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ID Proofing: The Key to Running a Successful Dispensary

Automotive fraud

Identity Verification: The Key to Running a Successful Dispensary

You started your cannabis business because you saw the potential for tremendous growth in the industry and the positive impact cannabis can have on people's health. Not a bad move as the cannabis industry has grown quickly with the rapid legalization of recreational marijuana use in more and more states and sales projections of up to $37 billion by 2024

It is clear that the space shows great promise, however, due to the type of business, there are a lot of unique roadblocks to consider.

As the cannabis sector has blossomed, criminals have turned their attention to gaming cannabis businesses. Fraud has reared its head in the form of fake IDs and identity theft, challenging dispensaries to ramp up security in response.

The need for dispensaries to implement powerful identity verification processes has been magnified by the legal repercussions of failing to do so. From a tarnished reputation to criminal penalties and the threat of a business shut down, the consequences of selling to someone you shouldn't are not to be overlooked.

The purpose of this blog is to help you navigate the issues around identity - ensuring that you are selling to the right people. When ID proofing is handled correctly, the benefits to your business are huge. Here are just a few:

  • Blocking fraudsters from affecting your business and customers

  • Stopping crimes and illegal cannabis distribution from proliferating

  • Sidestepping serious legal problems

  • Preserving your company's public credibility

Like many modern businesses, you probably have a retail store, and an online business supported by delivery. The following concerns demonstrate the importance of an efficient identity verification process.

ID Authentication Concerns

Underage sales

Selling to minors is an especially serious crime, and dispensaries must adopt a proactive stance on verifying customer IDs to avoid legal liability. Requiring customers to have their IDs ready upon entry is important whether your company sells in-person or by delivery to simplify the process

Ensuring you are only selling to legal adults does more than build your business's reputation for compliance; fines for non-adherence can be astronomical. From a $3,500 fine coupled with a 5-day suspension for your first violation in a given year to a fine of up to $50,000 for your third violation in the same year (depending on your location), the consequences of underage sales can be financially detrimental to your company. 

Authorities have even taken to hiring minor decoys to assess dispensaries' compliance with minor sales restrictions in certain jurisdictions (such as California). Just to be sure each sale is legal, an additional check during the payment process is recommended.

Over-limit Sales

Looping

Keeping minors from making purchases is one thing, but what about adults who try to buy too much?

"Looping" is an issue that has surfaced wherever a legal limit on how much marijuana an individual can purchase each day has been implemented. Instead of leaving with a single purchase, people began exploiting a perceived loophole in the wording of the law and making additional purchases in rapid succession.

Keeping a record of IDs being used to place purchases at your dispensary can help prevent illegal sales of this nature. Cannabis business owners and executives should also craft a policy to prevent looping for diversion.

Smurfing

There is more than one way for criminals to bypass the legal purchasing limit for marijuana. Many use a tactic known as "Smurfing", whereby they simply visit different shops on the same day to bypass legal limitations.

The term "Smurfing" stems from money-laundering, where large cash transactions are broken down into much smaller ones to avoid detection. In the cannabis industry, it has come to refer more specifically to transactions broken up by location as opposed to looping at a single dispensary.

A verification system that keeps track of IDs used to place purchases can assist local law enforcement in cracking down on the practice while keeping your business safe from any association with such criminality.

Regular Identity Fraud

Besides the above concerns dealing with more obvious issues carried out by people with either real or fake IDs, those perpetrated by individuals armed with stolen personal information can cause serious harm as well.

With actual identity theft, a customer could pose as another individual to cover up more widespread smurfing. This issue can become particularly complex when fake IDs are also employed. Customers from out of state could produce a fake driver's license or even a forged tribal document to finalize an illegal purchase.

By verifying the authenticity of an ID and quickly matching it to the person who is using it is a solution that can help you mitigate this fraud altogether and avoid harsh legal ramifications. 

A Process That Works

If you need to facilitate online purchases and deliveries, a final pass through an accurate identity-checking solution can help. It can also drastically reduce friction for customers without exposing you to legal risks. Ensuring the right person signs for each delivery by authenticating their ID with a purpose-built solution at their doorstep is a great way to keep your dispensary compliant with local legislation.

Intellicheck is more than a basic identity-checking solution. We deliver a highly accurate solution. A traditional bar code scanning solution is easily fooled by high-quality fakes because it does not check the security codes in the barcode. Intellicheck isn’t fooled by good-looking fakes.

A document scanning solution with an 80% detection rate does not do much better. It too is looking to see if the document looks real. These solutions will match the document against templates in their database and render a verdict. However one in five times a good customer is turned away or a bad customer is let in. Those are not good odds then your business is on the line. Intellicheck delivers 99.9% accuracy. 

With sub-second results, we can deliver an in-person process for your dispensary or drivers, or an online process that includes facial match and liveness for your website. Combined with the ability to use the scanners and/ or mobile devices you have, we save you money through:

  • No new equipment to buy

  • Faster processes that lower abandonment rates

Less fraud and more good customers

How can you get your dispensary to a state of total legal compliance?

In a word, Intellicheck.

Reach out to our team today to learn how you can get started.

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