California’s Department of Cannabis Control (DCC) is the state’s primary cannabis regulatory authority. DCC’s predecessor agencies often gave several days’ advance notice before an inspection. Since its formation, DCC has taken a vastly different – and more aggressive – approach to cannabis inspections. Our California cannabis team is now seeing drop-in, no notice DCC inspections as a matter of course. The “lucky” licensees will get 24-48 hours heads’ up.
Given all of this, licensees need to prepare for a DCC inspection at any time. And as you can guess, this is an issue for a lot of folks in the industry. While DCC inspectors can look for any kind of defect in a licensee’s operations, there are some big-picture issues that inspectors are looking for. They include things like:
Track and Trace Compliance
Hands down one of the most common things we hear about from businesses facing inspections is questions about METRC compliance. Having plants or batches properly tagged, stored, and entered into the track and trace system is the bane of many operators’ existence. Failing to do so by the books can lead to immediate issues for inspectors. It’s not uncommon for the agency to send notices of compliance demanding correction of METRC tagging issues within just a couple of days. And they can be for relatively minor seeming things as well, like tags that are not clearly visible to anyone in the presence of a plant.
The DCC has the right to demand copies of a host of certain kinds of records at basically any time. This includes not only written or METRC records or lab testing certificates of analysis, but also copies of surveillance records which must be kept for a minimum of 90 days (which can be longer per local law). It also includes things like insurance policies for distribution vehicles, records of employees, certain contracts, and more. Failure to keep records or turn them over during a DCC inspection can lead to disastrous consequences.
On sort of a related note, licensees are required to display their license within their facility. While this isn’t a recordkeeping issue per se, it’s easy to get dinged for not printing out the most recent copy of a license and display it in a facility.
Modifications to premises
Licensees are required to seek the DCC’s prior consent before modifying their premises. This obviously includes things like throwing up or tearing down a wall. Many people don’t realize that simply changing the location of where specific cannabis activities are conducted can require preapproval. So if a diagram says that one room is used for labeling and another for storage but a licensee decides to move the label machine into the storage room, that’s a potential violation that an inspector is looking out for.
This is especially a problem for cultivators whose fees are based on the square footage of canopy area. DCC inspections often involve measuring canopy area to ensure that cultivators don’t exceed their cap. Manufacturers likewise can expect the DCC to ensure that they are not engaging in types of manufacturing not previously disclosed to DCC.
Cultivators are required to submit detailed pest management plans and lighting diagrams in their applications. If a cultivator uses pesticides that were not disclosed on their pest plan, or lights of a different wattage from what was in their lighting diagram, they can be rest assured that this is something the DCC inspections will catch. Likewise, inspectors will look at their weighing devices to determine whether they meet DCC regulations.
Access to premises
DCC inspectors will also look to see whether licensees comply with premises access rules. Other than retail facilities, licensed premises are generally off-limits to outsiders. Even retail facilities are subject to rigorous age gating. Failure to follow these rules can be disastrous for licensees.
How to prepare for DCC inspections?
Unfortunately, there’s not a great way to prep for something you don’t know is coming. The best thing anyone can say is to follow all the rules. In all likelihood, there will be little to no notice. DCC publishes Disciplinary Guidelines that outline how aggressive it can be to enforce its rules (very aggressive). So it’s best to not let compliance lapse as a proactive measure.
Even though DCC will often give licensees a chance to correct rule violations (unless they are massive), it’s not a good business model (or bet) to wait to comply until a DCC inspector is walking through a facility.
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