As all-cash businesses, dispensaries face constant risks.
Businesses in the cannabis industry face massive hurdles just to exist. Even in states where the recreational use of marijuana is legal, the federal prohibition of the product means cannabis retail businesses have to operate almost entirely with cash and have to meet tough standards and regulations that aren’t imposed on other businesses. The difficulty of the business itself is one thing. It’s made significantly tougher by worsening crime targeting cannabis companies. There’s an emerging market of security companies specifically targeting the cannabis industry as an attempt to deal with that.
The Evolving State of Cannabis Security
Chris Eggers spent twelve years as a cop in San Francisco. He says he was good at the undercover work, but wasn’t a huge fan of the law enforcement culture overall, and especially hated the way the police treated marijuana and the businesses relating to it. He says the Police Department told officers at a training camp that marijuana was a gateway drug. So, Eggers decided to make a change. He quit the police force and in 2021 started up his own company Cannabis Compliant Security Solutions (CCSS) instead. He uses his experience in law enforcement and knowledge of the law to help businesses follow the letter of the law exactly. He says many cannabis businesses fall victim to companies who don’t have their best interests in mind, and he wanted to be the fix to that problem. “What I found in the cannabis industry with respect to security is a broken system, made up of various service providers that have contracts with no allocation of risk, some of which are extremely predatory. It’s a broken model of a band-aid patchwork system of various services that provide – air quotes – ‘security,’” said Eggers.
CCSS is an independent consulting agency and risk management firm and is not commission-based. That means it doesn’t just provide security options, but also helps cannabis-related businesses to make sure they’re compliant with every rule in the book so that the business doesn’t go under at the first sign of trouble. “There are several ways you can lose your business,” explained Eggers. “Most of them, I would argue, happen after an incident occurs – and that’s unforeseen insurance claims, that’s damage to property, that’s lost inventory. Another big piece of this pie that people aren’t talking about yet is the cannabis industry’s struggle to retain their employees in certain cities.” Compliance, he explains, isn’t just about following state and local regulations; cannabis retailers also have to be compliant with their own insurance policies. As an example, he provided a horror story of a dispensary that had $200,000 of damages and loss after a break-in. Because that business did not have the specific door its insurance policy required, they only got $11,000 back from their insurance company. Going through those policies and finding solutions to bring businesses to compliance is a big part of CCSS.
That being said, security itself is still a big issue. CCSS designs solutions tailored to each individual client. All cannabis retailers must have security of some kind, usually meaning a security system that includes cameras and alarms. However, the way those are incorporated will vary. Others often choose to have a security force actively monitoring the property as well. Even that first step in security meant to dissuade criminals from breaking in has been tough – the pandemic made it hard to find quality workers in every sector, and the security guard industry is no different, Eggers says. Business owners also have to decide whether they want their guards to be armed (something he does not find particularly helpful).
Dispensary Robberies Becoming More Frequent
Plus, Eggers says you can never stop crime altogether. Break-ins are a matter of if, not when. That’s especially true in the Bay Area, where CCSS is based. And it’s a fact for all retail businesses, not just those dealing with cannabis. In the Bay, break-ins at dispensaries have gotten so bad that local officials have started speaking up, voicing their concerns that crime could drive out small business owners. The Chairman of Oakland’s Cannabis Regulatory Commission, Chaney Turner, has even said he fears the crime could affect People of Color more than any other group, driving out the very people many cannabis legalization laws hoped to help.
“If the robberies continue to happen, I think we’ll lose more equity businesses,” said Chaney. “It’s not fair for people, coming from these experiences and backgrounds, whether it’s being formerly incarcerated, you know, or just being poor, right, and working your way up to having an actual, you know, cannabis operation only for it to be burglarized and vandalized so many times… We need to find ways to keep these people hopeful. Because people are losing hope and if they lose hope, we’re going to lose businesses.”
A Changing Market
Eggers says he has multiple clients who are thinking about leaving Oakland or San Francisco because of how bad crime has gotten there. He says he spent a lot of time talking with cannabis business owners about what their pain points are, so that he could then talk with them about solutions. “Some would argue we’re leaving money on the table,” said Eggers, “but I don’t know what I don’t know. How I make up for that is to provide as much value as possible to our clients. We do that in part by being independent, by knowing our stuff, and making sure that when we provide recommendations or even if we implement solutions, that it’s the right solution for that facility – not because that provider or that hardware manufacturer is giving us the biggest commission.” Eggers explains, CCSS gives companies “one throat to choke.” The guard company, camera company, video monitoring company, roaming patrols, and so on are all subcontractors under CCSS. That way, if something goes wrong, the business only has one place to call for help, rather than trying to deal with several different service providers and vendors. “What we’ve done is launched a managed and optimized security solution. We’re calling it MOSS. Think of CC Security Solutions as a general contractor,” said Eggers. “We’re really trying to re-allocate the risk and hold people accountable. This industry is evolving and becoming more sophisticated. In order to be sustainable, this is a model that will help operators get there.”