Here’s what you need to know about SOPs, and why they are so important for your retail store…
ABOUT THIS SERIES
CannDelta, in partnership with the Business of Cannabis, has produced a 10-article series entitled “So, you want to open a cannabis retail store?” which is aimed at preparing prospective cannabis retailers with the tools and resources needed to open their own cannabis retail store. This series covers everything from initial planning, estimated start-up costs, the licensing process, location selection, staff hiring, inventory management, and much more. The goal of the series is to empower prospective cannabis retailers with the knowledge and resources needed to change their mindset from “one day” to “day one”.
Interested in accessing all 10 articles in one place? Download the CannDelta E-Book now using the sign up link at the top of this page.
In this article, we guide you through the development and implementation of Standard Operating Procedures (SOPs), which are a critical component of a cannabis retail operation. Having a robust set of SOPs established will not only ensure that your retail operation operates within the confines of federal and provincial compliance, but it will also maximize productivity and profit while minimizing the risk and liability of incidents. After reading this article, you will have a newfound appreciation for SOPs and will be ready to produce a strong working set for your retail store.
WHY SOPs MATTER
Having clear instructions on how to conduct your job is always important. When your job is a part of the nascent cannabis industry that is littered with strict rules and regulations, it is imperative that you have clear instructions on how to conduct your job. This is particularly true in the case of a cannabis retail store, where it is easy to make missteps that could very well end up costing you your hard-earned retail licence. SOPs are therefore especially important in the cannabis industry, as they provide clear guidelines on who is responsible for doing what, and how.
SOPs should be constructed in such a way that they can answer any question that may arise during the operation of the retail store, such as:
- What do we do in the event of a product recall?
- Am I allowed to issue a customer refund?
- Are our cameras capturing enough of the secure storage area?
- Is our marketing and advertising campaign compliant?
- Who needs to be present for cannabis destruction?
- What do we do in the event of a burglary?
- What do I do if I catch an employee smoking cannabis during their shift?
While it is natural to focus on the major components of the retail store when drafting SOPs (e.g., inventory management, security systems, purchases, opening, and closing), it is imperative to have a comprehensive set of SOPs that encompass all aspects of the retail operation, including for scenarios that are unlikely to occur. Not only are SOPs great resources for unexpected events that require clear guidance (e.g., an emergency), they are also fantastic training material for new employees. Having a concise and clear set of SOPs will ensure that your employees understand exactly what to do in a given situation and it will minimize the need for repeated training sessions.
SOPs are meant to provide clear and concise guidelines for who is responsible for doing a particular task as part of the retail operation. A strong set of SOPs will have the following features:
- They should be comprehensive, covering all aspects of the retail operation
- They should be concise and unambiguous
- They should clearly identify who is responsible for a given task, and also identify the chain of command for reporting purposes (e.g., the budtender is responsible for _______, and shall report to the retail manager on duty)
- They should include contingency plans (where appropriate) in the event that something unexpected happens
- They should be dated, regularly audited, and continuously updated with best practices to ensure they are functioning as intended
- They should be made available to all retail store employees, who must have read and understood the contents of the SOPs prior to their first shift. A reliable and robust set of SOPs can be used as training material for new staff and an on-going reference manual.
The retail store operators and managers are responsible for drafting SOPs, and it is strongly recommended that a complete set of SOPs be available prior to hiring staff and opening up your retail store. Featured below are strategies for developing a complete set of SOPs for your retail store.
Do Your Research
A great way to get started on preparing SOPs is to visit local licensed cannabis retail stores and take inventory of the various aspects of their retail operation. How do they conduct age-gating? How many sales staff do they have on the floor? How are they taking customer orders? How are they preparing/fulfilling customer orders? Where do they have their cameras positioned throughout the store? This is a great way to figure out how you want to tailor the design of your store and to get a good sense of what aspects of the retail operation will require SOPs.
Brushing up on the rules and regulations for cannabis retail stores is another great way to conceptualize what SOPs will be needed. As an example, the AGCO’s Registrar’s Standards for Cannabis Retail Stores outlines exactly what Ontario licensees are required to comply with when opening and operating a cannabis retails tore. The comprehensive set of standards covers everything from surveillance and record-keeping measures to advertising and training activities. Familiarizing yourself with the laws and regulations is a great way to strategize what SOPs are needed and what activities they should encompass.
Talk to Existing Retailers
As has been mentioned throughout this article series, it is strongly recommended that you reach out to existing retailers for advice and guidance. A major strength of the nascent Canadian cannabis marketplace has been the incredible willingness for competitors to support one another in the quest to strengthen the industry as a whole. You should have no problem finding a retailer who is willing to offer up tips and tricks for how best to prepare and implement your SOPs.
We’ve highlighted throughout this series how important it is to contract professionals to support key aspects of the retail operation such as interior design, licensing support, and legal counsel. This also holds true for SOPs, which some consulting and law firms will offer for a set price. In looking for a firm to purchase SOPs from, be sure to check that they have extensive experience in cannabis retail, specifically in your province of interest. The latter point is particularly important given that the licensing laws and requirements vary between provinces and territories across Canada.
You will also want to ensure that the SOPs have been “stress-tested” by licensed retailers and that the SOPs encompass all important aspects of the retail operation. If possible, ask a prospective firm to provide references for retailers who have purchased their SOPs, so you can reach out to them for feedback. You can also contact these firms to look over your personally produced set of SOPs to provide a gap analysis on what SOPs are missing, and what can be done to improve them.
Once you have successfully crafted or purchased a set of SOPs, it is important to conduct “stress-tests” in mock-up scenarios to assess your employee’s comprehension of the SOPs language and therefore the quality of the SOPs overall. These stress-tests should be designed to encompass all aspects of the retail operation, such as:
- Employee Management
- Inventory Management
- Shipping and Receiving
- Record Keeping
- Vendor Management
- Purchases and Returns
- Point of Sale
- Security and Emergencies
- Advertising and Promotions
The results of the stress-tests can be used for further refinement, including for drafting new SOPs to cover previously non-considered aspects of the retail operation. It is strongly encouraged that you have a completed set of stress-tested SOPs as early as possible, and certainly before opening your doors to customers. Make your mistakes during mock-scenarios so you can avoid them when your store is up and running.
Once your store is open to customers, you will want to establish a clear mechanism for continuously evaluating the performance of the SOPs. Are new employees able to quickly comprehend the material? Are they functioning as intended? Are there SOPs we need to create? These are questions you should be asking yourself on a routine basis to ensure that your store runs smoothly. We recommend having each SOP be dated and regularly audited (e.g., on a quarterly basis) to continuously update them with best practices.
Finally, it is recommended that you hire experts (e.g., consultants and lawyers) to conduct mock inspections, akin to the periodic inspections the AGCO will conduct at your retail store. This is a great way to ensure that your store is running efficiently and within bounds of compliance.
It is essential that you develop or acquire a robust set of SOPs to cover all aspects of your retail operation as early as possible. You are now armed with the knowledge needed to develop, stress-test and implement your own SOPs, to ensure that your retail store is well-prepared to open up to customers. By continuously assessing the performance of your SOPs, you will ensure that your employees feel confident in executing their required duties, which will keep you on the right side of compliance.
CANNDELTA IS HERE TO HELP
CannDelta offers a robust set of 55 customized SOPs that cover all aspects of the retail operation, including employee management, sales operations, security, record keeping, inventory management, regulatory reporting, including for curbside pick-up and home delivery.
Hear from Rob Heydon, Co-founder of 420Love (976 Main St. E, Hamilton) to get his perspective on the importance of SOPs and his experience with CannDelta provided SOPs.
“The SOPs I received from CannDelta for our brand 420Love are very detailed guidelines and instructions on how to properly run a retail store. When I won the lottery last year and partnered with another “BRAND” they provided very little or no training and none of these SOPs. We feel very strongly that our brand 420Love will complete, stay compliant and succeed in the marketplace with the help of these valuable SOPs.”
Prospective and current cannabis retailers needing support should reach out to CannDelta for a free consultation. CannDelta is a Toronto-based regulatory and scientific cannabis consulting firm that can be reached at email@example.com or toll-free at 1 (877) 274-6777.