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Can a Dispensary Lose its License?

Obtaining a license to own and operate a marijuana dispensary is a lengthy and costly process. Even after you become licensed and operational, there are still a plethora of regulations you must comply with. As a dispensary owner, you can expect your retail location to be frequently inspected for compliance by state agents.

These inspections are necessary due to the nature of the product. Because it is in such demand, there are dispensaries that have been found guilty of operating outside of the law. Hopefully, you are not one of these, but you can still get caught up with infractions for not keeping up. 

Licensed cannabis retailers need to prepare for dispensary compliance inspections to avoid fines for violations or infractions. In preparation for an investigation, double-check the areas below; they are the most frequently violated compliance orders by dispensary owners.

Display Business License

It may seem trivial, but not displaying your license properly will cost you points as it is one of the first things that the inspection agent will be looking for. State regulations require cannabis retailers to noticeably display their license so that it is visible from the outside of the building. Ensuring that your agent sees your business license before they enter your location to conduct will set a strong precedent for the rest of the inspection.

Inventory Management & Packaging Compliance 

The operations of dispensary depend on its inventory, so you should have immaculate records of its whereabouts from the time it is brought in to the moment it is sold. There should never be situations where there’s a lack of sufficient explanation for missing stock or inventory discrepancies. Oversights are typically due to human error, lack of quality assurance, careless packaging, and employee theft. Inventory negligence will lead to hefty fines, penalties, and possible suspension or loss of your cannabis license. 


Another area of compliance that will be assessed during the inspection is the packaging and labeling of all products you intend to sell. Each product must meet the set guidelines that are considered necessary by regulating agencies. For example, all state laws require marijuana products to be sold in childproof packaging that comes directly from the licensed distributor. Additionally, the labeling on these products must include specific information such as the weight, name, THC levels and a safety notice. If your dispensary is found to be receiving inventory from an unlicensed distributor, you will be subject to fines and penalties.

Sales and Inventory Records

One of the essential aspects related to compliance within the cannabis industry is the ability to maintain thorough records, specifically those of sales and inventory. Regularly providing sales and inventory records to designated agencies is even required by law. This means that keeping inventory and sales records readily available will save time and stress if an inspection agent decides to audit your business.

Surveillance Footage Records

After taking so many preventive security measures around the premises, don’t get docked during inspection for not properly maintaining your video footage. Inspectors will need to acknowledge the fact that the dispensary is complying with statutes relating to the length of time security logs and video footage is being retained.

Every state has specific mandates regarding how long dispensary owners must keep their security records. The state of California, for example, requires that cameras are placed at all entrances and exits, and record from both indoor and outdoor vantage points 24 hours a day with no interruptions regardless of lighting or conditions. California laws require this video footage to be kept for a minimum of 90 days. Some states, insurance companies, and legal representatives require the footage to be kept for as long as a year.

Illegal Sales

Illegal sales refer to selling to an underage person or unregistered patient, making a sale outside of authorized operating hours and exceeding the daily sales limit for an individual. An inspector or auditor proving your dispensary is illegally selling products is the quickest way to have your license revoked. Many owners avoid these costly errors through point-of-sale systems with automatic controls preventing sales from being made outside business hours and denying purchases without scanning an ID.

The first illegal sale violation typically results in a fine. For example, the State of Washington pulls licenses after the third violation. And it’s not just the state who has a problem with unregulated sales; the Federal Government will take action too. Federal fines for sale violations can reach up to $10,000.

Transaction limits

Sometimes known as purchase limits, transaction limits refer to how much you can sell to a single person in a specific period. However, limits vary by person and product. In most cases, flower is regulated by the ounce, edibles by milligrams of THC, liquids in liquid ounces, and extracts in milligrams. These combined factors can be easily misinterpreted and dispensary owners can easily fall out of compliance. Auditors can inspect your transaction history through your POS records.