Commercial cannabis businesses may be exposed to geographic risk through their business locations, transactions with vendors, and transactions with customers.
Illicit cannabis market risk varies for many reasons, but within this risk driver, they are primarily attributed to high intensity drug trafficking areas.
When applying a risk-based control environment, it is essential that the control activities reduce the identified inherent risk.
Inherent risk
In general, illicit cannabis market risks related to the geographic locations risk driver are mainly exploited through operating in, or relationships with suppliers and customers in, higher-risk geographic locations.
Control activity
These inherent risks are best controlled through strong vendor management and ethics and whistleblowing control activities.
The following sections examine the risk factors, red flags, and risk mitigation for these issues.