Changes in the Cannabis Sector: Background Checks and More

As the United States undergoes a broad shift in attitudes towards marijuana, it is easy to think of it as having achieved wide acceptance. In some cases, that's true—but at the state government level, cannabis is still a touchy subject. Legislators, perhaps fearful of being seen as too pro-marijuana, continue to enact additional rules and regulations on the cannabis sector. From background checks mandated for every employee in a company to the threat of hefty fines, it's not always the burgeoning industry full of promise it may seem.

Missouri, which recently legalized recreational marijuana, is considering mandatory fingerprint-based background checks for cannabis companies. Even volunteers would have to submit fingerprints to work in a grow operation or distribution facility.

In Oregon, producers of cannabis products could now face up to half a million dollars in fines if regulators determine any of their products harmed the public. What "harming the public" means in this scenario remains murky and unclear. In Utah, the state will place packaging requirements some have called burdensome on all marijuana products. Before being approved for sale, the packaging must receive the "all clear" from the state's Department of Agriculture and Food.

Meanwhile, California continues to move in the opposite direction—aiming to reduce the constraints on the cannabis industry further to encourage growth. For example, the state recently changed its laws to make marijuana delivery services easier to maintain by increasing the amount of inventory any vehicle can carry. Order pick-up points have also been established. More importantly, 15% of the excise tax paid by cannabis distributors will now move to retailers instead—making it less expensive to start up a growing operation.

Even with the first signals from the federal government that re-scheduling might be on the way, individual states are likely to continue to exert substantial power over their own cannabis industries. The continuing enforcement of marijuana prohibition, even in states where it is quasi-legal, such as Kentucky, represents a concern for many thinking about working in the industry, too.

For marijuana growers and distributors, that means navigating a complex landscape where cannabis is normalized in some states but heavily regulated in others. New regulations, such as Missouri's fingerprinting requirement, could threaten the jobs of rehabilitated individuals with a successful job history in the industry.

In a sector attempting to expand beyond the confines of individual state markets to better leverage economies of scale, that's problematic. For now, it seems clear that the only path forward is to work on compliance region by region. Working across state lines could mean engaging in extensive certification processes in each state.

That could continue funnelling these businesses to the west coast, where California currently represents a golden opportunity for growers. How the industry evolves in response to this regulatory patchwork remains to be seen, but one thing is certain: maintaining compliance today demands diligence and attention to detail. Whether that means meticulously completing cannabis sector background checks or choosing a state market with the right tax environment, everyone in this industry must take note.