The compliance officer’s dilemma

Culture of Compliance

The true measure of success for a compliance officer lies in creating a culture of compliance that permeates the organization. He needs to make every employee a compliance officer of sorts, and the greater his degree of success in doing so, the less the need for any one individual with “compliance” in his title. He is working himself out of his job. This is the compliance officer’s dilemma!




Cost of Non-Compliance

Did you notice the word cannabis doesn’t appear in the paragraph above? The dilemma exists in any industry where there is a high penalty for not following the rules.


  • As the former COO for a start-up that wanted to hold an IPO on an American stock exchange, I was responsible for compliance with the Sarbanes-Oxley Act (SOX). Failure to comply meant not getting listed on the stock exchange.
  • As the former CISO for a company that stored and transmitted payment card data, I was responsible for compliance with the Payment Card Industry Data Security Standard (PCI DSS). Failure to comply meant losing partnerships with suppliers and service providers that were critical to the business.

The penalty for non-compliance in the cannabis industry is usually a fine. Since the first retail store opened in January of 2014 and through the end of 2015, Colorado’s Marijuana Enforcement Division has imposed nearly $1 million in fines. As long as the business is financially strong enough to handle the fine, it at least has an opportunity to continue operating. In many cases, however, businesses have their licenses suspended or even revoked. Over that same time period, the MED suspended 65 licenses and revoked another 47 licenses. Operational license renewal rates have dropped by 50 percent, primarily because of the challenges of running a compliant marijuana business.

As a result, many cannabis companies have hired compliance officers and tasked them with full-time compliance. Ironically, the mere existence of a compliance officer gives everyone else permission to say “it’s not my job, go talk to the compliance officer.” But it’s foolish to think that one person can achieve 100% compliance 100% of the time. Everybody from the CEO to the part-time hourly staffer needs to share in the compliance mandate. It only takes one person to slip up to create an expensive problem.


Know Your Business

Jordan Wellington is the former Director of Compliance at Vicente Sederberg, the law firm that led Colorado’s Amendment 64 campaign and drafted the original rules governing medical and recreational marijuana in Colorado. In any given meeting, he’s likely to share this nugget:


You may think you’re in the marijuana business, but you’re really in the compliance business. If you’re good at compliance, you get to play around with weed. If you’re not good at compliance, you go to jail.

For full dramatic effect, you need to hear it in person. Jordan is not afraid to drop an F bomb! Drama aside, his point is well taken. Marijuana business owners need to understand that compliance is at the top of the priority list, each and every day. Those that don’t understand are literally putting their business lives at risk.


Embrace the Dilemma

So here’s my advice to compliance officers. Embrace the dilemma. Do your best to work yourself out of a job by creating a culture of compliance. Be the compliance champion and rally employees around the cause. Advocate and teach at least as much as you scold and advise. Do these things and you will be successful. And in the unlikely event a short-sighted boss thinks you’re no longer needed, know that your success will quickly carry you to the next opportunity!