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Cannabis Regulation Blog

Our latest thoughts on the world of adult-use cannabis regulations and compliance

North Coast Concentrates, the Importance of Vigilance & Marijuana License Revocation

When it comes to compliance, the importance of being proactive can’t be stressed enough.  Last week, Washington cannabis regulators provided a stark reminder of that fact, a lesson that will likely prove fatal for the relevant licensees’ business.  

It all started when an unnamed employee of North Coast Concentrates, a licensee with two locations in the state, was pulled over by local police for a routine traffic stop.   During the course of that stop, police uncovered large amounts of marijuana concentrates and flower. The concentrates were traceable in the state’s track and trace database, but the flower was not.  Neither were properly manifested for transport. North Coast’s licenses were suspended shortly thereafter under emergency suspension procedures, and the state indicates that it will seek permanent revocation as soon as possible.

The apparent diversion of this product by the employee exposed at least two dramatic holes in North Coast’s approach to compliance, first with their accounting for each and every bit of product, and second with their hiring and oversight of personnel.  Of course, it is possible that these “oversights” were in fact intentional: Regulators stated that their investigation has uncovered text messages reflecting an awareness of diversion by at least some others at the licensee. While such knowledge would make the licensee’s conduct all the more egregious, it’s important to stress that even without such conduct, the licensee may still nevertheless have been facing the same regulatory consequences, including permanent license revocation.

Though details continue to trickle out, certain takeaways are clear.  At the most basic level, licensees are responsible for their operations and their product.  Thus, even if certain partners and executives at a cannabis business have the best of intentions, it is essential that they know their team and have procedures in place that can mitigate the risk of rogue actors taking steps that endanger the public and endanger the business and the not insignificant investment that goes into operating a licensed cannabis business.