A small compliance error can mean the death of a cannabis company. Operators do their best to stay up to date about the complexities of local, state, and federal cannabis laws, but while they spend copious time pouring over legal documentation, attempting to make sense of complex regulatory language, something else may slip through the cracks.
CannaRegs helps clients keep up with constantly shifting regulatory environments and remain within compliance parameters. Every day, a team of lawyers, fluent in local, county, state, and federal law make about 100 updates to the CannaRegs database. The unique repository organizes compliance information and requirements not only based on location, but also by issues including taxes, zoning, licensing, labeling, and packaging.
Chief Executive Officer Amanda Ostrowitz founded CannaRegs to do the research business owners, compliance officers, and others in the industry need. Ostrowitz, an attorney, possesses unique insight into complex legal arenas, having worked for the Federal Reserve. During her time with the government, research into banking regulations led her to realize just how onerous operating a cannabis business had become. “Not only did I learn there were close to eight [local] agencies overseeing cannabis, but my city had completely different laws in place than the next city over,” she said.
The discovery led Ostrowitz to consider how to simplify a system she saw becoming more complex by the day. “I knew we needed to create a legal research platform, which ultimately evolved into a comprehensive policy tool for lobbyists and hyper-local industry professionals,” she said.
Creating an organization like CannaRegs takes much more than one sharp and determined legal mind. The company employs an entire team of attorneys and legal experts to stay on top of an endless tangle of regulations in a growing number of jurisdictions. “Almost 50 percent of our staff are on the legal research team. At least half of these are attorneys. That makes 25 percent of our whole company lawyers,” Ostrowitz explained.
CannaRegs benefits from decades of legal expertise, including Ostrowitz’s, but the company doesn’t shy from young employees or fresh ideas. “When it comes to new-hires, we tend to hire a lot of candidates right out of college,” she said. “We find they are really driven individuals with incredible skill sets. Additionally, they are really excited about working within the cannabis industry, as it’s seen as full of opportunity.”
Lawyers are accustomed to jokes at their expense, and cannabis lawyers are particularly magnetic for corny wisecracks. The tables have turned now, though, according to Ostrowitz. She used to hear “Oh, you’re a cannabis lawyer? Ha ha. Is that a thing?” Now, “there is less of that because cannabis is becoming so normalized,” she said. Despite the serious nature of their work, the CannaRegs staff tries to try to take things as lightly as they can in the office. “Usually, we are just making nerdy regulatory jokes,” Ostrowitz said. To get the punchline, “you had to be there.”
Joking aside, CannaRegs deals with difficult issues. No two states are alike when it comes to laws and regulations. “With Massachusetts, for example, everything is extremely complex because of the way the law is structured and the way the government is formed. Both are different from anywhere else in the United States,” said Ostrowitz. States like Michigan are challenging because they harbor so many local governments. In California, about twenty state agencies are involved in regulating some aspect of the industry. Despite all the chefs in the kitchen, Ostrowitz said she finds getting information from California to be a bit easier than in other states. “[California’s] agencies are compelled to produce relevant info within seventy-two hours following meetings related to cannabis because of the Brown Act,” she said, citing 1953 legislation named after State Assemblyman Ralph M. Brown, who authored the bill guaranteeing public participation in the legislative process. “This means we can get the information we need to our clients very quickly and efficiently.”
Working with the plethora of agencies across the country is vital to CannaRegs’s mission. “We build proprietary systems to manage information, and we also build unique technology and workflows for each state,” Ostrowitz said. CannaRegs invests considerable time in building and maintaining relationships with governments in all legal states and on all levels. Because of the relationships, the company is able to get information almost immediately. “We call hundreds of offices across the country every week,” she said. “Governments have realized answering our calls actually saves them time. Once we have the info uploaded [to our database], then they won’t receive phone calls from everybody else.”
Maintaining friendly working relationships with government agencies allows the company to offer clients detailed, in-depth services that can help them stay out of regulatory trouble. CannaRegs’s Smart Search, for instance, provides access to regulations in each jurisdiction, accomplishing with the click of a mouse what otherwise would be hours of work.
CannaRegs’s event calendar also represents a boon for compliance. The user interface resembles popular workplace project-management tools and often provides information weeks before local governments publish it. “Our calendar tells clients the first time something has been discussed, meaning clients can get involved very early on in the conversation, whatever that conversation might be, [allowing them to get] ahead on a business idea or get ahead in their existing business,” Ostrowitz said. The calendar is synced with CannaRegs’s email alerts, allowing users access to important information instantly. Users may specify the jurisdictions for which they want to receive alerts.
Although, CannaRegs’ clients include attorneys and cannabis business owners, a large portion comprises government offices. They need to remain up to date about what’s happening in their own states and others. Consulting firms, lobbyists, and real estate companies also utilize CannaRegs’ services: Identifying cannabis-compliant properties is one of the most challenging aspects of opening a business in the industry. “Real estate firms find our service particularly beneficial, as they are looking to purchase property in the respective area as soon as the idea is put out there,” Ostrowitz said.
In addition to helping shops keep their doors open, CannaRegs empowers employees and saves time for operators and managers. “We allow budtenders to search their queries themselves, making them self-sufficient and compliant,” Ostrowtiz said. “CannaRegs can be used to coach staff on what not to do, and also can be used as a training tool to ensure staff understands the consequences of non-compliance.”
Regulators are not apt to forgive compliance errors just because an entry-level employee goofed—and errors occur more frequently than one might imagine. “Think of five companies you love right now, and two of those will not be here in five years due to non-compliance,” Ostrowitz said. “It needs to be realized that compliance is not a cost center; it’s the heartbeat. If the heartbeat is gone, the whole thing dies.”
CannaRegs Components
Searchable rules and regulations: Three search functions allow users to browse, search laws, and “smart search” the company’s database. Research that previously took hours may take only minutes.
Custom email alerts: Users receive daily emails about selected cities of interest as new developments, meetings, or announcements are published.
Rule-making calendar: A consolidated, city-by-city schedule of rule- and policy-making events helps users stay up to date about potential and actual changes to laws and regulations.
Official publications: The database offers quick access to forms, official guidance documents, industry bulletins, position statements, product recalls, and more.
