8 Tips to Avoid Dispensary Fines and Lawsuits In Canada

Cannabis legalization doesn’t mean businesses can no longer be given dispensary fines. Legality is not an all-encompassing term, especially since cannabis is still largely controversial. 

On October 17, 2018, Canada passed the Cannabis Act. It legalized cannabis in the country but also provided a strict legal framework for substance possession, sale, and distribution.

The advantage to having a cannabis business in Canada is that the law in the country is clear. In the United States, cannabis is illegal on a federal level, while some states have legalized its use, making regulations quite chaotic. 

Business owners must remain on top of these ever-evolving regulations, which is a real challenge to running a dispensary. They know they have the market, but there are rules they must adhere to. 

Cannabis regulations in Canada may be clear, but businesses must still be vigilant to avoid facing lawsuits or paying exorbitant fines. 

What are dispensary fines and lawsuits in Canada?

To understand dispensary fines and lawsuits, we need to understand the goals and tenets of the law. 

There are three reasons why the legalization of cannabis in Canada has a strict legal framework that dispensaries and the public need to follow:

  • To prevent minors from buying cannabis 
  • To prevent criminals from making money from cannabis 
  • To protect public health and safety by making legal cannabis accessible to adults 

What is legal?

Adults 18 years old and older are allowed to do the following:

  • Publicly possess up to 30 grams of dried cannabis (or the equivalent of non-dried cannabis)
  • Share up to 30 grams of legal cannabis with other adults 
  • Buy dried or fresh cannabis and cannabis oil from licensed retailers 
  • Grow up to four cannabis plants in their residence for personal use 
  • Make cannabis products at home as long as they do not use organic solvents to make concentrated products 

What are Cannabis fines and penalties

There are fines and penalties for dispensaries that sell cannabis to those under 18 years old. The maximum penalty for infractions is 14 years in jail.

Additionally, cannabis businesses in Canada are limited by the following regulations:

  • They should not make products appealing to minors 
  • Packaging and labeling of cannabis should not be enticing to minors 
  • They cannot sell cannabis on vending machines and other self-service systems 
  • They cannot promote cannabis on platforms accessible to minors 
  • They cannot hire minors as part of their workforce 

Violations could mean dispensary fines of up to $5 million or a three-year jail term. 

Cannabis products should also be appropriately labeled since mislabeling can lead to lawsuits. Canada health regulations state that variance in cannabinoid content should only be in the 15% range. 

Top things to consider to avoid a lawsuit at your cannabis dispensary in Canada

Lawsuits, dispensary fines, and penalties are situations any business wishes to avoid. After extensive research, we discovered the eight things to consider to prevent a lawsuit, fines, or fees at your dispensary. 

Let’s dig in.

1 - Stay on top of important legal updates in Canada.

Dispensary owners must learn the provisions of the Cannabis Act before they open their businesses to the public. They must be thoroughly educated on the regulations in the specific province or territory in which they will operate their dispensary. 

Each Canadian province and territory has responsibilities for distributing cannabis in its area. They have their regulations regarding the following:

  • The sale of cannabis in the area
  • The location of cannabis dispensaries 
  • How stores operate within the jurisdiction
  • Who is allowed to sell cannabis in the province/territory

Businesses must procure a license from the local government to start selling cannabis. Further, the province or territory may also set restrictions, which can be stricter than the national law:

  • They can lower the allowed weight for possession 
  • They can increase the minimum age 
  • They can specify areas where cannabis may be used in public
  • They can set more stringent requirements for the cultivation of cannabis for personal use 

It’s not enough that businesses are aware of these laws—they should also monitor updates or amendments to the law. They can monitor by regularly checking the Department of Justice’s official website.

Dispensary owners can also find up-to-date info on the territories’ official websites:

2 - Hire a consultant or lawyer.

Operating any business takes up a lot of an owner’s time and energy. Cannabis legalization is still a relatively new and complex field, so situations will come up now and then that will impact dispensaries. 

Hiring a cannabis consultant and lawyer will certainly help dispensary owners stay on top of new regulations and updates on laws and business compliance requirements. 

What a cannabis consultant can help you with.

A consultant will be with you every step of the way, from the preparation of specific requirements to the application for a license. A consultant will also advise you on business and operational matters. 

When the business is already operational and performing well, the consultant can also recommend vital steps for the expansion of the business. 

A consultant will be a very helpful guide in complying with the law and hiring the right people for the dispensary. A consultant is also vital in providing industry insights to help the business grow and achieve long-term success. 

What a lawyer can help you with.

Dispensary fines and lawsuits can be very expensive. Hiring a lawyer who will guide the business through the legal implications of opening a cannabis dispensary makes sense. 

After all, Canada’s Cannabis Act is still relatively new, and businesses must have a legal partner to help monitor and navigate all developments in the cannabis industry. These legal experts have their ears on the ground, and they have connections that will help businesses shift and change to meet any new regulations that the state, territory, or country will mandate in the future.  

3 - Use technology to avoid labor lawsuits.

Having a consultant and a lawyer will help make sure the business does not get entangled in legal violations and lawsuits. Technology can complement that advantage, as many different software applications can help dispensary owners avoid violations. 

Track and trace technology to avoid lawsuits.

Cannabis may be legal in Canada, but it is still regulated, from possession to production and distribution. Health Canada is tasked with tracking the flow of cannabis in the country. Cannabis dispensaries are also responsible for submitting a monthly report of cannabis transactions or cultivation to the provincial or territorial authority. 

Tracking tools to avoid labor lawsuit.

A labor lawsuit incurs tons of fees and eats up any business’s time and resources. To ensure that your dispensary business doesn’t have to go through any of that, you can use certain tools that will efficiently keep track of employees’ attendance and activities. 

Cannabis software with time tracking and facial recognition will automatically verify each employee’s time-in and time-out, track their break periods, and monitor their activities while on site. This type of automation ensures that all employees get their mandated benefits while businesses get the most out of their work hours. 

Payroll software to avoid dispensary fines.

Every dispensary business should have integrated and cloud-based dispensary payroll software to make it easy for administration and HR departments during paydays. The ideal software should have integrated smart automation, calculations, data transfers, and compliance. This will ensure that all employees are paid on time and correctly—an essential element that will prevent labor-related complaints and lawsuits.

4 - Don’t do anything illegal.

Why do some entities resort to illegal operations like underground cultivation or underground sale of cannabis that exceeds the limit? For one, it’s a big business. Since the legalization of cannabis in Canada, the industry has contributed over $43.5 billion to the national gross domestic product (GDP). 

However, the repercussions are terrible if illegal businesses get caught. The owners could face jail time, and there will be numerous fines and penalties. Moreover, they will not be allowed to work in the cannabis industry again. 

When you follow the law, you can boost your reputation, which will be the key to the longevity of your cannabis dispensary. So, always keep operations above board: distribute and cultivate only the legal amount of cannabis and never sell to minors. 

5 - Invest in good HR protocols and tools.

Human Resources departments play a crucial role in cannabis dispensaries. They are at the center of the hiring process, organizational development, reinforcement of business values, and even in the investigation of misconduct within the organization. 

This is also where cannabis consultants and lawyers come in handy, as they can assist HR managers in setting standards for the company’s staffing and culture.

A good HR team should also be complemented with high-quality tools for a more streamlined approach. KayaPush, for example, integrates human capital management software that allows the HR team to easily access the dispensary’s employee data. HR doesn’t need to spend hours manually going through files for each person in the entire organization.

Dispensary businesses can also use software or applications that will let employees communicate their concerns to upper management. With the promise of anonymity, this openness can encourage confidential reporting of misconduct or assault in the workplace.

6 - Keep pristine records.

Records are crucial for cannabis dispensaries, and they must be neatly filed and organized at all times. 

Policies and procedures.

Every organization needs to have thorough documentation of its policies and procedures. This ensures that product quality, working environment, and all other crucial elements of business operations are not compromised no matter how many employees, HR personnel, or even management teams change hands. 

Accounting and employee records.

Maintain thorough organization of the following records:

  • Operating cash
  • Accounts receivable
  • Accounts payable
  • Inventory
  • Team members and other personnel
  • Security - physical and cyber

Legal documentation.

Records must also include pristine copies of dispensary licenses, tax records (including the employees), payroll, and regular recurring fees. 

7 - Train your staff on compliance.

Part of your dispensary’s branding involves training your staff to do things uniformly. This includes greeting customers both in person and on the phone, via emails, live chat, and even text messages. Your branding should also be actualized in your physical store, such as packaging and signage.

Your staff must also be trained thoroughly on legal compliance in Canada. Everyone in the store should know that they are not allowed to sell or distribute to minors. Ask for ID as often as warranted, and learn to identify potential fraud. 

Remember that your store is not allowed to display cannabis products that would be visible to minors from the outside. 

8 - Enlist a compliance officer.

A compliance officer conveys new laws and regulations to everyone in your business. This is an important position in a cannabis dispensary—local regulations could still change very quickly because of the novelty of the law. 

What does a compliance officer do?

A compliance officer ensures that all cannabis-related laws and regulations in Canada are followed at all times. The officer must create a standard operating procedure for all elements of operations to dictate best practices. If there are violations, the compliance officer will also investigate. 

A compliance officer should be updated on all local cannabis regulations. They should also be in touch with local regulators, especially when new guidelines are set. 

Protect your dispensary with the use of technology

We hope this article has helped you learn about the different ways you could be at risk and how you can overcome these challenges.

Protect your reputation and finances by ensuring your cannabis dispensary is on top of all local laws and regulations. Streamline your organizational and operational functions with KayaPush

KayaPush is a software solution that allows dispensary owners and management to focus on the operational side of the business. The software team will take care of payroll remittances, HR activities, time and scheduling, tracking, and law compliance. KayaPush will give your business end-to-end compliant solutions that could save you from lawsuits and dispensary fines.

Want to learn more about Canadian payroll for your cannabis dispensary? Download our free guide below!

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