A Guide for Dispensaries: What Happens When You Don’t Comply
A year ago, California joined the other U.S. States in legalizing the sale and use of recreational herb. It was a bumpy ride getting to this point and up to this day, things still aren’t so smooth sailing. Part of legitimizing this industry is, of course, ensuring that retailers, cultivators and distributors abide by rules and regulations. The standard compliance regulations were deemed to be unclear and constantly changing at first so businesses were provided with a transition period for them to adapt. Failure to comply will only mean a blunt end to dispensaries.
The BCC is committed to strictly enforce the regulations and they have developed protocols to handle business that do not fully comply with standards set in regulation. This article details the procedures of enforcement and the consequences of non-compliance for your information. Read on and be aware of the disciplinary actions to be served for lack of compliance with laws.
NOTICE TO COMPLY
The Bureau will issue a written notice to comply for violation(s) of regulations found during an inspection or investigation. The letter will contain the nature of the violation and may also indicate the ways in which you can rectify the issue and become compliant. This notice will be served after the inspection before leaving the inspected premises or will be mailed within 15 calendar days after discovery of violation. The business owner has 20 calendar days from being served of the notice to comply and inform the Bureau of the corrections made. Failure to achieve compliance after being served with a Notice to Comply may result to a disciplinary action.
An actual citation is what a business will get for any act(s) which are in violation of any regulation or state law applicable to running a dispensary. The Bureau will issue a citation that may contain order(s) of abatement, fine (up to $5,000) or both. This citation will be in writing and will describe the nature of violation; this will be served personally or by certified mail. Failure to settle the fine within 30 days from the date of assessment may result in further disciplinary action such as suspension or license revocation.
Contesting the citation and request for informal conference are allowed. Request for a hearing should be done in writing and must be made within 30 calendar days of service of the citation. Request for an informal conference, on the other hand, must be done within 15 days after service of citation.
If the business needs more time to correct a violation, the Bureau may extend the time to abate for a good cause. This will only apply to time extension requests due to conditions beyond the control of the licensee/person cited after exercising reasonable diligence.
In cases where the Bureau demands a fine to be paid, the computation below may be used:
Possible Fine Amount = 50% of ADSA multiplied by Number of Days Suspension
The ADSA or Average Daily Sale Amount is computed by dividing the gross revenue by the number of days open during the previous 12 months. The aforementioned formula only serves as a guide for computing a fine amount and the Bureau still has the discretion to adjust the fine depending on the case.
For more serious violations, the Bureau may impose licensing restrictions or petition an interim order to suspend the license. The interim order for suspension or restriction may be issued with or without notice to the business depending on the degree of impact the violation would cause on public health, safety and welfare. A business whose license has been suspended shall post a conspicuous notice of suspension in its premises. This notice must be visibly posted on the premises for the entire period of suspension.
Suspension period may be as little as 5 days or it can go as long as 45 days.
A stiffer penalty like revocation of license may be enforced depending on the nature and severity of the violation or offense. This disciplinary action is commonly applied to cases with multiple violations or with willful disregard or violation of laws or regulations. Having a business license revoked would translate to shutdown of business in an indefinite period.
3-TIER DISCIPLINARY ORDER
In order to make disciplinary orders consistent on a statewide basis, the Bureau released a disciplinary guideline that specifies offenses and recommended penalties or disciplinary actions. The Bureau used 3 levels or 3 Tiers to categorize offenses and its corresponding minimum and maximum penalties.
Tier 1 covers violations that are potentially harmful like failure to comply with security measures, unauthorized storage of goods, failure to confirm age of customers, and unauthorized hours of operation. Tier 1 minimum penalty would be5 to 15-day suspension, a fine, combination of fine and suspension, and revocation stayed or temporarily put aside. Tier 1 maximum penalty would be revocation.
Tier 2 covers violations with serious potential for harm and which involves greater risk and disregard of public safety. This includes subletting of premises, exceeding license privileges, failure to follow good laboratory practices, prohibited attire and conduct, and failure to comply with manufacturing standards. Tier 2 minimum disciplinary action would be similar to that of Tier 1 except that suspension will be longer at 15 to 30 days. Tier 2 maximum penalty would be revocation of license.
Tier 3, the last level of discipline, is for violations done willfully or deliberately. It covers fraudulent acts relating to running the dispensary business including engaging in business practices without the Bureau’s approval, restricting the examination of books or records, retail sale of untested goods, failure to pay fine, failure to pay taxes, and illegal sale of dangerous drugs. Tier 3 disciplinary action may include 45-day suspension, a fine, or suspension-and-fine. The maximum penalty at Tier 3 would be license revocation.
Public safety is the top priority of the Bureau and the disciplinary actions discussed in this article can help ensure public protection. For your business’ protection, it is important that you exert due diligence in ensuring that you are up-to-date with the rules and regulations in running a dispensary in the Golden State. It goes without saying that you must comply with these rules and regulations regardless if they seem to be constantly changing. Remember, this industry is still growing so with it comes some growing pains. The market you are in is a lucrative industry and a highly-regulated one, too. So regularly check your operations, employ the right people, don’t cut corners, and err on the side of caution. Comply with the rules and regulations so you can stay in business and take advantage of the opportunity this booming industry offers.