Comply or die: Cannabis executives learning the hard way

El Cumplimiento como única vía para escalar en la industria del cannabis

Jim Belushi says that before you have a cannabis company you have to have a compliance company. And we couldn’t agree more. In a hyper-regulated industry such as cannabis, it is vital that the regulations established by the entities that exercise control and monitoring are scrupulously followed.

In Colombia, most of the licensed companies do not go deeply into the technical or legal regulations, nor do they take seriously the obligations they have undertaken in issuing the administrative acts that license them to start activities. Although it is understandable that, after 12-18 years of bureaucratic process, they want to lose sight of their lawyer to make way for their agronomist, the contingency of not complying fully with each of the required provisions cannot be underestimated.

In our experience as an outsourced compliance team for Colombian companies, the average number of flagship networks identified in the initial diagnostic stage is twenty. You read that right, twenty! Up to twenty concrete points of regulatory non-compliance of some kind, of which an average of twelve are items of maximum alert, which would lead to the loss of the license, the feared «resolutory condition». The most common are in the area of contracting, failure to comply with the conditions set out in the act, activities that should not be carried out without prior authorisation, monitoring of cultivated material, and poor completion of reporting formats.

Sources from the Ministry of Justice and Law and the National Narcotics Fund (FNE) have recently confirmed the opening of numerous investigations for non-compliance and several executions of resolutory condition or total loss of license so far in 2020. And, if the clients we have had the opportunity to audit represent a significant sample of the internal compliance status of companies in the industry, it is prudent to anticipate many more in the coming months. The industry still echoes the words of President Duque warning that there is no place in this industry for «garage companies».

Entrepreneur: do not underestimate the importance of maintaining a thorough, detailed and professional compliance practice. Only in this way can you build a competitive and sustainable cannabis business, capable of competing in international markets without regulatory friction. And to take the point of President Duque, we will add: do not be advised by «garage consultants».