[{}Chapter: Introduction
Jake: I am your host Jake Litke, the CEO at MediaJel. Today we have Jenny Germano who is a well-tenured cannabis expert, helping companies launch, merge, and handle compliance as an overall topic, but a lot of different things touch compliance. We deal with a lot of compliance on our end, but it's generally around advertising laws, of which there are many and sometimes annoying to deal with.
Jenny: Oh gosh. I'm sure.
Jake: Yeah. So, um, Jenny, maybe we could start off talking about how you found your way into the cannabis industry, which is kind of what I like to ask everyone. And you've been here for a while, but how did you end up in the cannabis industry?
Jenny: Yeah, I would... well, let's go back to 17 years ago. I was part of the fallout of the 2008 recession, and I was having a hard time finding work. I come from the restaurant and hospitality industry. I spent 23 years of my life working in hotels, restaurants, from Colorado to when I lived in New Jersey and also in Ohio. And so I experienced the recession in 2008 and I started looking for a new job. And in 2009, I was able to secure a job working in a small boutique medical cannabis dispensary. And literally at that time it was really challenging because everyone's like, "Well, you don't have any cannabis experience." And I kept saying, "Well, where do you get cannabis experience in 2009? There's no training. There was nothing available other than I was just a consumer." So this dispensary actually brought me on where I was basically an intern and did not make any money, and I was also working at a hotel in downtown Denver and then also working at a catering company. So I was working three jobs, and that was pretty much my foot in the door here in Colorado in the early days. This was before we had the regulatory framework set up. We were not adult use in those days, we were still just on Amendment 20 for medical cannabis. And then in 2009, it just exploded where all of a sudden there were dispensaries popping up all over Denver and in Colorado. And just from there, I worked my way up the ladder managing and running these vertically integrated operations. And then I founded my company in 2015, ICS Consulting.
Jake: And ICS Consulting, you work with all sizes of companies, right? You've worked with small companies, MSOs, single operators. And is that across the whole country? Have you worked in all the different markets?
Jenny: Yeah, I mean, I feel like I've touched a lot of them. Especially over 11 years, I just say I work for micro to MSO. So from really small mom and pops, social equity, micro businesses, however they label them in each state, to medium-size to multi-state operators. And pretty much I've been able to dabble in almost every state, 20 plus states now over the last 11 years. It could just be maybe I did an audit in one state for somebody, or I came in and helped them build out their compliance program, just because I do such a wide variety of things that operators need help with in a mature and a new and emerging market. So it gives me the opportunity to dip my toes into a lot of the different states.
Jake: Yeah. So, what parts of these businesses do you... I mean compliance is broad. There's a lot of laws, right? Compliance could be you need cameras in the right places in your grow house. It could be you need to have certain signs on the walls. How is it? Do you basically go into the state and look at the entire spectrum of compliance and you have to understand all of that?
Jenny: Yeah, it's actually a lot of work, I'm not going to lie. I think I will say Colorado prepared me for all this. Colorado, when we had two sets of regulations when the adult use market launched, we had the adult use regulations and the medical, and each rule set were 900 pages. I had to learn that and understand that. So being that rigorous and that rigid and overregulated in Colorado really prepared me for the entire national market. So it's very easy, I've been on a plane studying the rules and regulations before I was about to go into a state and do an audit. It's really not hard for me to prepare. I think there's so many great tools out there than there were 11 years ago to help somebody like me be prepared and organized to go into a state, and if they're looking, you know, if that client or company's looking for specific things, it makes it even easier to target down that compliance nuance.
Jake: Yeah. Now, you mentioned audit, and I think you mean you go in and do your own audit to tell people what they're maybe not doing correct, what they are doing correct, but what does it look like from an actual compliance audit perspective in these states? Who is coming in and checking to make sure that things are compliant?
Jenny: Sure. Yeah, so the audits I do are more the regulatory compliance operational readiness audits, right? So people are prepared for when the state could pop in and surprise them for a surprise inspection. And so then you have the regulatory body in each of these states where they come in for their annual inspection, and you might not necessarily know what they're looking for. Sometimes in some states they schedule them and other states now they just show up and there's a surprise, and every year they're looking for something different. So right now that's really what's holding these operators accountable, is the state regulators, but also the local municipalities. It really depends on the state, we're all in silos because every state is different, right? That's what we have to do right now, we're regulated by the states. And you know, for example, Denver County, the health department is involved, they come and inspect dispensaries, but maybe in another state like Michigan, maybe the health department doesn't come in and inspect facilities in Michigan, maybe it's a different branch of the government. So it's really different all across the board, but I think really the municipalities, they're heavily involved as well, and they're keeping everybody on their toes.
Jake: Okay. And what is the success rate, or, I have to imagine when an auditor comes in they can probably find something to complain about. Is it, is there always a list no matter how buttoned up you have things, or do people ever just get a clean bill of health on an audit?
Jenny: This is such a great question, and for any consultants or employees or operators listening to us talk about this right now, I'm sure they're going to relate to what I'm going to say next, is that you could have five inspectors or regulators or compliance officers, or whatever that state calls them, come in and all five say different things. They'll all say something different. One inspector will come in and say, "Oh, everything looks great," and then a month later maybe all of a sudden you get a different one and there's turnover, and they're going to say, "Oh, you need to move that camera three inches." So it's really kind of like where it's at across the state nationally. And I know that comes up a lot, operators tell me that happens a lot with them, that they'll come in and they get these different things, or they'll say things that aren't even in the rules and regulations and they don't understand why they're bringing it up, and they're not going by the book. So it can be a pretty mixed bag out there.
Jake: And do you find that some states are more or less difficult to work with in general? Like, for example, in digital advertising, there are states like Florida that are more difficult because you have to get the ad units created and approved. Pennsylvania has similar issues, Ohio is very strict on what you can and what you can't do. And so, like you said, each state is basically its own little sovereign nation of cannabis laws. Although there have been a fair amount of copy-paste, at least I've seen that in advertising.
Jenny: There's actually specifically a pretty vague sentence that someone put in one of the state laws around advertising, it got copy-pasted into other states' advertising rules, which is unfortunate because it's an unclear sentence.
Jake: Oh yeah. So, to that point, how much of the rule set is consistent, if at all, amongst the different states? Like, is there a core set of things, like almost every state requires X, Y, and Z, and then there's these other variable things on the edges?
Jenny: Yeah, I think they're pretty consistent, but they're just tweaked a little bit differently. I think for the most part, every state, child-resistant packaging is a good example, right? Most states are on board for child-resistant packaging and testing regulations, but then the testing regulations are going to be completely different all across the board, all across the country, and what they require as far as the full panel testing requirements. But then packaging is similar, we all know we have challenges when it comes to packaging, but one state might require you submit all your packaging ahead of time to get approval and that they want to do a regulatory review. And in states like Colorado, they don't require regulatory review, you can go ahead and get your packaging and labeling and your marketing and all that stuff designed around your product and then go to market, and you're not really submitting for approvals for those types of things. So I think all across the board we all have security and packaging and labeling and child-resistant requirements, but under each of those categories they all look a little different.
Chapter: Most Common Compliance Failures at Retail
Jake: Yeah. Okay, what do you see as the most common things that a cannabis retailer runs afoul of, if you know, from a compliance perspective? Like, what are the greatest hits?
Jenny: I would say out of the gate, document management and seed-to-sale tracking are the two biggest challenges, I think, for retailers. Not having employees properly trained to run the... I'll use Metrc as an example because I know they're in a lot of states, employees aren't appropriately trained, or there's a lot of turnover, or not only that, I've had some retailers where they hired the wrong person, where that person said, "Oh, I know Metrc, I know Metrc," and they hired him as a manager, and then they find out three, four, six months later that the whole entire account is a mess. Or you have a cultivation, a grower who's amazing at growing, right? They're really incredible, but they're lacking the administrative skills to go in and do the Metrc, and then all of a sudden testing's getting messed up and how things are inputted into Metrc, and closing out different batches. So I would say definitely the seed-to-sale and then document management. I feel like one of the biggest things that I've run into is you'll come into a facility and that manager will not know where all the recordkeeping and documents are, because the ownership team or executives aren't actually giving them access, or they're not training them on where to locate it. And I feel a lot of times the managers are running around to try to find this information. There's not any kind of document matrix system that really organizes it. And so then that's a piece that I run into a lot.
Jake: And that sounds like, since you run into that a lot, you must have some sort of system for bringing order to chaos.
Jenny: Oh yeah. I honestly, I'm a systems-oriented person, I love organizing, and so when I work with operators, just on top of doing the compliance audit, I'm looking at how all their processes flow. You know, is all the information that's in these SOPs, are the employees actually enacting these things, or is it completely disconnected and you just have SOPs collecting dust on a shelf and they're not actually being engaged with. And so, yeah, I definitely have systems in place and a matrix and I get people organized. That way, my rule is, if you can't find it in under five minutes, then you're not doing a great job at being organized with your documents. You don't want to keep inspectors sitting there behind your back, which is something I learned in the early days, we didn't even have the cloud, we weren't even putting stuff on the cloud like everyone is now. I mean, back in 2009, you had the inspector just standing behind you as you're going through filing cabinets. Imagine that. And that's really what helped me develop these systems over the years.
Jake: And so when you engage with an organization, is your goal to come in, figure out what's wrong, get them organized, stand them up on their own feet, and then sort of exit the situation, or do you end up getting into a situation where you're always at least some fractional amount, you know, serving in a role even if it's a minimal one?
Jenny: Yeah, great question. Actually, it's a little bit of both, right? There are situations where you come in and get them help, and work through all their gap assessments and closing those gaps and training everyone to where they graduate and they move on and they no longer need you anymore, and they're not even hiring other consultants. Like, they really are, you have taught them how to create the system to run a compliance program in their facility. And the other piece is I feel like more of the smaller operators will keep me fractionally, where I come in, they'll have me come in twice a year, once a year, look under the hood, give some feedback, let them know where they're at. So it is kind of a mixed bag for me. I feel like some of the larger organizations, they'll end up bringing on somebody, but a lot of times too, that larger organization will call me and say, "Hey, we got a new compliance person, can you come and audit them and see how they're doing? Do they need any feedback or training?" We just want to make sure we're doing everything right. So it is a mix, for sure.
Jake: Yeah. Well, it sounds like it's almost like a CPA, right? Where twice a year you go, "Here's the books, take a look at it. What do you need to, you know, do we miss anything?" And then, you know, that must be nice because you probably built some long-term relationships. And I want to jump around to just talking about the different states. So you've been in this for a while, you've seen states come online, right? So California, Colorado, they've been around for a long time, Michigan too, but you've got New York and New Jersey now coming online. How much of, when a new state comes online, is it like a rerun of something that you saw 10 years ago?
Jenny: It's a total rerun, to be honest. And obviously it's new and exciting, and maybe that state's doing something I haven't seen before, but it kind of is reliving the same story over and over again, which is fine because I have, because of the experience, I can anticipate and help people anticipate what's coming their way. For example, if you look at Minnesota right now, they're struggling with a supply chain where the dispensaries are open, but it's really hard to find products. That's pretty common in new markets, where there's not a lot for people to put on their shelves right now because the cultivation facilities are still getting built out, and it takes a while to grow the plant, harvest it, it has to get tested, and then you're going to be selling it to the manufacturers. So that's kind of normal. But yeah, I feel like even actually for the last 11 years, I can go back even 17 years and I'm still seeing things that are similar in new markets, and the same mistakes that people are making even in the new markets. There's little pieces here and there.
Jake: And when you say mistakes are being made, there's kind of two ways to think about that. One is mistakes at the legislative level, like, here's our program that we came up with and it's flawed somehow, and then there's the implementation of said system. How much have you seen the newer states coming online, when they're developing their program, actually learn from some of the mistakes that the earlier states made? Does that make sense?
Jenny: Yeah, I think they absolutely are. I feel like Colorado is the poster child for what to do correctly and what to not do, and they can look to us, or California, or even Michigan. I think a lot of states, if you look at a lot of the regulations, you can see where they copy and pasted a lot of the things from the Colorado rules and regulations. And our rules and regulations originally came from alcohol here in Colorado, and from that regulatory rule set that they converted into cannabis. So yeah, I feel like I do see a lot of that. And as far as mistakes, what I see happening is that I think some states out of the gate are doing a great job, and I keep thinking, gosh, I wish we would have done that in Colorado. That tells me right then and there that they are learning, because they're doing it better, where maybe they have more engagement with a quality management system, maybe they set up their testing program better than Colorado. But I also see states, too, within two to three years they update their rule set because they're seeing the mistakes that they're making, or they see areas that need to get fixed or streamlined, or remove things or add things based on maybe violations that they're seeing, what the investigators are running into out in the field. And so I feel like we're all adapting, whether it's the operators or myself as a consultant or the regulators of the state, everyone's evolving in their state as it's moving forward and maturing.
Jake: Well, that's a little bit encouraging, I suppose.
Jenny: Yeah, I'm kind of that type of person, though. I really love being a part of the cannabis industry, I see it as a wonderful opportunity, and I really do see people learning and growing and evolving. Especially coming from 17 years ago, at first I was learning, they were teaching us, getting us ready to be raided, you know, by the federal government, and I was going through raid preparation, and I remember thinking to myself, gosh, I'm going to get arrested for working in a dispensary. So I think it's come a long way. I look at Colorado and we still have some evolving to do in Colorado, where it was first police officers who basically were arresting people for cannabis that were now our regulators. Well, now I see in other states, you don't even have to be a police officer, somebody like me can go into Missouri and apply for a job as a regulator, or Rhode Island. That was really never a reality for me when I first started in the cannabis industry, I wanted to actually become a regulator, but there were no opportunities in Colorado because you had to be a police officer at the time. So that kind of pushed me into my consulting path.
Jake: Yeah. Well, now you get to be on the good guys' side, I guess.
Jenny: I like this side, actually, I like this side. I have good relationships with regulators, at the end of the day it's important to have those relationships and be professional, but I love being able to support operators.
Chapter: M&A and License Transfers
Jake: Yeah. Now, something we touched on a little bit, we haven't talked about it here yet, is the... what happens when you merge two companies, right? Just the license bit itself is tricky. I know in California it can be very tricky because you can't just transfer a license, right? So there's all of these workarounds that people have created where they, like, MSA the license on top of another entity and do all of these weird shenanigans to try to operate like a normal business. So I think everyone understands that, and I don't know how more or less difficult that is in other states, I kind of know how mostly from California.
Jenny: Oh yeah.
Jake: So I guess my first question is, is it that difficult in every state to transfer a license from one business entity to another?
Jenny: Oh yeah, I definitely have been through it, where I had an existing client that was selling off something like 10 licenses, and he was piecemealing it off to different people, or maybe this group bought like two, or they wanted to be vertically integrated, and it does take time because obviously you have those new people that are purchasing the license or doing the transfer, if they're not an existing operator, they're going through the same thing, the background checks, the application, filling out the application the same way and checking all the requirements for somebody to become an operator. Or if there is an existing operator, they still have to vet, the regulators are still vetting everything and doing the transfer. And I'm sure in some states it can probably take 90 days or longer, but I don't think it's just easy, one, two, three, really, in any state.
Jake: Yeah, all right, so we know that's hard. But I imagine there's a lot of other things that happen if you're trying to put two business entities together or transfer an asset from another, because you mentioned Metrc, there's all these documents which hopefully are stored in an organized manner, but maybe likely not. How do you merge that together carefully? It's really a lot of work.
Jenny: One, you have to have a team, one you have to have a system and a process in place and a plan. You know, first I would start, you would have to audit everything and understand, you know, if you're the person purchasing, if you're acquiring that company, hopefully you know all your systems and standards and that you're solid, that, hey, we're going to be using this POS software and it's going to be our SOPs, but you should also be looking at the companies that you're acquiring, because they might have systems that they're using that would work better for your model that you're not currently using. So I think it's always important to look at both businesses and see which systems are going to work. But I think at the end of the day it does take some time to merge everything together and sort through what's going to work, what's not going to work. And even then, after they merge and sort through, six months to a year down the road, you could say, "Well, this isn't working, we're going to have to pivot and adapt and do something different." So I think it takes time, it's very challenging, you have to have the right people in place, the right team in place. And I think more than anything, once these companies start acquiring more and more companies, especially if you're getting into other states, the challenge is the rules and regulations, everything is so siloed, everything is so different. And how is everyone communicating across all these states under one umbrella for this one company that's now merging and becoming this one entity? So it is a challenge and it does take some time.
Jake: Now, how do you decide, like, let's say you're operating just inside of one state, you've got two retailers, maybe they each have a couple locations and there's some sort of merger, acquisition, whatever, and they're coming together. How do you decide which set of SOPs to keep, just whoever has the best, or is there some strategy, because eventually you want things to be harmonized, right, in one organization, one set of documents and SOPs. Is there a formula, and is it all one, or do you take some from one entity and some from another entity if they're better or worse at different aspects of compliance?
Jenny: Yeah, for me it's about which ones are the best, which ones are the most detailed and clear, which ones are technical. I think SOPs, it's really important, a lot of times people don't even have version control of their SOPs. Maybe the one company has incredible version control and they have an actual document system or quality management system software that they're using to manage all their document control and all their versions and their SOPs. I would lean towards more that company that was doing that than somebody who just had some SOPs that were just typed up, that weren't like real technical compliance SOPs, because you could have a dispensary that can have 40 to 50 SOPs, well, at least dispensaries that I help, I create 40 to 50 SOPs, I have SOPs for everything. So yeah, it's really who has the strongest SOPs, where they're clear, who has a really incredible document management system and version control for those SOPs. I think that's really important, the stronger one would win in my case.
Jake: Yeah. Have you run into a situation where not just the documents were poorly organized, but maybe some of them were entirely missing, like they were just never created in the first place? And if so, how do you resolve that?
Jenny: Well, that's why it's important to do an audit, I always go back, everything starts with the gap assessment. If you really want to know what's going on with anything, including if just documents, if just SOPs, if you just want to do a gap assessment of someone's SOPs compared to a company that you're going to be merging with, then do a gap assessment of both sets of SOPs to figure out who's missing what. But that's the only way you're going to figure out what's missing and what you're lacking. And it happens all the time, I audit facilities, I've been auditing facilities for 11 years, and a lot of times people don't even realize that the rules changed and that they don't have the correct SOPs, or they misunderstood it, or sometimes dispensaries will think, "Well, I don't need a recall plan, I'm just a dispensary, I don't make the product, why do I need a recall plan?" But you do, because if the recall happens, what are you going to do with the product that gets recalled that you're selling in your dispensary, right? You're going to have to quarantine it, you have to take it off the shelf and make sure it doesn't get sold, and there's all these things that you have to look through, the dispensary operator lens, than a manufacturer would do things through their lens. So, yeah.
Jake: Uh, where does recalled stuff go? Is there like a recalled warehouse somewhere where these things go, like the Raiders of the Lost Ark, some big room?
Jenny: It goes off into recall land. But that's a great question. I know people that have product literally stuck in their vault for years waiting, because there's investigations that have been going on for two years against somebody. We have recalls for all kinds of reasons, right? Something happens where they pull product, they do this in every state where they'll come into a dispensary and just randomly pull products off the shelf and then go test them and find out that all of a sudden they're having testing issues, right? Or somebody could have a labeling issue or a potency labeling issue, and it gets pulled. So recalls, or inversion, we've heard a lot about inversion lately into the market, right, where people are inverting hemp into these facilities doing inversion, and so the recalled product typically sits in somebody's vault until the regulators say that it can either a) be released, the product can go back on the shelf and be sold, or b) the product has to be destroyed or sent back to the originating manufacturer, the grow, and typically they'll destroy it, or sometimes the dispensary might destroy it, but you would check in with the regulators first to make sure you know what you're supposed to do with it. I have many clients that have had product just sitting in their vault going, "Okay, this is on hold." And every time I go and audit them, it's just sitting in their vault, still on hold, and I just said, "You have to wait till they give you permission to destroy it."
Jake: What? And what is... it probably varies by product, but there's got to be some sort of rules on what destroying means and how you're supposed to do it.
Jenny: Yeah, I feel like for that, that is really similar across the United States nationally, on the destruction of waste. I think that's a very common rule that's pretty much copy and paste across the country. And it's really about making sure it's unrecognizable to people. So if they went through the garbage, they're not like, "Oh, here's a whole joint," or "Here's a big chunk of bud," right? They're grinding it, they're mixing it with non-cannabis waste to make it unrecognizable. And I think that's really common across the country.
Jake: Okay. Be curious to see, that's like one of those things that, you know, they have like the "How Stuff Works" show, it'd be interesting to see a video of how does that actually work. Have you ever been in a product destruction environment scenario?
Jenny: Oh yeah, definitely. And I will say, too, I have a podcast, I'm going to be having on a company out of Missouri, Monarch Waste, who are actually a company that specializes in cannabis waste. So, believe it or not, there's actually companies out there who specialize in helping these facilities manage their waste or destroy their waste, and we have them out here in Colorado. Yeah, sorry, I just wanted to throw that in there because you had brought up the piece about waste. I have seen the destruction of waste, I've been also on top of helping new operators and existing operators, I've been part of investigations where an operator needed some help, they were being investigated, and the regulators told them to reach out and get some help with cleaning up their Metrc and whatnot. So I've had to come in where I told the operator, "Well, okay, we're going to have to waste all these products, reach out to the regulators, let them know that you're going to be wasting." And we had to do everything on video and then submit all that to the regulators, the video of destruction of waste and all the logs and how we tracked it, and whatnot. So, and I've seen a lot, like, I think over 400 pounds wasted.
Jake: Oh wow.
Jenny: Which is a lot.
Jake: Yeah, that's a sad day.
Jenny: It's a lot. It was a lot that I watched get destroyed.
Jake: Yeah. Now, how does it work when you are working specifically with an MSO? They're juggling different sets of rules at the same time but trying to run the same business in different states. How do you handle that?
Jenny: It's pretty intense, right? And I think this is a problem that MSOs run into. I can't speak to the largest ones in the state, I've talked with MSOs that are probably, you know, maybe anywhere from three to 10 states, and I think their biggest issue is managing the conglomerate of all these different rules and regulations. And this is where it's really important to have some kind of compliance management system to manage your compliance program and then what you're doing for each state, because you want to have all your systems and processes, right? If I'm an MSO and I have a grow and I have retail stores, or even if I just have retail stores, I want to make sure that everyone's following our brand guidelines and our core values of the business and also all of our SOPs. Our SOPs might be a little bit different because they're tweaked based on the regulations, but it is an overwhelming task, you kind of do need a compliance team to help manage it, it can't just be done by one person, especially if you're in 18 states. It's overwhelming. But so it's important to have some type of platform or tool to help you organize it and streamline compliance across the board.
Jake: Yeah. What are the platforms that people use for this?
Jenny: You know, there used to be a lot of really great platforms, I'm not sure what happened, other than, you know, recently the market, there was a dip in the market, a lot of these platforms went out of business, they're not even around anymore. A lot of the platforms that I really enjoyed using, they're completely gone, like, poof, gone. I think 2022, 2023 ate a lot of those platforms up and they went out. I think a lot of people are moving towards more platforms that people might use in the pharmaceutical industry, or to manage FDA compliance or federal compliance, and they're just using these non-cannabis technical management platforms, they're not just cannabis platforms. They're just regular platforms that someone would use to, you know, where I'm at with all my OSHA inspections and quality management system platforms are what people are really leaning to right now, because you can have a QM platform and it can manage all things compliance, all your document control, your inspections. If you're in the international market it can help you manage your import export, we're not currently doing that here in the US market.
Jake: So, oh yeah, let's talk about international. You were saying earlier that you're doing work internationally now. We've had a couple people on Cannabis Marketing Live that are doing consulting work and helping people kind of go from the US to Europe. It seems like some of the international markets are simultaneously ahead from a legislation perspective because Canada's federally legal, but then sort of behind because they don't really have a real industry built yet.
Jenny: It's so true, even though it's legal. It's so funny because for the longest time I kept thinking we were really behind, because I would look to places like Israel, which has done so much around medical cannabis and the science of medical and the science behind cannabis. And then when I started dipping my toes into the international or global market, I started doing a lot of research, I started preparing to go into the market in like late 2024, 2025, it was something always on my list of goals for my business and where I wanted to go. And so I've just been doing a lot of research, and now that I've dipped my toes in, what I've realized is that they actually are not ahead of us like I thought, and they're actually really behind, and it kind of reminds me of the early days, like circa 2011, is kind of where I see the global market. And right now the global market, they are reaching out to people in the US marketplace to help them, whether it's through licensing or getting operational, and also, too, the global market, they're doing import exporting, which we do not do, but in the United States we're not there yet. But there's plenty of people in the United States who are professionals that do the ISO 9001, do quality management systems, that are helping these operators prepare their import export programs. But yeah, I would say they're definitely behind and they're looking to people in the US. We've been fortunate enough to engage with two international clients here this past year, and it's been really exciting, but they really need the help.
Jake: Yeah, they really need the help. And what is it specifically that you're seeing international markets looking for? Like, are they looking for brands to license? Are they just looking at, you know, how do we manage our systems? I know it's not a large cohort, but to the extent that you're talking to people now, is it people, organizations in the US that want to go into other markets, or is it people in other markets that are trying to take best practices from the US? Like, is it both?
Jenny: It's a little bit of both, I think it's a little bit of everything. There are people who are looking to go into the international markets, there are also people here in the states that are just going to sit and wait to see when interstate commerce will happen in the US, and they can just start shipping from their state all across the United States and do exporting that way, and they're not looking to expand across the United States at all, they just want to come straight out of their state. So you have that piece, for the international market, and I'm not all things expert on the international market because I am pretty green and learning as I go right now with that, but so far, from my experience and my conversations and events and people that I'm talking with, it's a little bit of everything that they're looking for, right? We're getting inquiries around helping people with licensing, a lot of quality management, GMP, EU GMP compliance, GACP, which is the Good Agricultural Practices, a lot of people want these certifications, and kind of these federal or international standards, because if, when in the international market, if you're importing into Canada or importing into the EU, or from Africa or some of these other places, they do have requirements that you have to have these GMP certifications and all this information before they accept the product for shipping. So yeah, I think the international market is a little bit different in the different items that they're looking for, but basically it's really compliance and standards, whether it's GMP or ISO 9001, and all those things, to just, you know, setting up their audit program, employee training, consumption lounge, right? And I've had inquiries around lounges, or I think in Germany they might call them clubs out there, but maybe they want some help with launching a lounge. I've seen everything in different countries where they want to have a 420 hotel lounge, dispensaries, everything in their market, and a lot of these markets are medical. I believe Germany's adult use as well, but it's not adult use across the country like the United States is, it's still very much a member of a club.
Jake: Yeah, and it's very pharmaceutical, I would say, more than anything.
Jenny: They're more pharmaceutical, I feel, globally, than we are in the United States, our medical cannabis model. We're kind of pharmaceutical in some states, you know, like I thought Virginia did a good job with their medical program, it was pharmaceutical, and maybe Maryland, their medical program had some pharmaceutical requirements. Also, too, Texas, they just did their low-dose THC that they did out there with some pharmaceutical pieces mixed in. But I really look at the global market as very pharmaceutical.
Jake: Yeah. Let's go back to something you mentioned about interstate commerce in the US. So, right now the markets are all isolated, right, by state, and you end up with some pretty extreme pricing deltas, right, like the cost of a product in Michigan versus Illinois is like night and day. How do you think... let's just say that the DEA reschedules cannabis off of Schedule 1. Now, that gets rid of a whole bunch of issues, but does that allow interstate commerce even inside of a single entity, like even if you're not trying to wholesale from one state to another state to a different company, but you are, you know, I would say the same company, but technically they're different business entities because they're licensed in each state individually. What are the legislative things that need to happen in order to have interstate commerce, which would, of course, change the landscape dramatically of what's going on in the US?
Jenny: It would completely change the landscape dramatically. Yeah, I'm not sure, like, honestly, this is so hard to talk about, descheduling, because it's something that we've never seen in the cannabis industry. Even the rescheduling right now that we're all waiting on, and we're waiting for this hearing coming up here in June around medical cannabis, and the adult use market is hanging in limbo on what's going to happen with them. And you know, I'm not sure the framework that's going to have to be set up or how they're going to do it, but it's going to have to be the same for everyone across the United States nationally. And I feel like they're probably going to have to go through some kind of registration, like they're doing currently on the medical cannabis side, where they're letting operators know they can do the DEA registration right now. I'm feeling like something similar would have to happen because I think they're going to want to check product being shipped across the United States. I'm not sure if they're going to use a pharmaceutical model, like when regulated drugs get shipped across the United States, right? Prescriptions, you can order a prescription online and it can show up, you can get your prescription in the mailbox. Is that what it's going to look like? So I'm not really sure, I can't really speak too deeply on it. I always tell people I do not have the descheduling or rescheduling crystal ball. I think we're all in the hurry up and wait mode, it's hurry up, wait, hurry up, wait, something else comes up and we get paused, and we're waiting again. It's going to be very telling what happens, I think the hearing's on June 29th, that could set the roadmap for all of this and what it's going to look like. I never thought they were going to deschedule out of the gate, I always felt like they were going to reschedule first and then see how that worked, and then descheduling would come next. That always felt like the safer bet. But I don't even know if they're going to reschedule adult use, they might just keep it where it's at, which is just going to be very wild.
Jake: Yeah. There's just so many things that are difficult about trying to operate a business within the cannabis space. If you could make it difficult, it's been made difficult.
Jenny: It is very challenging. I always tell people the cannabis industry is not for the faint of heart. If you do not like change, then I don't think this is the right industry for you, because it changes like the weather in Colorado. For anyone who's ever lived in Colorado, all of a sudden it could be raining, hailing, tornado, wildfire, hot, cold, snow. Like, that's pretty much the cannabis industry, always changing all the time.
Jake: Right.
Chapter: Top Compliance Tips for Operators
Jake: Let's kind of talk about... we're getting a little close on time, but if you could distill the top five, or seven, or three, whatever, things for people to think about when it comes to compliance and standing up either a new retail location or putting locations together, what are the things that bite people the most that they don't... I know being organized with documents is one thing, but there's got to be some things that consistently don't get addressed because maybe they're obscure, or for whatever reason. Do you have a list of those things, like, these are the things that people usually forget to address?
Jenny: Yeah, I think one piece, and I mentioned it earlier, which I find happens a lot, right, we have all these systems or these SOPs and documents in place, but is it translating to the staff? Are they actually following it? Do they understand? I find that happens a lot, so that would be a piece I would make sure, is how are those systems working and flowing in the actual business? Is there actual engagement with it, and if not, what's happening, why is there a breakdown in that? Another piece would be communication in the business, I find, and this regards to roles, so people's role, whether you're an executive level in the company all the way down to the bud tender and trimmer, does everybody understand their role? Does everybody understand how they're supposed to communicate things that are happening in that role? And if there's crossover, are people talking to each other? I've been into a facility where I asked a question during the audit at a grow regarding something in Metrc, and they said, "Well, I don't do that part of Metrc, I only work in this part of Metrc, I have no idea what they're doing over there in this part of Metrc." To me, that shows a lack of not communicating, they're not having meetings, they're not talking to each other. So I think communication is an area I see a lot of breakdown, which is woven into every single piece of compliance, communicating. And then the last I'll leave you with is employee training. I know people think employees aren't trained, but they're not as trained as you actually think they are. I think a lot of times employees get onboarded and they get the things that they need to do to learn the role out of the gate, but I don't think there's continuous training, or they're not checking in, or they're not training them every, you know, quarter, unless it's mandated by the state. What I find in areas where it's not mandatory, or there's not a lot of mandated requirements around training, employees are lacking the training or getting access to that training that they need, which then affects everything like Metrc and making compliance mistakes that can cost you a violation.
Jake: And are there software systems that are designed to do this specifically? I know that there's like learning management systems that organizations use, but yeah, there's a lot out there.
Jenny: Yeah, there's a lot of LMSs out there, there's, you know, a bunch of them, like Learn Brands, there's also places like Cannabis Trainers and all these places where you can take on-demand training and whatnot. But I still, there's also specific training, like, for example, if people in Colorado, if they're going to collect test batch samples, they're supposed to be trained, they're required, they're mandated, and they're mandated to sign attestations, but they still don't take the training and they get nabbed for it all the time. So that tells me it's not that the content's not available, there's tons of platforms there, there's tons of information and data and content out there for people to get trained. It's an actual systems issue, there's something going on where people in the organization are not making sure employees are getting trained.
Jake: And this sounds like a pretty pervasive situation.
Jenny: It is. I mean, honestly, Metrc or inventory violations would not be the number one violation across the country right now. I did a bunch of research last year on violations across the country, and inventory data entry is the number one violation across the US right now in the cannabis market for top violation.
Jake: Yeah, I can definitely see that, because we work with lots of different retailers across the country, and the product SKU management can be a nightmare, right? You have people just kind of making names up in free text fields and calling things different, deciding to use, or slashes, or unit pricing versus like the whole product itself, because sometimes it's like, oh, well, how much THC is in this product, well, are you talking about an individual serving or the whole jar? And then to further your point, another thing we see is in some of the ecom platforms, the bud tenders have the ability to override the order IDs with the notes field in one particular popular ecom platform that we work with. So we'll run into situations where, you know, we're matching for our attribution, we're trying to match up, we ran these ads to these people, did they buy something? And instead of an order ID being there that we can key off of, there's, you know, a note about some guy in a red hat, or whatever, like, the bud tender just decided to type in there, right? So that becomes a data quality issue, and that's, again, a training issue. And even inside of that, when that does occur, because I've seen it happen at multiple dispensaries, it's inconsistent within that organization, it's like there's two people in one store that are using the field wrong, of eight stores, right?
Jenny: Yeah, it's really an accountability issue. I see it all the time, because people hire me to come and do audits, I say, "Hey, you need to have your employees trained." Look, Metrc provides online training for free, or you can hire a company to help you come in and get everyone trained. If you're not holding people accountable, making sure they're taking the training, or having it set up so they can just go on and get trained, then they're not going to take the training. I've gone into facilities where they weren't even closing out harvest batches on the cultivation side until they knew somebody was going to buy the product, then they would close out the harvest batch and send it out to testing instead of just closing out all the harvest batches like you're supposed to, and send all your product off for testing. So they're trying to cheat the system, or they're not trained properly. And so I think that's where the issues, I think, I see all the time coming up.
Jake: Yeah.
Chapter: The Real Cost of Skipping Compliance
Jake: When you are, like, you know, compliance, and marketing to a certain extent also, when you're running a business, these are expenses that you pretty much have to do. But as a business owner, especially with the cash constraints in the cannabis space, people, they don't want to have to spend that money or that time and energy. How much of a struggle is it for you to explain to someone the value of what you're providing, rather than, like, "Oh, I just need to check this box and make sure that I'm not in trouble," because a lot of the value you're providing, building these systems, actually will just make the whole company run smoother, right? Beyond just, are we going to get in trouble, if you can increase operational efficiency inside an organization, there's a lot of value, it's sometimes hard to measure, right? Like you say, "Okay, well, last year you were disorganized and this year you're more organized." What does that mean for you from an opex cost, or business growth, because you're actually doing things correctly? Is it beyond just not getting in trouble? How are you able to explain the value of what you're doing to these operators, or is it not that hard?
Jenny: It's actually, sometimes it can be an actual challenge, especially with brand new operators. For example, if you're helping someone, they're getting ready to win their license, and you're putting something together for them, and you're trying to explain, if they're raising capital, you want to say, make sure that you're raising enough capital to cover all your compliance costs and all these things that you need. It's more than just marketing and branding and license and hiring people, there's actually a cost for compliance. I feel a lot of times, I kind of stand behind, spend the money now instead of getting hit with the fines later. And I'll read through violations that are 30 and 50 thousand dollars, I'll read the action report that is put together by the regulators, and I'm going, gosh, like, all, and I see all these things listed, and I'm like, it could have easily have been all fixed with compliance audits or a compliance program. And so why are people doing that? And I think a lot of people, a, the money, you mentioned money is a huge issue, people make decisions based on money in the cannabis industry. And then you have, I don't know, let's just say we, the camp of people making every decision based on money, and "I won't do it if I can't afford it." And then you have the camp of, "Well, I know I got to spend this money, I don't want to spend the money, but I know I got to spend the money because I really want to be proactive and I don't want to get a violation." You know what I mean? Versus the camp of people that said, "Well, I'd rather wait and see if they come in and say anything, and take that risk." So it really depends on your circle, I call things a circle of risk, and the things that you do in your business can either grow your risk circle or shrink it. And some people have smaller risk circles because they have all these systems in place and they're engaged, versus there's some people who like to gamble, they like to gamble with that risk, right? They like to gamble with the millions of dollars. It's really wild, people spend millions of dollars to get these facilities open, and then they'll come and cut corners on compliance or things that are really important, decisions that they have to make because they need to do other things. And so it is a challenge for operators, because they have to make... they're sitting there going, "I have to make the right choice." You know, we really need this, are we going to add the compliance program? The market's been very volatile, and people have been getting let go, I feel like it's had a little bit of a bump, it's been bumping back up, but in 2023 is a good example, I had tons of people reaching out to me for jobs saying they just got let go, and they were compliance officer or safety manager, and they were just all of a sudden cutting these programs, and instead of having five or six or seven people do it, they just have one person do it.
Jake: So, what is the tradeoff for, uh, let's say I didn't spend, I'll just make a number, $50,000 on my compliance, and therefore I did not pass some sort of audit and I got fines, right? Like, how does that work? Is it something like, well, not spending $50,000 last year cost you $200,000 this year? I don't know what the fee structure or the fine structure looks like.
Jenny: It's kind of different, are they... gosh, I've seen... I mean, I read them all, I read the ones from Michigan, all over the place, Colorado, some of the states, they'll send them right to your email box, there's also platforms where you can look up all the different violations, or you can just use AI as well to do searches on violations to get it all in one spot. But I have not, none of my clients have received a 50 or $100,000 violation, I usually get referred people once they have received a $50,000 or $30,000 violation. I work with a lot of attorneys, I have a lot of cannabis attorney relationships, and they'll say, "Hey, this person got this huge violation, I'm sending them your way, I told them they need to have an audit and get a compliance program." So I think once they get the violation, they do decide to clean up their act, because it's a very expensive lesson. I like I said, I think there's some people who are automatically proactive all the time versus the reactive people. But yeah, I've seen violations as small as like $3,000 up to $50,000 across the United States, $50,000 being extremely egregious, like not using Metrc, revocation. A lot of times you'll read through these summary reports or show cause orders from the regulators where people have product in trash bags. Anytime I see trash bags and no tags, I know they're in trouble, there's no Metrc tags, then we know something crazy is going on at that place. And to this day, in 2026, you can still see violations, people are not tagging products, storing things in trash bags, having inversion. And I also think a lot of times the pressure of the marketplace, and people trying, a lot of people are in survival mode. Like, you look at Michigan, a lot of these Michigan operators, they're in survival mode right now, and I think for them it's fight or flight, and some of them are making really bad, unhealthy choices that are affecting their businesses, and they're getting in trouble.
Jake: Yeah. All right, well, thank you so much for all of your time, it's been very interesting for me. I like to learn things that I don't have a lot of exposure to, this part of the industry. How can people find you? You have... oh, you know, I never asked you, what does ICS stand for?
Jenny: Oh, it's... so I created ICS obviously 11 years ago, but Industry Compliance Solutions.
Jake: All right, that sounds very corporate.
Jenny: I know, nice and generic.
Jake: Yeah.
Jenny: Yeah, you know what it was? And I'm not much of a corporate person, I've actually never even worked in corporate America, I've always been, like I said, I'm from the restaurant industry, but I was really scared to have "cannabis" in my name in 2015, everyone was like, "Don't do it, don't do it." I was... so anyways, that's why I came up with the pretty generic, boring name, and I just keep it now that it's been around for 11 years.
Jake: So, well, where can people find you on the internets if they want to have a conversation with you about compliance? Maybe there's people that might need your help. Probably do.
Jenny: Yeah, well, first I would have ask people to check out my podcast, which is Under the Microscope with Jenny, and we're pretty much, it's pretty much streaming everywhere. I do an episode a week and I talk about all things cannabis operations, compliance, I have on guest experts, I actually feature a lot of operators from across the country, and then I do a lot of solo episodes just talking about compliance. You can also check out my website, which is ICSConsultingService.com. And you can just Google Jenny Germano, I'll pop up, or ICS Consulting Colorado, I'm sure I'll pop up, that might be a really easy way. But I'm pretty much just on LinkedIn, I'm not on Facebook anymore. And I have a YouTube channel, you can check that out.
Jake: Great. Well, again, thank you for your time. This has been, like I said, it's been interesting for me, because there's a lot of things I... you know, I don't touch the backend side of the business, we're always about customer acquisition, customer retention, digital marketing, and there's this whole layer beneath the iceberg, right, of stuff that's happening in the background that certainly customers don't understand, and even people within the industry in specific parts of it, like ourselves, we don't see that.
Jenny: I agree, yeah, and I'm in the same boat as you, like when I have people on my podcast, I get excited because I get exposed, I've just been exposed to so many things that I didn't know about, so I'm just like you, I get excited having people come in and talk about things that I might not know about.
Jake: Great, well, have a great day, and we will chat soon.
Jenny: Yeah, thanks, Jake, I really appreciate you guys and the opportunity, so thank you so much, this was awesome.
Jake: All right, take care.
Jenny: Yeah, take care.]
.jpg)
