Standard Operating Procedures for Michigan Cannabis Businesses

A big part of running a successful business is developing consistent operating policies and procedures. Cannabis-related businesses in Michigan must also comply with constantly evolving regulations and restrictions on cannabis distribution. Adopting and implementing standard operating procedures (SOPs) can help your Michigan cannabis business stay compliant and run more efficiently.

What Are SOPs?

SOPs are formalized, documented versions of the routines you already have in place. These documents identify and standardize the tasks and processes involved in all business operations. Creating these SOP checklists ensures that everyone knows the approved way to do things and does them the same way. They help your business run more efficiently, reduce the potential for fraud or errors, and allow you to deliver a more consistent product or experience to the consumer.

Since cannabis production and distribution is a heavily regulated industry, developing written SOPs can help you stay compliant with state and local regulations. Standardizing procedures and documentation makes it easier to quickly provide information if you are audited or reviewed by the Michigan Cannabis Regulatory Agency, OSHA, or the Department of Labor and Economic Opportunity.

What SOPs Does My Cannabis Business Need?

You can create an SOP for any task that can be standardized within your operations. This includes everyday processes and procedures, periodic tasks like payroll and licensure, and occasional or unpredictable issues like workplace injuries or employee complaints. Where appropriate, create checklists that can be signed and dated as completed, then saved with other business records as necessary.

Some common SOPs include:

• Daily opening and closing routines.
• Inventory control, tracking, and ordering.
• Product quality assessment, storage, rotation, and expiration dates.
• Inventory intake, packaging, and labeling.
• Pricing, marketing, and sales/promotions.
• Recalls and defective product notices.
• Checkout procedures, including processing payments and packing products.
• Delivery logs and vehicle tracking records.
• Cash handling, reconciliation, storage, and depositing.
• Customer ID validation, age verification, and tracking systems.
• New and ongoing employee training.
• Payroll management.
• Workplace safety and health.
• Sexual harassment reporting.
• Employee management (breaks, personal item storage, phone use, etc.).
• Disciplinary policy.
• Security and emergency protocols.
• Accounting and tax procedures.
• Licensing renewal.
• Auditing checklists.

Your staff can help you create SOPs that are the most beneficial to your operations. It’s also wise to regularly review the SOPs and update them if regulations or your business needs change. Note the date each was created and revised somewhere on the document (usually in the header or footer), and keep copies of previous versions.

In addition to its creation and revision date, each SOP should include the following:

• A detailed description of the task or procedure and the individual steps involved.
• Everyone responsible for the task’s performance and their specific role.
• When and how often it must be done.
• Why it is necessary (and the penalties or risks of non-performance).
• The necessary equipment or tools.
• How the task is verified or documented.
• Contact information or resources in case of problems or questions.

Communicate and Follow SOPs

Once you’ve created and memorialized your SOPs, you must communicate them to your employees. Ensure all team members are appropriately informed of and able to access the SOPs that affect their roles. (For example, keeping the opening and closing SOPs where all store employees can easily reference them makes sense, but only managers may need access to the annual licensing renewal SOP.)

Every employee and team member — including you — must follow every SOP every time. Managers should regularly review SOP forms with their employees and monitor compliance. Owners should periodically check in with managers regarding employee compliance and follow and document their own top-level SOPs. SOPs should be changed or formally rescinded (rather than unenforced or abandoned) if they are no longer necessary, relevant, or helpful.

Consult a Michigan Cannabis Business Professional

Cannabis businesses must comply with strict regulations and record-keeping requirements. SOPs that standardize many aspects of your business can make these ongoing obligations less difficult and stressful. They can also help your business run more smoothly, reduce workplace conflict, increase profitability, and improve customer experiences.

Although creating a set of SOPs is an excellent idea, the process can seem overwhelming. A good place to start is by consulting with an experienced Michigan cannabis business attorney.