Every commercial cannabis business operates in multiple jurisdictions where regulations are enforced.
Jurisdictional compliance risk varies for each commercial cannabis business. The primary reasons are attributed to the jurisdictions the cannabis product is produced, marketed, transported, or sold in.
When applying a risk-based internal control environment, it is essential that the control activities reduce the identified inherent risk.
Inherent risk
In general, compliance risks related to the jurisdiction risk driver are realized through the jurisdictions the cannabis product is produced, marketed, transported, or sold in.
Control activity
These inherent risks are best controlled through formal control activities establishing effective change management, compliance management, and issue management.
The following sections examine the risk factors, red flags, and mitigation techniques for these issues.