Cash protection basics: 5 areas cannabis businesses cannot ignore

While the most recent efforts to pass the Secure and Fair Enforcement (SAFE) Banking Act were unsuccessful, the availability and innovative nature of banking solutions for cannabis businesses does continue to grow. It is typical for operators to have banking relationships. But, there are still obvious limitations around the cost and sufficiency of these services that impact the transactional experience for the operator and consumer. As a result, cannabis companies continue to experience more complex operational risks and challenges – including management’s controls around cash, product quality, and adherence to state compliance requirements.

With continued growth in state programs and licensing opportunities, we thought it would be helpful to revisit the basics around the need for security and controls related to processing cash and protecting sales. There are five key components you should have in place to help ensure that your cash is protected by a much-needed risk and compliance program.

1. Tight cash storage and transportation policies. Secure storage capabilities and strong cash tracking policies are at the core when it comes to preventing loss or employee theft and promoting a culture of compliance and transparency across the business. Some critical cash controls may include:

  • Strengthening segregation of duties by clearly outlining roles and responsibilities at the dispensary, and restricting access appropriately around the collection, recording, storing, and depositing of cash, which should be under dual control.
  • Making sure that cash is controlled in secure drop safes and transported for deposit by trusted cash custodians and armored vehicles.
  • Obtaining independent monitoring and oversight around the performance of daily cash reconciliations and physical inventory counts.

2. A holistic security strategy. Secure your cash with physical security and surveillance measures, employee activity tracking (cameras and safes), fleet transportation tracking and safety programs, information technology protocols, and employee background checks. A few foundational elements of an effective loss prevention policy are listed below. These should be documented and continuously enforced.

  • Perform a security assessment around the facility, and install comprehensive camera and alarm systems throughout the dispensary.
  • Implement robust employee procedures, and consider formal check-in and check-out processes at shift changes.
  • Conduct a thorough employee onboarding program, including employee credit and criminal background screenings.
  • Perform regular and surprise inventory counts to identify potential cash or inventory shortages. 

3. An employee training program. Training your employees around critical policies and internal controls helps promote accountability and governance across dispensary operations. While the establishment of policies and training is important, so is the enforcement of these rules and standards. Routine monitoring and testing of the company’s key policies and procedures is essential to making sure that rules and standards are being met and that loss, theft, and diversion are prevented.

4. Appropriate insurance. Cash equates to product. It needs to be protected with the same diligence, which includes obtaining the appropriate insurance. Applicable state insurance regulations must be checked to determine what type of insurance is required, as requirements vary by state. Cannabis businesses can receive reduced insurance premiums and greater coverage if they display a strong risk management program that includes the establishment and enforcement of policies, surveillance, and security.

5. Controls around supply chain and production. Vetting your third parties’ security and risk posture is critical to protecting against product tampering or data and privacy breaches. Quality control standards must be maintained through efficient production operations and rigorous quality testing in order to comply with federal and state requirements. These practices also help solidify the trust and confidence of employees, customers, and investors.

In conclusion, cannabis businesses cannot ignore the basics of cash protection, especially given the challenges they face with banking relationships and the heavy reliance on cash sales. A comprehensive risk and compliance program is critical. By implementing these measures, cannabis businesses can promote a culture of compliance and transparency while protecting their sales and reputation.

Contact our team for more information or to get started on strengthening your cash protection program. Plus, be sure you’re subscribed to our CannaQuarterly newsletter for future insights on these topics and more.


Daniel Fornelius, CIA, Director, Risk Advisory Services


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    Daniel Fornelius

    CIA, Director, Risk Advisory Services

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