Obtaining a medical marijuana business license is a long and thorough process. Therefore, it’s important to keep your eye on licensure. Congratulations, you’ve passed the finish line and you are a fully licensed cannabusiness! But what about after you’ve obtained your license?
This is where we commonly see the wheels fall off the wagon and issues start to arise. So how do we avoid issues before they come up?
We’ve listed five tools that promote:
- Successful cannabusiness
- Empower your employees
- Maintain a complaint working environment in this highly-regulated cannabis industry.
1. Background Checks
This is generally a standard practice for most businesses, regardless of what industry they are in. Presently, MMFLA licensed facilities are required by law to conduct background checks on all employees upon hiring. Individuals with any felony conviction in the last 10 years, or various misdemeanors within 5 years, are prohibited unless the Department of Licensing and Regulatory Affairs (LARA) has granted written approval of the employment.
While some employers may simply ask on their job application whether the applicant has a criminal history, we suggest conducting a formal background check for your records in the event of an inspection by LARA.
There are several background checks available to employers that can vary in what information they show, how long it takes to process, and how much each search costs. Generally, federal background checks reveal crimes prosecuted at a federal level, while state searches (such as ICHAT) will show charges from a state, county or city.
However, not all searches will show every criminal interaction. For instance, sentences of HYTA probation (Michigan Holmes Youthful Training Status for Youthful Offenders) or other diversion programs may not show up on a state background check, but will still be considered during LARA’s review and inspection of your facility.
It’s important that you choose at least one method and adopt a Standard Operating Procedure (SOP) for screening every job applicant. Failure to check each employee results in noncompliant staffing, and subject you to failed inspections and associated penalties. Furthermore, keeping clear records of your employee background checks helps easily avoid these common pitfalls.
2. Employment Agreements
Michigan is considered an “at-will” state, meaning an employer or employee may terminate the employment at any time. This might seem desirable, but there are many benefits to having an employment contract in place. When building a team with a skill set specific to the cannabis industry, your staff may become invaluable. Knowledge of your company’s growing methods or edibles recipes are valuable and you want to encourage your employee to stay with the company.
This agreement could outline conditions to avoid an employee leaving suddenly, or offer incentives that will keep your staff. You may also outline salary expectations and bonuses within this agreement, and avoid future confusion regarding these opportunities.
This contract can also serve to protect proprietary information by outlining what information an employee may take with them if they leave your company. Additionally, it protects non-discussable details that exclusively take place in a work environment. A similar protection you may put in place is a noncompetition agreement. This stipulation can prohibit employees from taking trade secrets to existing competitors or establishing a competing business with the industry experienced gained.
By having a written agreement that protects your business interests and clearly outlines the roles and responsibilities of your employees, you can focus on fostering a positive working environment.
3. Standard Operating Procedures
Every business will benefit from SOPs. This is especially true for cannabusinesses subject to regular regulatory assessment and inspections. Written SOPs reduce training time, create consistency across your brand, reduce errors, increase productivity and meet legal regulatory requirements. Additionally, cannabusinesses greatly benefit by writing and adopting SOPs regarding:
- Opening/closing procedures
- Inventory tracking
- Point of sale process
- Security protocols
- Cash handling
- How to work with LARA in the case of an inspection
While it may seem like common sense, writing down the company’s expectations and step-by-step guidelines avoids new employee missteps. You can also refer to the SOP when LARA inquires as to how your company handles a particular job responsibility.
4. Employee Handbooks
A detailed employee handbook is invaluable to your business and employees. It can serve as the first introduction to your culture, mission and standards. Therefore, it should set the tone for the employment relationship while providing details of policy and procedure. Expectations are more likely to be met consistently when written guidelines are provided. Additionally, management level staff can reference material while answering employee questions or making decisions that are consistent with company goals.
As an employer, there are a number of state and federal laws your business must follow. Your handbook should summarize your obligations to your employees, as well as employee rights and demonstrate compliance for such regulation. It may not be a requirement to include this information in your handbook. However, it’s your responsibility to inform employees and is in your best interest to show compliance.
Your handbook can also serve as an important tool for keeping workplace related issues within the workplace, therefore allowing for simpler resolution. For example, if your handbook designates several managers an employee may report workplace violations to, you may avoid time-consuming investigations or litigation. It’s worth the time spent to have a well written and comprehensive employee handbook for every cannabusiness.
5. Separation Agreement
While a separation agreement is not mandatory, its specific conditions to employee departure is beneficial. This document typically seeks to release the employer from conditions such as compensation claims, wrongful termination or other employment law claims. Additionally, this agreement can grant your business protections as well. You can include measures like a non-compete, which prohibits former employees from working for a competing cannabusiness for a certain period of time.
A non-disparagement clause would further protect your business’s reputation from potential defamation or slander. You may include a variety of other contract provisions specific to your business. Typically, severance payments are made to the employee in exchange for signing such an agreement. Furthermore, this could mean money well spent to protect your cannabusiness in the long run.
Keeping your business compliant is important, but how you run your business will dictate your future success. While these five tools may not provide complete protection for your cannabusiness license, they’ll significantly help in avoiding the most common issues we see after licensure.