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Cannabis Security 101: How to Protect Your Business

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November 29, 2018

As tax professionals, we focus a ton on your cannabis business’s financial security.

We’re experts at helping you prevent bookkeeping mistakes, avoiding tax fraud, and making sure your cannabis operation is compliant with state and local tax laws.

But what about the physical security of your business?

Due to banking regulations, cannabis businesses are forced to operate in cash. By some estimates, cannabis companies handle $250,000 to $350,000 cash in monthly sales. That amount of money plus a high value produce makes every cannabis business an easy target for theft.

These security tips are important to protecting your company. Plus, careful consideration of your site security can also boost your cannabis business license application. Here’s what you need to keep your cannabis venture safe.

 

Create security SOPs

Our experts recommend having standard operating procedures to cover everything from inventory management to packaging and labeling, but the security SOP is particularly important. Not only will this guide your staff and, if relevant, security contractor, but this plan will impact the success of your business license application. Some of the elements your security plan should include are:

  • An annual operating budget for your site security

  • Floor plans, blueprints, and site agreements with your landlord

  • Technology specs

  • Vendor/partnership information and vetting

  • Handbooks that can be used for security training

We suggest demonstrating in as much detail as possible the steps you have taken to make sure your site is secure for your staff and customers. No detail is too small! Specific sections of your SOP should include:

  1. Physical location: include a site plan and floor plan. Detail where all the lights are on the property and how each light contributes to the security of the site. Include the perimeter security – walls, fences, door locks, etc.

  2. Security guard vendor: provide a detailed account of the company, your vetting process, and the agreement details. You should also lay out the duties of each guard so there’s no confusion as to who is responsible for what part of the security plan.

  3. Site access: how will the facility be accessed? Who has access to which parts of the building? Give a detailed account of things like parking, staff entrance, keycard/passcode requirements, ID badges, and visitor processing. How will customers visit, and do they have any screening procedures?

  4. Electronic security: this section should cover your video surveillance equipment, vendor information, motion detection and anti-intrusion measures, alarm systems, and fire safety.

  5. Security procedures: how will incidents and emergencies be managed? This section includes how you will train your staff for emergencies, closing procedures, anti-theft prevention measures, and how you will handle suspicious activity.

  6. Hiring employees: outline your staffing strategy, including background checks, onboarding and training, and how you plan to keep personnel records (safely).

  7. Inventory control and tracking: include how you will safely transport your inventory, safe storage plans (with specs), and how you will dispose of unused or damaged cannabis stock.

  8. Information security: your customer’s data is your responsibility, and some people may provide sensitive health information if they are medical cannabis customers. Detail everything from virus protection to backup server locations.

Every cannabis company is different, so your security SOP will be customized depending on whether you’re a retailer, supplier, or grower. Just make sure to be as detailed as possible when it comes to reviewing your company’s security. If anything goes wrong, you’ll be grateful you spent the time getting this right.

Hire Security Guards

Dispensaries in particular need to have well-armed, trained security guards to keep the site safe for customers and your employees. Due to zoning regulations, many cannabis companies are forced to locate their premises on the outskirts of the main downtown area. If something were to ever go wrong, it’s going to take that much longer for the police to show up. There are many guard companies established to serve the cannabis industry. Bottom line: the security company should be well trained, well armed (think Taser, pepper spray, gun, and body camera), and uniformed.

Invest in Secure Transportation

Again, because cannabis companies are usually forced by zoning regulations to property on the edge of town, it’s easy to mark vehicles regularly coming and going from your business. Your drivers and transportation can be easily tracked by interested parties; transporting your product and/or cash can put your business at risk. If you operate a delivery service, that risk increases exponentially.

Luckily, there are many partners who provide secure transportation to the cannabis industry. There’s no need to buy your own armored car; interview, vet, and price out your different vendor options and leave it to the experts.  

Vet Your Employees

Unfortunately, 90% of losses reported at cannabis dispensaries comes from employee theft. Your staff are the people you’re trusting to run your business, serve your customers, and see your investment grow. Follow these five steps to hire your first employees carefully, and make sure they’re trustworthy! Once you’ve got the right people on board, make sure they’re trained on your security SOP.

Get Insurance

Planning and preparation can help you reduce risk, but insurance is really the only way to make sure your company is fully protected. Incidents happen despite our best laid plans, and it’s better to have insurance and not need it than be stuck empty-handed. Check out our guide to learn more about the types of insurance you need to protect your company. Make sure that your insurance is compliant with state law – California, for example, requires cannabis operators to have some insurance.


Budget Appropriately

This is probably the trickiest part of the whole security operation. All of these measures are expensive, but estimates vary based on the vendor and the size of your operation. Security cameras can run a dispensary between $10,000 - $300,000, depending on the size of the space. Industry experts Canna Security America say that a system can cost as little as $5,000 or as much as $300,000, depending on what bells and whistles you add on to your package.

If you have questions about writing these expenses off in your tax return or finding a partner in the cannabis industry who can guide your business grow, get in touch. We’re happy to give you feedback on your finances and business potential.

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