people are thumbing through paperwork or can't find it. And again, simple, simple things you can do as a business, um, to prevent that kind of stuff.

Tommy: Every state has different regulations and the regulations are hundreds of pages long. If you're talking to somebody that just wants to learn about what's, what are the things that they should know, where can they start?

Tim Gunther: So that's a, you know, it is, uh, we call it, uh, keeping up with it all, KUWIA is [00:05:00] what I call it, right, K U W I A, and that's one of the hashtags I use. If you're in, if you're going to any state, the very first thing you need to do is just look up who the regulatory body is in Canada for that state. And they all list the regulations.

Now, do not read it at night cause you'll fall asleep cause you'll, uh, uh, you'll do that. So what I recommend is you open that up, print it out. And then depending on what type of license you're going after, cause people call us all the time. Hey, I want to get a license in the state. Great. Have you read the regs? Well, where do I find those? And to me, I'm going, if you don't know the regular site, so, so all states have a site. You can just type in Maryland cannabis regulations, California cannabis, and it will go to their site, and then just, they usually have links to their regs. Now, California is interesting, because in 2018, when they had three separate regulatory bodies, after 20 something years of having cannabis without any regulations, one day said, oh, 460 [00:06:00] pages of regulations, You don't have to follow it.

You have six months to get in line. They realized that three separate didn't work. So a year and a half later, they combined all three back into one. So operators who don't pay attention to those things, um, again, can sign up for alerts. Almost every site has an alert that you can sign up for, much like Google Alerts, and get notified when things change. And it's just really taking the time, an hour a week on compliance, if you're not a compliance person. just to see what they're voting on, how things are changing. But all state sites have a regulatory site, um, that will list the regs. And, um, it's probably the most confusing thing because Maryland has two sets of regs you have to follow and they're like, do I follow this or this?

You have to follow them both. And a lot of states don't have, make it very easy for you to print out the whole thing. So you're like going through the state site, but it's so important to go through the regs, and especially on the type of license you get. And I always tell people. [00:07:00] If I have a dispensary license, you should read the cultivation or processing licenses. So you know what they need to send you and how they need to send stuff. So when you're receiving material, um, you can almost check them. And say, hey, you're supposed to have these three things. If I take ownership of it, it's my responsibility. Um, it's, it's a, we've been doing it for nine years. We have a regulatory team within our company. And, um, my wife, uh, leads that team. So, um, She's in regs just about every day looking at it. And then we participate as a company when they're up for public comment. We read through it and make public comment. Uh, and I think a lot of operators just don't take the time, don't think their voice counts. And they are so wrong if they don't do that.

Tommy: Do states publish the fines that they issue out and the reasons for the fines?

Tim Gunther: So, uh, that is our best resource to find new business for us as a company. But It's also the best [00:08:00] resource. We educate all licensees. So I'll give you an example. If you were to Google Maryland license actions and sanctions, you'll go to a site, it'll pull up everything that they've done in a consent order. So for example, um, Fully Vertical Operator got fined 55, 000 for not notifying the company, the commission of ownership changes. Uh, Dispensary, we all want to be advertising and social. They had a West Coast operator come into Maryland who on Instagram had someone holding a shotgun blowing smoke through it out front of their store with their logo on the barrel. And they got shut, they got, their license got shut down because of what they were posting on Instagram. Because they didn't read the recs. Uh, California, if you look up, uh, license denial citations. And then if you go to final decisions, you'll read through all of it. And what I tell clients all the time is If you're operating in the state, go to those weekly. Look at the new things [00:09:00] happening because to us, that's where lessons are learned. And what we do as a company is we're out there almost every month and I pull up the news note and I read what happened. Then I go to operators that are around that person that got fined and say, Hey, California, the one got fined 270, 000 for failure to report their transfers between their locations. 270, 000, right? Um, so we look at that and then we go to the other operators that are transporters and say, Hey, your neighbor just got fined 270, 000. Do you have these things in place? And the great thing about those things, they're, they're, we call them teachable moments. They're tools that you can use to read through it. And then it's simple stuff like, Oh, I'm doing that in my dispensary. I need to stop. Or, I didn't think about that. Um, every state has it. Um, some do better at posting it. Uh, Illinois, um, if you, if you Google violations and enforcement, Canvas regulations in Illinois, [00:10:00] um, or in New Jersey, the same thing. New Jersey is one of the states that's starting to fine pretty heavily. So they require like a labor peace agreement. Uh, a company got fined 50, 000 for not having a labor peace agreement in place by the required time in their regs. Again, simple things that licensees should know But they don't, or they, they don't, they fail to, because a lot of them are like, they wait for their regular to show up and, okay, what am I doing wrong without being proactive?

And, and, um, to me, that's the biggest training tool for your staff, uh, to read through that. So when you're in that state, because it's, it's the, some of the fines coming out are getting heavier and heavier. I will tell you, in the, um, Eastern half of the country, the fines need to be higher. On the Western half of the company, the country, um, they're fines, but they're not, that's why West Coast companies coming to the East Coast have a hard transition because they're not used to the, [00:11:00] the, regulatory environment and strictness of it and the fines that they get offered.

Tommy: What are some best practices to get in front of this? Like if, if I was a dispensary owner and I'm writing out my SOPs, my policies, what are some of the best practices that you see?

Tim Gunther: Yeah. So, uh, here's a tool, uh, Google Alerts. I set up Google Alerts on cannabis fines. plus the state name. So if I'm in Illinois, I want to get the letter of any Canvas company licensee getting fined, um, in that state. So then you're getting, you know, weekly, you have a team member going through stuff. Um, the other thing is, is this Canvas community is unique.

It's, it's, you know, I worked a lot, my wife and I are both prior to law enforcement, but that community is very tight together. And what we notice about, ironically, about law enforcement, uh, And Kaya's Operators, it's a, it's a good community. And, uh, owners kind of collaborate with you, even though they're competition, but they, they're, they're brotherhood and sisterhood, right? Um, [00:12:00] spread your network out and talk to those and go to those dispensaries and talk to the owner and say, what are you dealing with? We're brand new, we're starting this. Um, the other best practice is, is, is compliance is not difficult. Thank you. It's pretty black and white what you have to do in the regs. The challenge is it's boring and people hate boring stuff and they just want to sell or they want to just grow or they want to process. Um, you've got to find a person that's a type A that is one that can read it and help enforce it within your company. Um, that's the best practice. And what I would tell you is even with all of our clients we have around the country. We have what we call the risk tolerance level, right? And what I tell CEOs all the time, our only goal as a company is to protect them and protect them and their license. But we get calls from the senior leadership, Hey, we're thinking about doing this. So we give them [00:13:00] a like, you're a little bit below the risk line. We're not going to stop you from doing it, but you have to recognize that you might get fined because, because of some of the heavy restrictions. Um, there is sometimes you have to kind of go that risk tolerance level and as long as you as a company understand that. Now there's certain things that we as a company tell a client, if you do this, we're no longer your compliance team. Like, what do you mean? We'll just continue to pay you. I was like, no. And we fired lots of clients because you just have to think through logic and advertising is probably one of the biggest issues where, where you can get the most trouble is if you don't really understand the Canvas advertising laws.

Instagram, Facebook, all that, what the do's and don'ts are. Um, and what I tell people all the time is we have, um, Papa and Barclay out in California has an amazing Instagram site. And I tell clients, go to that site and see what they're posting. It's not people smoking, it's not people, it's about benefits and values.

[00:14:00] And, and they're building a community around that. And that's where I think a lot of operators get lost. Especially ones that get into cannabis from other retail. Oh, I was in a retail and liquor stores and retail on this. You can't market like you can. So I think best practices is like read the regs and then really look at what the either advertising or whatever you're doing to find out what's required and then either consult with a group or, um, and the problem is there's lots of sharks in the water. Um, and you know this and being in the business long enough that Uh, when we get on, when we get on with clients, uh, recent story is we were literally, when a client hires us, we get on all the technology calls, we sit down and listen, and there was a vendor presenting something, and I just stopped the call.

I was like, stop. I said, that's illegal in this state. Well, no, dude, no, it's illegal. And they're like, well, no, we get permission from so and they named the executive director. I said, I personally know the executive director in that state. I'll call him right now, and then the guy [00:15:00] got real quiet, and I was like, We're stopping this call.

So you've got operators who are, uh, vendors who are presenting to operators, and these operators just don't know because they don't know.

And so they're signing contracts with people, and then once they get up and running, in six months, they just spent ten, twenty, thirty thousand dollars, and now they have the potential to get shut down. It's, uh, so you really gotta, you gotta know your, know, know someone that knows the people, And get connected because this community will tell you who the sharks and who the people are going to kind of be on your side.

Tommy: you made it such a good point. And you have to vet your vendors and get references, talk around. The community is very small and the people that have really good reputations, you'll find out. And the people that have bad reputations, you'll find out equally, uh, well enough.

Tim Gunther: Yeah. And I think that's a, that's a valid point. So, so for your listeners, you're listening, like when you get into this business, whether you're experienced or not, [00:16:00] when you're going to get pitched by all these vendors, especially when you win a license, you get calls from every like, Oh, we can do this.

We're the, we're, we're the world's best. We're the world leading. That's great. Give me five clients in this state that you work with. And let me talk to them. And it's like, well, we don't really have any in the state yet. So give me five clients in any of the state you operate in. And then the thing is you've got to ask the hard questions. Um, let's be honest. Most people who give references are going to give references to people who are only going to give shining things about them, right?

So there's that piece. And then you've got to go to like the glass door or Google the company name, employee complaints, and pull up, um, stuff about that company that employees are complaining about, stuff they're doing. You'll learn a lot about those people and all that.

Tommy: Insightful. If I was a entrepreneur and I'm writing out an SOP policy, I think you mentioned somewhere that you should avoid being too specific and be a little bit more general. What do you mean by that?

Tim Gunther: Yeah. So, [00:17:00] so just remember this in any regulatory compliance environment, if you're required to write SOP. So in every state, you'll see union SOP on waste, union SOP on receiving. Read the reg, but don't get into say, I'll give an example. Like if I'm a, um, a cultivator and I have a SOP on my cleaning protocol. I'm not going to list the brand name of the product I'm using. I'm not going to list, um, specific things about the type of equipment I'm going to use because what ends up happening is in most cases, people write SOPs that are specific. They forget all about them. A regular is like, can I see your SOP? Oh, you, you're supposed to be using this. And they're like, well, we don't have that anymore. Well, when's the last time you updated your SOP? So, what I mean by that is, you want to give guidance on the steps, and then we always tell clients is, we supplement things with work instructions. Work instructions and SOPs are different. SOPs are [00:18:00] about, or policies, are about how I'm going to do things. So if I need to get specific, I have a reference guide called a work instruction that goes along with it. I'm not turning that into the state. I'm turning the SOP into the state, because that's what's required. Um, and then a lot of people, if they should do best practices annually, have someone read through their SOPs.

Not the people that write it. Not the person that, or get a, get a general employee and say, do you do this? Um, and that's the other thing I will say is too many people write these SOPs they think are going to be happy for the state. And the state comes in, watches video of you doing something, and then they read the SOP.

Like, you're saying step two, you do this. I didn't see you do that on the video. Because everything's recorded in cannabis, and that's the one thing that's different about this is, is people forget they're on camera. It's almost like reality TV, and people forget what they're doing. Um, so, so it's important to be vague, but, but enough to cover the [00:19:00] regulations. And then use specificity through other means. Um, and, and we, we go in and do, uh, compliance audits for people who just hire us. Say, can you come and review our operations? And the first thing I do is like, can you send me your SOPs? I've got a new project we're getting ready to start. I'm waiting for them to send it to me.

We're going to read through it and then we're going to be at their operation for the full day. About three hours of that day, we just sit and watch. I just, I don't say anything. I just sit and watch and I make notes. I'm like, you said you were going to do this in the SOP, you're not doing this. That's potential fine.

You said, and said, here's where you need to regroup that. And I think that's an important part about this. Um, because regulators, uh, depending on their background, then that's important to know. Uh, you'll have to know who they, where they came from to know what they're going to look at in your business.

Yeah,

Tommy: head and that you write the SOP. Well, I guess, I guess I have two questions for you and we'll start off with what you've mentioned, which is so insightful. [00:20:00] Writing the SOP to be compliant with the regulations is one thing, but are you carrying out what you wrote down is another.

And how do operators have that fine line in making and having the SOP simple enough where it will be followed through by employees? And, and the second, uh, follow up to that is how often should you check to see whether or not operationally you're in line with what you wrote down?

Tim Gunther: it's, uh, it's, it's one of those things in, in the compliance world that we see all the time. Uh, here's what I'd say is, um, You, You, read the regs and you meet those SOPs. Then you're going to have operational, you may not call them SOPs, but operational functions. How to work the POS, what happens when I'm, um, short, all these little things.

Because in the reg it says you need to write a SOP that says to prevent theft and diversion. Very broad. So what are, what are the high level things, how you do that? Then you got to train your employees to be more specific, [00:21:00] like hey, when you have a cash shortage in your drawer of 5 or more, here are the steps you need to do.

You're not putting that in SOP. So every business has to think about that. And then, uh, the best practice for any kind of operational content is at least annually. And this meets, um, good manufacturing GMP protocols for processors, which is some, some people get certified GMP. In, in the GMP regs it says you must have where you're doing document control at least looking at annually. And what that means is that you're at least looking at it and then you can keep the version control. So if a regular does come in and say like, we've improved our SOP five times. Uh, and most people don't do that. Um, In, in this business there's high liability actions. And what I mean by that is you can have 50 SOPs on, um, Required by reg.

But in the reg, what are the, what are the things people pay attention to? Green waste, inventory, checking in [00:22:00] people, right? So then those high liability policies and procedures, you really should be checking that and not just checking it in the books. We recommend, so part of our service we do with our clients when we get engaged with them, we get access to their camera systems.

And the best time to watch people is when they don't know you're watching. So we just, and we watch transactions at a register. And we, we just went through this week, this week with another client because we were having some challenges in inventory, which everybody does. And so we watch the transactions like, look, they're not following what you set up.

We need to change this. And then we coach because we call them teachable moments. We don't, from compliance, we don't come in and hammer you. It's teachable, right? So now we're training the managers and leads to get on the camera system weekly, pick one employee and watch five transactions. And if you have processes set up, because the most common thing in inventory is I misscan.

I grab something and scan something else because they're not paying attention. Because they're just going [00:23:00] through. So to me, um, it's not just about checking your documents in, in writing. It's you have the systems in place to check people when they're on cameras. And it's such an easy tool to use, um, just because that's how you see if you're doing stuff.

And. I will tell you, we've caught things that are pretty egregious on camera, and we have a process. We have a whole instant report process, and we self report things because, and I tell CEOs all the time, we have to because I don't want them coming in and find, Murphy's Law is like if you hide it, they will find it. Right? And that's the other thing is, is you're not just doing it for the efficacy of the, the writing. You're watching your operations. Um, and I think as a business owner, where do you have the most shortfalls? Whether it's cash management, in processing, are you missing inventory, why? Um, we [00:24:00] watch transactions with processors, we watch the, uh, the teams that are doing trimming because we want to watch how often are they changing their gloves. Why? Because typically they're palming, putting in the glove, and do they have a process where they put all gloves in a specific waste or a general waste? That's where stealing happens. And what people forget is, we're all human, and we all have different things affecting us in life, I don't know what your day looks like. You might be counting out money and you're having trouble paying your bills and you're like, man this company's making a lot of money. I'm gonna count every twenty, put one to the side, and I'm gonna somehow take it cause I need a hundred extra bucks. Those are things you gotta be cognizant of.

Tommy: You mentioned self reporting. So if a, if you're finding through investigating, if you're onsite with regulations and your SOP, and you find that you're not compliant with an issue, what do you mean by self report?

Tim Gunther: Yeah, so, The tendency by, uh, lot of operators are. [00:25:00] I want to keep my secrets because I don't want anybody to know what I'm doing wrong. And that's the wrong, wrong way to look at this. What I mean by this is, when I find activity that may not be egregious but it's against the regs, a process where something happened, where someone didn't check an ID properly, like they just let someone through and you see that, uh, you write up a report, who, what, where, when, and why, you know, when you think about writing. You say, here's what happened. We're, we're reviewing. They didn't check someone in right. Um, we retrained the person. We're retraining all staff. I write it up in a nice way and I send it in to my, typically you have a, uh, regular that's assigned to you, and I self report and say, hey, we had this incident. Uh, here's what happened.

Here's how we corrected it. What you're going to find out is you're more compliant because you're doing that and when they come and inspect it, like Tim, you're good. Because you're letting us know that [00:26:00] you're actively trying to prevent this. Um, and I think that's where a lot of operators are afraid because they think they're going to get fined or in trouble. The main point is, is that they have to think about let me report it, establish a good rapport with my investigator liaison saying listen, we're not perfect and we did find something and we did this and sometimes you find stuff that's, that's terminating events, stealing and all that. You self-report that you have to, in certain states you have to do that. And I'll give you a real good example. Um, at one of our clients, we had an issue where a brand new employee went to the GM and said, Hey, I've gotta tell you something that happened with the CE of the company. So a brand new employee's going to the GM and the CEO did something he shouldn't have. Uh, and Jim calls me and I was like, we have to report.

He goes, well, what will happen? I was like, there's a potential you use, lose your life. So he said, lemme get the co. Co called me and I said, listen, [00:27:00] you have to applaud the employee that reported. I'm gonna tell you right now, you need to thank them. Take 'em to lunch, even though it's you that the one doing it, but we have to report this.

And if you tell me you don't want me to report it, we are no longer your compliance team. We're gone. He's like, Nope. What do you think will happen? I said, there is potential use of license, but let's let us write it up in a way. And we did that. We reported it, we wrote it up. It was about a. We had a five, six page report.

We had video evidence. And then he gave his side of the story. We got a statement. We turned it in. We never heard from the state again. On the issue. Closed out.

Right? And what's important about that is, is, and I told the CEO, went and thanked the employee who reported on him. And like, you're the type of employee I want.

And that's where I think that, um, a lot of times, people who work for an organization, doesn't matter what it is, When a senior person comes to them and tells them to do something that maybe is out of compliance, they're worried about losing their job, all these things, but they [00:28:00] need to remember like, if they train their employees right, like no matter who it is, report it up.

And you have to have a chain, like if I can't go to my manager, so in our case, we're, we're third party compliance. We get a lot of calls from employees, like, hey, this is happening. We investigate it and we follow up on it. Um, so that's self reporting and we've we've probably self reported six, seven hundred times in the nine years we've been operational, and no time have we ever self reported, and we had some major inventory issues, no time have we ever received a fine back. Now we received some things we had to change, but our relationship with that regulatory body and the investigator that supports us changed because, because we did that.

Tommy: That's so insightful. And there's collateral benefits too, just based on your story. I bet you that company has really good culture.

Tim Gunther: Oh, they have an amazing culture.

and, and, and and that's very hard in Canvas, right? When you think about, I'll just talk about the dispensary side. It's very hard. People talk about employee [00:29:00] churn, right? The reason it, the reason is because you don't have, you don't have your culture set up right and you're treating people differently.

We have clients that have had employees in as, I don't like the word bud tender, but I'm going to call as guides that have been with them since they opened for six years and they don't have any turnover because they're really focused on benefiting and showing that you need that in Canada. Because if you don't have that, and we have other clients who have high turnover, and guess what high turnovers turn into?

Inventory issues, retraining, and it costs them more that way, Do you know what I

Tommy: there's two, when there's two sets of rules and, uh, executives and owners do not hold themselves accountable, that's, you know,

Tim Gunther: It's a hard, it's a hard thing for people, because listen, umm, at a very large company you could have an owner that comes up and asks you to do something that you know you're not supposed to, but you're like, I want to keep my job, I can't get fired, and they do it and don't say anything to anybody. When we interview, [00:30:00] uh, we help clients interview for people, like when we get clients, especially like inventory managers, and we always ask scenario based questions.

Have you ever had an opportunity when you were asked to do something by a senior person that you knew was wrong? How did you resolve it? And it's interesting to see what people have, and they kind of sit back like, hmm, should I answer them? And some of them didn't know, they just did it because they said, I didn't say anything because I didn't want to lose my job. Alright, so you gotta, you gotta instill that in your leadership. That, um, no one's perfect and that you have to be able to look at that and review that.

Tommy: it, it seems like the relationship that a dispensary or cannabis business has with their inspectors is really, really important. What, what is your recommendation on business owners? Finding more information on their inspector and what types of information should they gather.

Tim Gunther: So let me, let me put, this is a great question because this is how we do it in every state we go into. It is [00:31:00] no different than when you're looking out for a job. When I'm going to look for, if I was going out to look for a job and I'm looking for a company, I go to LinkedIn and I find out who works at that company and the people I'm working for and I looked at their background, what school they went to, what their history is and all that. No different from inspectors. First thing I try to do is, who's your inspector? If I look them up, I try to see if they're on LinkedIn or I Google them. Now, typically you have law enforcement, gaming, Uh, The way we're looking at it is we're looking at what's going on in our day to day lives. So we're looking at different solutions.

Is it about socializing? Is it about allowing people to write? Is it about people's quality of life? If I have an inspector who came from healthcare, especially food safety, I look at their background, what kind of [00:32:00] certifications they have, then I look and say, okay, so now I know what my inspector is about. I'm anticipating what they're going to look for, and I tell clients all the time, know your inspector like you would know an employee, and then have the conversation like, uh, it's not, how do I put it? We have a general relationship with the inspectors we have in the states that we work with. And I literally have a great relationship with inspectors. But you get to know them, and once you start talking some of their language, they're human, and if you can do it. Now, some are going to just be hardline, non answerer, and be just pragmatic, like, nope, you need to do this. There's other ways, you've got to figure out that trigger of how to get them to, whether it's jokes or whether it's something. And the funniest thing is, if you look at people on social, because people post stuff all the time, They're fishing or they're doing this. So what do I do? I was like, Oh, you like fishing? Oh yeah, I love it. And then you get them on this. So that piece of it [00:33:00] is where people miss the boat on inspectors. Um, especially their background.

And, and, uh, we have one inspector in one state, his background was environmental protection. Even though he was inspecting me on a cultivation site, he was asking me about septic tanks. He was asked stuff he doesn't even need to ask me about. But I knew he would ask me about it. So I had all the paperwork.

Here's our permits. Here's our this. And he's like, okay, you're good. So those are the kinds of things that, and then once you get in the inspector's mind, uh, you know, I was in, my wife and I were both in the military and we were both in law enforcement. And in the military, when you pull up to a front gate, when you look at the person at the front gate, the guard, and they're well dressed, shined and all that, your impression of that business or that military institution is they got their stuff together. If you go up to the same gate and you see somebody all wrinkled and all that, what's your impression? There's something, there's something amiss here. Right? So you've got to think about that mentality. What's the first impression when the specters come in? [00:34:00] But

who are they, who they are, who they are is most important.

Tommy: Yeah, I would have never thought about that

Tim Gunther: Well, it's, it's,

it's, it's funny, it's uh, cause, cause now when I go into a new state, And we see the inspectors and I look at their profile. Then I look at whatever company they work for and I won't go search that company or, or a government agency to see if they ever published anything. And I read their publication.

I read what they wrote. I read, and I read that and my team does that as well because then it gives us knowledge of that person. They don't know we have, but it's not, we use it in sincerity. Like we just want to understand who we're working with. And if, and if operators did that, um, they would kind of see a change in how. Their relationship is with their inspectors.

Tommy: When somebody is thinking about writing their policies, right? Keep it general, be less specific, and maybe Does somebody first start on the [00:35:00] top five or top 10 key high risk issues, and then build out kind of your SOPs from there? Cause when I look at regulations, it's 300 pages long. Where do I start?

Tim Gunther: So I will tell you in every set of regulations out there, um, California, Illinois, New Jersey, if I, and I'll use a processor license as an example, uh, Maryland as well. So Maryland's got a bunch of new licenses that are coming out and we're getting calls from people like, where do I start? I need a checklist. If I read the processor, there's usually four or five sections and it says SOPs Eight things you need. Green waste, inventory. That's my starting point. Like what are they saying are specific? So every state has that. Um, you just have to look at it and say, what are the things they're asking me to have an SOP on?

Now people are like, Oh, I hate writing SOPs, but really what's your process? It could be as simple as green waste. I get a return. I have to log it in metric or whatever the tool [00:36:00] is. I do this. And you write out the simple steps. It doesn't have to be complicated. That's the starting point. You have to read the reg, and you're right, there are 300 pages in the regulation, but I will tell you there's value in reading the entire thing, because you're going to make a highlight, ooh, this might pertain to me, and in your specific type of license in the regs, you really hone in what they're asking for, because that's what you're going to be inspected on. After that, um, like labeling and packaging, in every state is an issue. We develop legal packaging checklists that we give to our dispensaries and say when a package comes in, there's this checklist you're going to go through and make sure if it doesn't have this, you call the vendor and tell them we can't accept this. People aren't doing that. So what people don't know, like in most states, when a dispensary receives material and accepts it, California, Maryland, it's their responsibility. It's no longer the responsibility of the processor. So if I receive something that's not properly labeled, guess who gets in trouble?

For The dispensary. And they get [00:37:00] fined. And you know why? Because there's more dispensaries than there are processors. So regulators know that if I have a hundred dispensaries, and they all receive the stuff from this processor, that's a hundred fines instead of one fine.

Tommy: Oh,

Tim Gunther: Right? So that's the starting point.

The starting point is always the regulations.

Tommy: see.

Tim Gunther: And like I said, you have to do it in the morning or afternoon. Don't do it at night, because you'll fall asleep. Um, and, and One of my co workers, one of our co workers, he's got a new thing where he reads 10 pages a day of a book. So in 10 days he can read 200 pages. I'm like, I love reading, but I get into it. So I told him, I was like, that's what you have to do with regulations. 300 pages of regulations, read 10 pages a day. Right? And then, In, in 20 days you have read 200 pages of it, right?

Tommy: [00:38:00] SOPs in place,

Tim Gunther: hmm.

Tommy: What about document management? Like, what is the best practices to manage your documents?

Tim Gunther: So historically, if you were to walk into a hospital, into, uh, any aviation company when you ask to see their policy and procedures, what do they do? They pull out this binder and they go through it and like, this is our processes. What I would tell people is, um, whichever way you do it. You, you will have written document, document management, but I highly recommend looking at, um, document management systems.

You could use Google, you could use Outlook, SharePoint, something to where you can actually document and then keep every version you've ever had. Um, so, you know, my background is in technology as well, right? So, um, clients that work with us use a, use a technology platform. What that platform does is it uses the common tools, [00:39:00] but if I have a new SOP that needs to go out for signature, do I want to send it out to all employees to handwrite and then store that in their file? That's hard, right?

Or do I want to have a system, whether it's an HR system, whether it's a document management system, that I can send stuff out, sign it, and then if you as an inspector ask me, hey, I want to see if anybody signed this policy? In three clicks I can show them, right? I think people really have to pay attention to that and there's, there's, it doesn't have to be expensive. You have to have a, a system in place to do that. Um, and I'll tell you, all states have a document retention rule where you have to have stuff for two years, five years that you have to keep track of. Um, a great example is manifests and invoices. Manifests are required, you have to keep them. So what do most people have?

Boxes and boxes of manifests. What we tell clients is you have a scanner, invest in a 700 scanner. We have clients that get a manifest, as soon as they get it, receive it, do all the checks, they scan it in, [00:40:00] and they have it go to a Google Drive, or they have it go to somebody to review, and then it's stored electronically. The value of that is now when an inspector comes in, I can pick up this and say, Oh, you want to see that? Boom, boom, boom, and show them. They're like, What's that? Here's our last 20 manifests. Do you want access? I'll give you access. That's critical. If you're like, I don't want to use technology, then if you're going to use pen and paper, make sure you have a good filing system and lots of room to store file cabinets.

Um, but it's critical in this stage. Um, and I'll tell you why is, uh, lawsuits happen with employees leaving all the time.

So you might fire an employee because they did something wrong. Well, you get a lot or you terminate them and you get unemployment coming at you. I'm going to tell you, we have clients that, Have all the documentation, corrective actions, all that stuff that they presented to unemployment with all the dates they were assigned it and showed the dates they were assigned it. And guess what? They win those claims that they don't have to pay employment because they were fired because they were stealing or [00:41:00] doing other stuff. A lot of times they can't do that, um, and, and the problem with that is now, uh, if you have an attorney coming after you and you can't produce your paperwork from two years ago, you're operationally inefficient. And they know that. So they're going to like, you're going to sell out of court. So document management, document control is, is important. Um, and again, it doesn't have to be complicated, but you have to get all your contracts, every, and everything that you, when you first start, um, contract management, most people sign contracts, don't read it in the closet says, this is an evergreen clause. You're a nil date. We tell clients like set up a trigger. To remind you six months prior or three months prior to look at this contract. They don't do that. They just store it and also they're paying bills they shouldn't be paying.

Tommy: Tim, thank you so much for joining us today. You've dropped a ton of knowledge.

Tim Gunther: Well, I appreciate Tommy. I, you know, I, I appreciate what you guys are doing and getting information out to the masses and um, you know, we [00:42:00] truly love compliance. That's why we're called, I Love Compliance. But again, if you go to, I hate compliance. com it'll come back to us as well, cause I know most people hate it.

Tommy: Well, I was gonna, I was gonna ask you, where can our listeners find you?

Tim Gunther: Yeah, so they can go to Uh, one of, one of a couple ways, uh, you can go on LinkedIn, look me up, uh, Tim Gunther. I'm known as the compliance guy. If you just type in the compliance guy, it'll pull up. Uh, if you go to ilc. biz or ilovecompliance. biz, uh, it's our site and there's a contact us. Um, we're always willing to talk and just find out where people are on their journey because that's, this is a journey for everybody and, uh, and we just want to be that bridge to help them, but that's the best way to do it.

Tommy: Thank you so much for joining. We have to have you back probably very soon. Things change all the time.

Tim Gunther: Tommy, anytime. I appreciate the opportunity to present to you and your, your, your members.

Tommy: I hope you guys enjoyed that conversation. That was a great conversation with Tim. Compliance can be difficult. It's. Usually [00:43:00] 200, 300 pages long, where do you start? And it was just awesome to hear tips and tricks. On where you should focus on and. What to do. Like always, please like subscribe wherever you're listening. It really helps to channel all or a lot. Until next time guys take care.

Outro: Thanks for listening to the KayaCast podcast. We hope you enjoyed the show. Don't forget to subscribe to our podcast and your favorite podcast app, or visit our website to access the full archive of episodes from the show.

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5 Quick Steps to Becoming Compliant (That You Can Implement Right Now)

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