4 Reasons Dispensaries Must Get Identity Validation Right

The cannabis industry has seen explosive growth year over year thanks to legalization initiatives in 10+ states for recreational use and in 30+ states for medical purposes. While an increase in business is always a good thing, it has also placed a magnifying glass on the operating practices of companies in the space. Regulators are paying very close attention to dispensaries in an effort to ensure compliance.

Cannabis businesses can land in hot water if they sell to the underaged or if they sell more than what is legally allowable. They can also run afoul through fraudsters using fake IDs to steal goods and services, or using those fake IDs to buy more than they are allowed, so they can resell it. 

This all puts budding dispensaries in a precarious position. However, there is one clear solution–identity validation. To guarantee your organization’s safety from the potentially dire consequences of compliance problems, customer identity must be routinely checked at each sale. One easy way to do it is through ID validation software. 

1. Increasing Fines

Steep fines are a given for dispensaries that fail to prevent underage purchasers from slipping through the cracks. In Colorado, fines range from $2,000 to $500,000 for a single offense in which anything more than .5 ounces (and less than three ounces) is dispensed to a minor by an adult. 

To make matters worse, this crime is considered a level three drug felony and can land offenders in jail for anywhere from two to six years. As amounts of marijuana dispensed go up, the fines and penalties ramp up, accordingly.

2. License Suspension

If fines and jail time were not enough, legislators in states where cannabis use has already been legalized have also made license suspensions enforceable for a variety of offenses. Specifics vary by state, but accounts of cannabis companies effectively being barred from doing business have already come up. For example, the CEO of Ancient Roots, a medical marijuana cultivator, and processor in Ohio, had his employee license suspended for giving out free samples to visitors at his facility.

Suspensions can also extend to your entire business, barring you from transacting from 10 days to 2 weeks, depending on your location. Closing your doors for an extended period of time can take a tremendous financial toll on your business, not only costing you immediate sales revenue but giving your customers a reason to seek out an alternative supplier, as well.

3. Protection from Noncompliance and Fraud

As sales in the cannabis industry breach the $35 billion mark, more and more scammers have set their sights on dispensaries as easy targets for exploitation. Whether you are faced with customers interested in bypassing purchasing limits or full-blown fraudsters looking for a way to make easy money, the threat posed by poor ID validation techniques is very real. 

Two tactics that are largely unique to scammers and illegitimate customers in the cannabis industry are smurfing and looping. Both can cause serious compliance concerns for your business if allowed to go on.

  • Smurfing– Some customers may try to place purchases at multiple locations every day to get their hands on more products than they are legally allowed to acquire. This tactic can prove disastrous for franchises with no system in place to track customer identities across branches, leading to business-ending consequences should authorities catch wind of the situation.
  • Looping– Looping is another common tactic customers use to get around cannabis purchasing and possession laws. Instead of visiting a different location to make a purchase, they simply return to the same one to buy more, over and over again. This phony perceived loophole is also illegal and allowing your own customers to do this can land you in hot water with authorities as well.

4. Poor Reputation

Even entirely unintentional offenses can put you on the radar for heightened surveillance indefinitely. Your store could be watched much more closely and probed on a regular basis by authorities who may never fully trust you again.

A bad reputation can create more than surveillance headaches for your business though; legitimate customers may steer clear of your company as well. Reputable dispensaries inspire confidence and attract the right kinds of customers. ID validation ensures you and your customers are safe from the actions of illegitimate buyers.

How to Safeguard Your Dispensary

The only way to stay ahead of scammers and bad buyers of all types is to adopt a truly effective ID validation solution capable of scaling your business. Intellicheck is the answer.

With Intellicheck, you can always be sure that your ID checks are being performed with the highest possible degree of accuracy. No matter how many customers you need to process, Intellicheck can keep up, delivering sub-second results every single time. 

Intellicheck’s accuracy is second to none at 99.9% and is trusted by both brands and law enforcement agencies throughout the country. Integrate your existing system with its simple API or get a full-featured ID validation solution up and running in a snap with the easy-to-use online portal. ID scans can be handled with your current system or even a phone to provide comprehensive validation results.

Improving the ID validation portion of your sales process can not only keep authorities from taking action against you, but it can win over new customers and help you retain your current client base as well. Intellicheck can help you to thrive in this expansive market.

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