California Cannabis Businesses Should Prepare for DCC Inspections

California cannabis businesses should steel themselves for the reality of an unannounced inspection by state Department of Cannabis Control (DCC) compliance officers – some of whom have been showing up armed at inspection sites.

As our Los Angeles marijuana business lawyers can explain, it’s not the first time pot shops have been subject to inspections. It’s just that officials handling it in the past typically gave companies a heads-up – often several days of notice – before showing up. But according to recent reports, there has been a surge of drop-in, no-notice inspections. The 24-to-48-hour heads-up is no longer something your company can count on.

Given that even minor transgressions or oversights might compromise your ability to keep your doors open, it’s imperative that licensed California cannabis businesses be ready for a DCC inspection out of the clear blue sky.

Prime Targets of California DCC Inspections

If a company isn’t following state marijuana law and guidelines to the letter, DCC can issue citations, fines, and even license revocation. As this new aggressive inspection campaign is under way, it’s unclear how nit-picky inspectors are going to be, but we do know the agency has expressly stated there are a few major compliance rules on which they’ll be devoting a heavy focus. Those include:

• Compliance with Track & Trace. Companies need to be fastidious about maintaining their METRC compliance records. That requires plants/batches to be correctly tagged, placed in storage, and submitted into the track-and-trace system. Our L.A. marijuana lawyers know it’s a tedious process about which many clients grumble. However, slip up on this front and it’s likely to cause problems during an inspection. Even seemingly inconsequential requirements like ensuring all tags are clearly visible to anyone within a certain radius of the plant can result in a track and trace violation.
• Property modifications. If you intend to change or update the physical facilities out of which you operate, you must obtain the DCC’s prior approval. This could be anything from knocking out walls to simply moving a certain part of your business operations to a separate side of the building. This is likely going to present the biggest headaches for growers, given that their government fees and size caps are based on their canopy square footage. Manufacturers, meanwhile, will want to make sure they aren’t overstepping the bounds of license by producing products that haven’t been previously disclosed/approved by the state DCC.
• Property access. Your premises needs to be secure. Retail facilities obviously allow patrons to enter off-the-street, but supplies should be adequately secured and there should be numerous protections in place for off-hours. Meanwhile, access to cultivation farms, manufacturing facilities, and lab sites should generally be limited solely to authorized personnel. Businesses should have proper gating, locks, cameras, and alarms.
• Workplace safety. If there are potential on-the-job hazards, they need to be addressed immediately – because of unannounced inspections but also just for the safety and well-being of your staff and customers. No doubt this is a unique industry with special considerations, but state Cal/OSHA workplace safety requirements still apply.
• Records. California cannabis companies can be compelled at really any point to turn over records they are required to keep – from certified lab test results to METRC records to auto insurance records to employee contracts to surveillance videos (which they must keep for a full 90 days). Businesses also need to have their license properly displayed on site.
• Transparent cultivation processes. Cannabis farmers are held to a high standard of accountability when it comes to providing DCC with detailed plans on practices ranging from light and energy consumption to managing pests. If your current operations deviate even in the slightest from the blueprints and plans that DCC has, the inspector is going to catch it. Make sure if you make changes to run it by your cannabis business attorney to see whether you need to submit a review request before pushing full steam ahead.