Going to my local cannabis dispensary, I’m greeted first by two security guards, one armed with a Kevlar vest over his uniform. Cameras are ubiquitous from the moment I step onto the property. A number of other security measures and protocols, unseen by the customer, are also place.
As I leave, an armored car with more armed guards pulls up to haul away tens of thousands of dollars of cash, a necessity since credit card companies and other electronic payment companies cannot work with federally illegal cannabis businesses. And all of this happens in a safe, low-crime neighborhood three blocks from a police station.
Security has always been top of mind for cannabis dispensaries in California when calling the police simply wasn’t an option. Today, cannabis retailers face a host of security issues to run their business day in and day out while keeping their employees, customers, and merchandise safe.
We saw this most dramatically in November when at least eight cannabis operations in the Bay Area were looted and robbed by armed gangs. Oakland cannabis operators alone estimated $5 million in the product was stolen and millions more damaged. According to police reports, in November, at least 175 shots were fired in the course of over 25 burglaries cannabis business in the Bay Area.
With cannabis operations putting millions of dollars per year into local city government coffers, the expectation of protection from local police has left many enraged. Some industry leaders have floated the idea of a tax strike, not paying cannabis taxes until state and local officials implement an appropriate response to protect and serve local cannabis businesses.
With hundreds of thousands of dollars of merchandise and tens of thousands of dollars in cash on hand, cannabis dispensaries have been targets of armed, sometimes deadly robberies for many years. This has been the biggest impetus for passage of the SAFE Banking Act in Congress (see November issue of the Playbook for more on the SAFE Banking Act). By allowing electronic payment and settlement, which would reduce the huge amounts of cash currently held onsite, the cannabis business can lower the risk of being a target for thieves, gangs, and violent armed robbery.
A proper security system can cost as much as $65,000 in equipment and setup costs for a dispensary and even more for a cultivation facility. The annual cost of private guards, armored cars, monitoring, and maintaining security vigilance can take up as much as 3% a year of the total cost for an average dispensary
Another factor to consider is compliance. States and municipalities can require a variety of security measures, monitoring, and reporting to be in place, sometimes to multiple agencies. In the state of Illinois, for instance, the Illinois State Police and the Department of Agriculture, Public Health, and Financial and Professional Regulation (IDFPR) are all involved in security compliance.
The cannabis industry continues to change and grow as do the security challenges cannabis business owners face. Since most security is outsourced to security companies, it’s critically important to choose a partner and security solution that keeps compliance top of mind and stays in step with the ever-evolving and expanding cannabis market.
Editors’ Note: This is an excerpt from our Monthly Playbook. If you would like to read the full monthly playbook and join the thousands of others you can sign up below.
