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Facing a Canada Revenue Agency (CRA) inspection can be a daunting experience, especially for businesses in industries like cannabis, where regulations can be complex. In this blog post, we'll discuss what you can expect during a CRA inspection, from the challenges posed by new auditors to the importance of accuracy in documentation. We'll provide insights and tips to help you navigate the audit process smoothly and ensure your business remains compliant.
Quick note: the CRA has two different inspection processes for licensed producers. An audit is actually a much more rigorous process that we aren’t going to get too deep into here. What most people call an “audit” colloquially is actually an “inspection.” The rest of this article focuses on such CRA inspections.
Important note: This article draws from what inspections were like while virtual. With the CRA returning to in-person inspections, stay tuned for a new article once there's enough data to confidently share what those are like.
New Auditors and Industry Challenges
When you're been notified of an upcoming CRA inspection, it's not uncommon to find yourself facing auditors who are fresh faces in the field. They often lack experience not only in cannabis but also in the workings of the CRA itself. This unique situation can present challenges for businesses in the cannabis industry. However, it's important to approach this with patience, and a willingness to educate can help immensely. Engaging in clear and open communication can go a long way in helping auditors understand the nuances of your business and the regulatory landscape.
Standing Your Ground
During a CRA inspection, auditors may make requests that seem unreasonable or excessive. As a business owner, you have the right to question and dispute these requests if they go beyond what's required by the regulations. For example, it is not uncommon for auditors to ask you to prepare a spreadsheet formatted in a particular manner. If this is easy for you to do, no problem. However, preparing such a spreadsheet can take countless hours, and it is not your responsibility. As long as you have all the documentation required by the regulations, you can provide that to the auditor, and they are responsible for converting it into a format that suits them. Be prepared to stand your ground while maintaining a professional demeanor.
You Can Ask to Speak with a Supervisor
During a CRA inspection, if you find yourself facing auditors who are not receptive to reason, you can always ask to speak with a supervisor. Many auditors are pretty new to the CRA, which means that they follow their guides exactly and don’t understand that it’s normal in business to have reasonable deviations from the status quo. However, their supervisors have far more experience with the CRA, which means they understand that not everything exactly follows the guide. As long as your actions are reasonable, within the regulations, and well documented, it’s generally ok. Remember, if you aren’t getting anywhere with a specific auditor despite being reasonable and logical, you're well within your rights to ask to speak with a supervisor. Just make sure not to act like a “Karen”!
The B-300 Report
One of the core components of a CRA inspection is providing documentation that supports your B-300 claims. This typically involves specific categories within the B-300 report (e.g. all additions to the plants and dried/fresh flowering cannabis material) for a given period of time (e.g. March through June of 2023). Any part of the B-300 is fair game. Sometimes, the auditor will ask for invoices, purchase orders, etc. to support sales numbers. Keeping well-organized and detailed records for inventory and sales (which you’re required to by the Cannabis Regulations either way) is crucial for a smooth inspection process. Make sure your documentation is accurate, up-to-date, and easily accessible to facilitate the auditor's review. (Pro tip: using CertiCraft will do exactly that!)
Navigating Tough Times
It's important to recognize that the CRA is not an inflexible entity. If your business is facing challenges, such as a major harvest or another critical all-hands-on-deck period, or unexpected setbacks, don't hesitate to communicate this to the auditors and ask for more time. The CRA is generally understanding and willing to accommodate businesses that are going through a difficult period. Openly discussing your circumstances can lead to a more empathetic and supportive audit process. Many of our customers have successfully delayed their inspections by several weeks by simply expressing their circumstances and asking for the audit to be postponed.
Importance of Accuracy
During a CRA inspection, accuracy is paramount. Even seemingly minor discrepancies can raise concerns and trigger further investigation. The CRA places great importance on precision, particularly when it comes to quantities and figures, no matter how small. Making sure that your documentation is accurate down to the last detail is a foundational aspect of building trust with auditors and ensuring a seamless inspection process. At CertiCraft, we disagree with the CRA’s choice to have even a single gram discrepancy be a cause for concern, but since that is how they approach inspections, it’s important for you to ensure that you can back up every number in your B-300.
One-minute CRA Audit with CertiCraft
To make your CRA inspections and audits take literally just one minute, consider using CertiCraft. Our solution is the only one available on the market that completely erases the dozens of hours that a single CRA inspection typically takes. CertiCraft ensures that everybody on your team tracks everything the CRA cares about with a simple interface that requires little to no training, generates the B-300 for you, and keeps audits completely stress-free. We also provide real-time support during an audit if you need an extra hand!
A CRA audit may seem like a daunting process, but with the right knowledge and approach, you can navigate it successfully. From dealing with new auditors and asserting your rights to providing accurate documentation and using tools like CertiCraft, you can ensure that your cannabis business remains compliant and prepared for any CRA inspection that comes your way. Remember, staying informed and proactive is your best strategy for a smooth audit experience.
This article was written in tandem with Jessica B.