6 Components of Cannabis Compliance Strategy for Licensed Producers

As much as we wish we could tell you otherwise, running a cannabis business in Canada is not a simple undertaking. There are countless things to keep track of, such as staffing, overhead costs, and government compliance. It can take a lot of effort for Canadian licensed producers (LPs) to stay afloat.

On the bright side, having a solid cannabis compliance strategy can free up your resources and allow you to focus on other vital matters in your business. By creating a functional and straightforward approach to staying compliant, you will stay in good standing with the government, save time and headaches for yourself and your staff, and improve the overall ease of your operations. It's a no-brainer for building an efficient team and successful cannabis business. 

Our expert insights, guidance, and best practices will help your business maintain its standing in the ever-evolving cannabis regulatory landscape.

1. Monthly Reporting

What it is & Why it Matters: Every month, licensed producers must submit reports to the CRA and Health Canada detailing various aspects of their operations. These reports include information on production, sales, and even waste disposal practices. Even though it may seem routine, generating these reports can be challenging for many producers.

The Challenges: One of the main difficulties is having the right tools and time to input all the necessary information required by the government. It can take a lot of work to prepare monthly reports. The government needs exact numbers, and working backwards can be challenging when something isn't adding up. If you don't have the tools to collect the relevant numbers, preparing these reports efficiently can be a hassle.

Another challenge is production staff properly documenting their work. With so many actions to account for, it's crucial to have an easy-to-use system to track data accurately and quickly generate monthly reports.

How to Tackle it: One solution is to use complex Excel spreadsheets. While this can work great for some teams, it can lead to frustration and errors for others. Adjusting the spreadsheets when things shift or expand can be a nightmare.

We're biased at CertiCraft, but we know from many testimonials and case studies how much relief we bring our customers who use our compliance software. CertiCraft ensures nobody misses critical data and generates B-300 and CTS reports with just one click. It's updated when regulatory changes happen, helping you stay ahead of the curve. Using CertiCraft slashes the time it takes to create and submit monthly reports to just one minute!

2. Day-to-Day Record Keeping

What it is & Why it Matters: Efficient record-keeping isn't just a regulatory requirement; it's a crucial tool for monitoring operations and quality control. It's vital when proving compliance during Health Canada and CRA audits or inspections.

The Challenges:  Managing tasks like plant cultivation, bulk product processing, and case packaging, along with various quality control parameters, can be overwhelming. Relying on manual methods like paper systems or spreadsheets to track everything is time-consuming and error-prone, which is frustrating for Quality Assurance Personnel (QAPs).

Even in the seed-to-sale and ERP software world, many licensed producers still face similar challenges. These complex software systems lead to user errors and employee frustration. These slip-ups result in report discrepancies that are hard to trace, which can waste countless hours for QAPs to identify the root cause. It's not a good use of their time and can be easily avoided. 

How to Tackle it: Again, we are biased here, but CertiCraft is the only cannabis seed-to-sale compliance software created in Canada. CertiCraft is intentionally designed to simplify regulatory requirements. Its intuitive workflows ensure staff tracks their work in real-time effortlessly. Unlike other systems retrofitted for compliance, CertiCraft is purpose-built, minimizing the risk of errors and enabling QAPs to find and fix mistakes quickly. It's the most user-friendly cannabis compliance software on the market, designed to make your operations smoother and audit-ready.

3. Audits and Inspections

What it is & Why it Matters: When facing CRA or Health Canada audits, it's not a matter of "if" but "when." These thorough examinations can be nerve-wracking and even occur several times a year.

The Challenges: While audits ensure compliance and transparency, they can be disruptive and stressful. Last-minute scrambles to gather data in government-required formats, especially when discrepancies are found, can take up valuable time.

Another challenge is the need for more standardization in the evaluation process. Health Canada and CRA auditors have varying interpretations of regulations and policies, leading to inconsistent observations. This lack of uniformity has been a contention within the industry, as businesses often need to grapple with differing expectations from one audit to the next. We discuss this further in this article about Health Canada Audits. 

How to Tackle it: As discussed in the "Day-to-day Record Keeping" section, effective record-keeping is crucial for audit preparation. Spreadsheets, paper, or existing seed-to-sale systems may seem convenient, but many lack a primary focus on compliance. CertiCraft, the only system designed fully around compliance with the Canadian Cannabis Regulations, streamlines this process by generating CRA and Health Canada audit documents within minutes. Auditors have told us they appreciate CertiCraft's alignment with their checklists, making audits quick and easy. It's a win-win for both licensed producers and government representatives.  

4. Packaging and Labelling

What it is & Why it Matters: Health Canada issued 15 non-compliance reports between 2021-2022, including unsatisfactory packaging and labelling as one of the infractions. Imagine going through the painstaking work to release a product, only to have packaging or labelling compliance issues that make you recall everything 😱. It can be a massive headache after an already tiring process. 

The Challenges: Health Canada's strict rules severely limit creative branding. There is a significant limit to the amount of information that's allowed on cannabis packaging and many things that LPs can't do. Mandated child-resistant packaging generates excessive plastic waste. Instead of being a leader in the eco-conscious space, the cannabis industry has next to no wiggle room when it comes to innovation in packaging due to government regulations. (We discuss these challenges in more detail in this blog post.) 

How to Tackle it: Overcoming packaging challenges involves thoroughly grasping Health Canada's labelling regulations. Minor errors can lead to major non-compliance issues. Details matter; even a logo larger than the government cannabis symbol can result in a penalty. If you have the budget, consider collaborating with an experienced design team or labelling service with lots of experience within the regulated cannabis industry. It will save you time and effort as you prepare your products for the market. 

5. Lab Testing & Results

What it is & Why it Matters: Lab testing is a crucial step in cannabis compliance that ensures consumer product safety and quality. It confirms adherence to Health Canada's standards, covering factors like pesticide levels, contaminants, mould, and purity. Cannabis businesses collaborate with licensed labs for these tests.

The Challenges: Cannabis producers face unique challenges, notably dealing with microbial life (bacteria, yeasts, mould, mildew, etc) in product samples. High levels may require irradiation, impacting product quality. Lab testing costs, exceeding $1,000 for necessary tests can strain financial resources. This pressure can limit cultivar variety, reducing product diversity for consumers. In addition, the lack of standardized Health Canada regulations and audits for labs can result in wildly inconsistent test results.

How to Tackle it: Building a solid relationship with a lab is essential. Regular communication and collaboration can help licensed producers navigate the process more efficiently and manage costs. Choosing a reputable lab is crucial, given the government's increasing scrutiny of shortcuts. Some LPs strategically split tests between labs for cost efficiency, focusing only on cannabinoid testing for THC and CBD counts once they have their primary suite of tests. Testing solely for cannabinoids is much cheaper than the full suite of lab tests.

6. Standard Operating Procedures (SOPs)

What it is & Why it Matters: Standard Operating Procedures (SOPs) are the backbone of any regulated cannabis facility. They are vital when applying for a production license and guide the facility's operation. SOPs serve as the blueprint for daily tasks and shape the facility's compliance strategy since they define how your team spends their time daily. 

The Challenges: Crafting effective SOPs is a delicate balance. They must be simple, flexible enough to adapt to changing circumstances, and comprehensive enough to cover all reasonable scenarios. Extremely detailed SOPs can be fussy and tiresome and, if not followed and documented correctly, may result in Health Canada penalties during audits. 

How to Tackle it: SOPs should evolve with operations, realistically depicting how the team functions. By writing them in the simplest terms possible that everybody on your team can follow, your team will follow the SOPs - a critical part of compliance. Giving them regular updates based on what works for the team helps streamline operations, reduces overhead, and supports efficient growth.