Up until 2012, marijuana for recreational marijuana use was illegal. Now it is one of the fastest growing industries in the country, with an annual revenue of $25 billion and growing! But while cannabis is such a lucrative vertical, recreational use still remains illegal in some states, and in others, daily purchasing limits remain heavily regulated.
What is Looping and Smurfing?
Looping and smurfing are very similar, with the difference being in the purchase locations. They are both intended to circumvent the daily purchasing limits by use of creative methods. Both of these methods exploit a “loophole” in the law. Cannabis sellers use looping to acquire amounts of product beyond the legal limits for resale in states or countries where cannabis is still illegal, or to resell on the black market.
Looping is done by making several trips to the same dispensary in the same day. The customers will go in, purchase the desired products, checkout and leave. Upon leaving, they wait a short period of time and return to the same dispensary and repeat the process.
Smurfing is done in a very similar way, with the key difference being a rotation of dispensaries. Again, these patrons will visit a dispensary, buy the desired products, check out, and leave. But, instead of re-entering the same dispensary, they go to another dispensary and repeat the process.
The Risk of Noncompliance
One of the most recent high-profile cases of noncompliance was back in 2017 with Sweet Leaf. It was discovered that executives were allowing the budtenders to completely overlook these transgressions while allowing some customers to make purchases up to 40 times per day. While the charges against the budtenders were dropped, they were still required to perform community service. As for the executives and higher-up employees, they lost all 26 of their licenses, fined $2 million, banned from the industry for 15 years, with an additional $8.8 million tacked on for unpaid rent fees on the commercial properties. Several former executives were also sentenced to time in prison due to allowing almost 2.5 tons of marijuana to make it to the black market.
How to Protect Your Business
Compliance can be an extremely simple process. All it requires is a few extra seconds with each customer, and a trusted ID Scanner For Dispensaries. With the appropriate hardware and software combination, it all but ensures your business remains compliant.
The appropriate scanner uses a series of lighting checks to check for embedded security features such as holograms and watermarks to help prevent the use of fake IDs. By scanning a customer’s ID upon dispensary entry and/or purchase your dispensary will have an accurate record of each time a customer has entered the premises. When integrated with your cannabis POS system, each ID scan can also be associated with a purchase. VeriScan software includes setup for automatic alerting when customers have reached their daily purchase limit according to your state’s unique laws.
If you’re worried about certain privacy retention laws (PII), don’t worry, because we factored that into our software as well. Based on the regulations of your state, the storage of customer data can be adjusted to ensure compliance on that front as well.
Trying to navigate such a rapidly changing industry can seem tricky, but luckily we have some of the best Cannabis compliance experts in the game. Schedule a call today to see how IDScan.net can help your dispensary remain compliant and protect from looping.