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Why Cannabis Businesses Need Protection to Keep Growing

Cannabis businesses are an attractive target for criminals.

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Opinions expressed are solely those of the author and do not reflect the views of Rolling Stone editors or publishers.

A recent spree of violent burglaries across the U.S. has cannabis businesses on high alert. In a two-week period in October 2021, 25 cannabis businesses in Oakland, CA, were robbed, with damages exceeding $5 million. Washington state’s Liquor and Cannabis Board (LCB) reported that there were more than 50 robberies of cannabis businesses in the state, many of them armed, in 2022 so far. New England has seen a string of organized robberies. Chicago police released a community alert just last month after two cannabis businesses were robbed on the same night — both having been robbed the previous week.

As the director of cannabis markets for Genetec, a global provider of open architecture physical security platforms, I’ve seen firsthand how vital it is that cannabis businesses are proactive in their security measures. Because they market a high-value product in a cash-intensive environment, cannabis businesses are an attractive target for criminals. The product desirability is self-evident, and because Federal laws essentially prohibit banks from doing business with legal cannabis operators, most transactions are in cash. In my experience, an average dispensary may have upwards of $10,000 on hand on a daily basis. This substantially increases the safety and financial risk for legitimate businesses and their employees.

The U.S. House of Representatives has now passed the SAFE Banking Act six times, only to have it stall in the Senate Banking Committee. Given the current challenges and political climate, the prioritization of passing this key legislation is likely low on the list.

Protecting the Business and Employees

In this environment, cannabis operators must take every possible step to protect their products and people. As members of the retail community, cannabis operators should be aware that many of these robberies fall under the classification of organized retail crime (ORC). ORC is a designation given to a criminal enterprise of two or more people working together to steal merchandise and/or cash for personal gain. Merchandise involved in theft incidents is intended for resale rather than for personal consumption or usage.

Organized retail crime was on the rise even before the pandemic, and in 2021, about 69% of retailers said they had seen increased ORC activity that year. Law enforcement resources are spread thin and violent crime takes priority response over burglary and property theft. This means cannabis operators need to pro-actively design and harden their dispensaries and stores with the primary intent of deterring potential theft attempts. The next priority is gaining as much evidence as possible to identify the perpetrators if a robbery does occur. Hardening a robbery target effectively requires a combination of awareness, technology and collaboration.

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Target awareness begins with the operator and the employees themselves. This includes a defined protocol for cash handling, safe cash drops and what to do in the event of a robbery. It should also cover proactive measures, including potential suspect and vehicle identification, as most robbery targets are “cased” in advance of the actual crime. Potential criminals should also be made aware via enhanced lighting and signage that the dispensary is under constant and recorded visual monitoring. That added emphasis could be a deterrent to a tepid robber.

Security design, including reinforced doors, rolldown shutters and ballistic glass, are all considerations in the initial architectural plan. Basic regulation in most municipalities will mandate video cameras, access control and intrusion detection. Panic and duress buttons can be added to augment intrusion detection along with sirens and strobe lights. These features are inexpensive adds that provide strong deterrents. Consider if you need to upgrade your security platform that can monitor multiple sites — this can be worth the initial investment compared to the costs of replacing technology later when it’s determined the existing security technology is inadequate. Time-lock safes are a must combined with employee training on regular cash drops. Many municipalities include these technologies in their operating regulations, but even if they don’t, they should be a consideration for operators.

Working Together

In addition to protecting themselves, cannabis operators should work proactively with other retail businesses within the geography of their dispensaries on ORC burglaries or robberies. If evidence can be collaboratively shared to identify an organized retail crime organization, the combined losses may be enough to prompt investigation and prosecution at the felony level. Many national and large regional retail chains have ORC task forces for this very purpose. They may have established cases working involving the same criminals who are targeting dispensaries. Share video evidence with these new partners. Together, these coordinated efforts may lead to the successful prosecution and jail time of the ORC kingpins on felony charges.

There is an incentive for cities and counties to act. In Oakland for example, cannabis businesses are taxed around 6% on sales. This is lost revenue for the city as the stolen product is sold on the street. At the Federal level, the safety of citizens working in these establishments should be driving the decision to pass the Safe Banking Act as well as the viability of the business itself. Insurance coverage for these business operators is difficult, if not impossible, to obtain. The losses sustained during the rise in robberies have some operators teetering on the brink of solvency. Some of these small businesses are being robbed multiple times. Many may not have the funds to survive another robbery.

The cannabis industry is evolving, along with the legislation to support and guide it — although not always at the same pace. As the industry grows to reach its potential, it’s critical that cannabis businesses are aware of and protect against the threats that arise as part of the ecosystem.

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