By: Scott Roberts and Andrew Haftkowycz
What are SOPs?
Standard Operating Procedures. Whether you are familiar with the term from years in other industries, or have never heard the term before, a Standard Operating Procedure is a step-by-step guideline created by your company’s management team that lists all written instructions for how an individual part of your business’s operation is to function.
At its best, an SOP is a foolproof training tool which allows new employees to quickly pick up tasks and guarantees that these employees will use the same diligence as the company’s most seasoned professionals. This is important for dealing with standardized processes, like nutrient and chemical mixtures that require precise measurements.
At its worst, an SOP can spell licensing and regulatory disaster if your company does not have well-maintained records, personnel who update and distribute SOPs, or a complete lack of established SOPs. A cannabis business without a sufficient SOP library available to employees can force the CRA’s hand to suspend or revoke a license (or issue a fine anywhere between $10,000 all the way up to $3,000,000).
What do SOPs Accomplish?
An SOP should outline every required step of a process that a facility employee needs to:
- complete the task, and
- be in compliant with the latest regulations.
An SOP is useful only if the weakest person on the team can read it and follow each step from A-to-Z without needing to seek clarification (unless the SOP tells that employee to do so). While endless examples of SOPs can be found online, the format should be basic and practical.
Think of SOPs as a “living document”. Things change. The CRA reverses course on a certain restriction, or maybe the boss decides to “simplify” the check-out process for premium customers. We call it “innovation”; however, it can become a real headache if these “innovations” go undocumented inside the old SOP. A good accounting of SOPs can mitigate these headaches by making sure that the managing staff of your business:
- understands the need for accurate and updated SOPs, and
- actually makes updates to the SOPs.
Along with updating, good SOPs also need to be communicated. You can’t reasonably communicate every-single-change to every-single-employee with 100% precision, but you can implement processes to get you closer to perfection. Some methods used by competing industries include:
- Digitizing their SOP handbooks
- Providing a “comment” section where employees can log changes
- Saving them in accessible “dropbox” libraries that employees can access
- Using flowcharts, checklists, quizzes, videos, and links to training manuals
- STATE-OF-THE-ART: placing QR Code stickers around the facility
These methods allow employees to scan and access SOP instructions wherever they are in the facility to make sure they don’t accidentally add the wrong plant mixtures and cost your company $50,000 in unusable products or add unwanted attention from CRA on your business.
Why your Investors will love your SOPs
Investors and Shareholders are complex creatures, but they consistently look for one thing: RISK. In an industry as new and risky as cannabis, attracting reliable investors can be a hassle, and often obtaining a license or a property can rest on finding reliable investors. Giving the investor adequate assurance that their capital investments in your company will not evaporate into extreme overheads or ridiculous fines is increasingly important as the industry grows and saturates.
A surefire way to ease investor anxiety is to offer well-crafted SOPs that have practical plans for mitigating risk, creating operational safety, and most importantly, showing that the business plan they are investing in has been thoroughly examined. The stronger the SOP, the more likely that an investor will trust their investment to give them good ROI.
Why your Employees will love your SOPs
Admittedly, most young entrepreneurs who have dreamed of entering the cannabiz are not seduced by dreams of endless “Standard Operating Procedures”. While you won’t attract top talent advertising that your Dispensary or Grow Facility offers “good SOPs”, it will help keep your workers happy in their jobs.
Many companies run into turnover problems at some point, and the cannabis industry has an even higher turnover rate than most other emerging markets. A lot of this has to do with the actual job. It turns out that running inventory per CRA regulations is not nearly as “sexy” a job as many aspiring potheads imagined when they saw “legal marijuana” on Indeed.com. Additionally, entrepreneurs who may start their own Dispensary or Grow Facility quickly become disillusioned from their “get-rich-quick” scheme when they actually have to do the work of running a compliant business, cannabis or otherwise.
Whatever the reason, the ultimate nail in the coffin that leads to turnover is quite simply employee dissatisfaction. While a good SOP cannot save a disgruntled employee from an unfit manager, having poorly written, unmaintained, or inaccessible SOPs can quickly make an employee assume that the organization is lazy, inefficient, and doesn’t care about them as an employee.
Turnover: The Snowball Rolling Down the Hill
Turnover can cause logjams in the good-SOP-making process. When a new manager starts at your company, they may read some old SOPs and decide to draft a new set of step-by-step “rules” for their employees. If that same manager suddenly quits, you may find yourself with employees abiding by two completely different SOPs.
A smaller problem caused by this turnover is that your employees will look at these contrasting rule-sets and decide that the business owners clearly don’t know what they are doing. The employees will not see the company nearly as favorably as they did in the job interview.
A bigger (more expensive) problem caused by this turnover is when the nice people at the CRA decide to make a surprise visit while you’re not at the office and ask a budtender where they can find the SOPs. At that point, you are at the mercy of your budtender saying the deadly phrase, “which ones?”
How to Avoid Repeat SOPs?
Make a Method: have an established method of approving an SOP. The easiest way to have good SOP creation is to have more-than-one staff position that approves SOPs.
Checks and Balances
One person should be responsible for maintaining and regularly updating SOPs for content (checking CRA bulletin changes, communicating with managers throughout the company, working with the COO, etc.). A different person should be responsible for approving and authorizing the changes prior to them officially being added to the SOP library. A third person should be responsible for communicating/delivering these newly authorized SOPs to department managers and employees. This three-person-system of checks and balances can seriously increase your company’s accountability and precision.
The DELETE Key
An important tool for the SOP team is the delete key. Once your team finds SOPs that are either outdated from business operation changes, or outdated from CRA regulation changes, those SOPs need to be tossed. It is important that one person on the team is able to identify whether current SOPs are still legally compliant and which ones can be deleted or categorized as out-of-date to reduce any potential confusion. This will help you avoid serious fines, lawsuits, or both.
Type A Personalities
Make sure the SOP team has a person who is Detail-Oriented. The SOPs should be well-cataloged so that the naming and categorizing of your SOPs are fairly intuitive and not impossible to find inside the company’s records.
The company team member who catalogs SOPs should be using practical and detail-oriented schemes that are not overly complicated and account for everyone’s position within the company. The SOP library should also have an accounting of changes, includes organizing the [OLD] and [CURRENT] files that will give you bonus points when the CRA does do a surprise audit.
Even if you do experience turnover, a well-positioned SOP team will guarantee that there are still managing personnel who know where the records are kept, and know how they are properly updated, whether the update is from management or from the CRA.
SOPs: Good for Business, Great for You
When functioning properly, an SOP greatly increases the chances of:
- Investment and Growth
- Mergers & Acquisitions
- Substantially Less Employee Turnover
Anyone involved in the cannabis industry ought to consult with experts frequently and have skilled attorneys able to handle any of the inevitable issues that arise within an industry as fast-paced and regulated as legal cannabis.
If you are either looking to boost your current company SOPs, or seriously need to get SOPs ready for a surprise CRA audit, the capable attorneys of Scott Roberts Law Firm have been servicing the legal needs of business owners in the cannabis industry since 2014, making them a top choice to address any cannabis business problem. Our team can help you get your company moving in the right direction.