Here’s what you need to know about how to make sure your store is secure and compliant without breaking the bank…

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.

OVERVIEW

Protecting the customers, employees, and assets of your retail store is the most important job of retail store owners and managers. From a physical security standpoint, this means equipping the retail store will all the necessary features to ensure that you can adequately prevent and react to any threats against your store and the individuals within it. In this article, we teach you how to design a robust security system that will ensure your retail store is secure, on the right side of compliance, all without breaking the bank. You will hear from leading security experts across the Canadian cannabis industry, who have offered up tips for developing your physical security plans.

PROVINCIAL REGULATIONS

 One of the foremost goals of cannabis regulations is to prevent the diversion of cannabis products into the hands of youth and the illicit market. Accordingly, federal and provincial regulations were designed to ensure that companies dealing with the production, handling, and distribution of cannabis products are equipped with a sufficient level of security features to prevent theft or the misplacement of products. Each provincial government has established its own set of requirements for the level of security needed for recreational cannabis stores, which should be reviewed extensively prior to initiating the development of your security program.

Here, we cover the requirements for Ontario retail stores as described by the Alcohol and Gaming Commission of Ontario (AGCO) Registrar’s Standards for Cannabis Retail Stores, however much of this information can be applied to other provinces.

Mandatory Security Requirements

 The AGCO’s Registrar’s Standards outlines numerous mandatory physical security requirements that will need to be in place prior to passing your inspections and opening your doors to customers (see Article 3 for details on inspections). Noteworthy requirements include:

Section 2.1: A secure, high-resolution surveillance system must be in place at all times. Cameras and lighting must be positioned to clearly capture 24-hour coverage of the interior of the premises and immediately outside the premises, including entrances, exits, age-gating, pick up areas, point of sale area, receiving, sales floor and storage areas.

Section 2.2: All cannabis must be stored securely at all times and be accessible only by staff from receipt of the product to point of sale, destruction, or return to the Ontario Cannabis Store (OCS).

Section 2.4: All points of access to the premises must be secure and protected against unauthorized access.

Section 2.5: Licensees must ensure that cannabis and accessories are not visible from the exterior of the premises.

Section 5.1: Licensees must take reasonable measures to ensure that patrons are not purchasing cannabis or cannabis accessories on behalf of individuals under the age of 19

During your first inspection, the AGCO compliance officer (C/O) will look to confirm that each physical security requirement listed in the Registrar’s Standards has been implemented into your retail store and is functioning as intended. They will check to see that visualization into your store from the outside or in your age-gating area (e.g., vestibule inside the store) is not possible, that you have camera footage covering all areas where cannabis could be present along with your point of sale area, and that your access points are secured.

They will look at your live surveillance footage to ensure there are no blind spots throughout the store. This is especially important for your secure storage area, and C/O’s will often strategically position tissue boxes throughout your storage room and check the camera footage to ensure it remains visible at all times. They will also ask about the structural makeup of your secure storage area, and while the AGCO has no prescriptive guidelines for the construction of your storage area, they will look to see that you have made an effort to secure it (e.g., drywall reinforced with metal mesh).

Passing your first inspection is a critical checkpoint during the Retail Store Authorization (RSA) phase for advancing into the queue where you will await your licensing date. Given that the security system is the priority of the first inspection, it is highly recommended that your early efforts focus on getting your store built out to the point where you can have your system installed.

Like many components of your retail store operation, your physical security system is something that should be developed in consultation with professionals, ideally those with cannabis retail experience. Working with experts will ensure that your security program is appropriate for your store location and is compliant with respect to all federal and provincial regulations.

It is no secret that it can be quite expensive to equip your store with all the necessary security features to keep it secure and compliant. In Article #1 of this series, we highlighted that a security installation (equipment included) can cost you anywhere between $25,000 to $75,000 depending on the size and level of detail required. Working with professionals such as security consultants is a great way to ensure you don’t overspend in the pursuit of the perfect security system.

DESIGNING A ROBUST SECURITY SYSTEM

 The AGCO Registrar’s Standards is a great guide for the level of security detail your store will need, but it is by no means exhaustive, and additional features will be needed to ensure the safety of your store. Adapting your physical security measures to the risks associated with your specific location, including any vulnerabilities that might exist based on the construction and design of your store, will go a long way to ensuring a robust security system is achieved.

A comprehensive security system is developed by considering a retail store’s specific needs and identifying potential risks to create a program that has multiple layers of security. The following key principles should be considered when developing your security program:

• The ability to prevent individuals under the age of 19 from purchasing cannabis or cannabis accessories;
• The ability to deter a security incident in the first occurrence;
• The ability to detect a security incident at the earliest opportunity;
• The ability to delay the intruder from their objective following detection;
• The ability to respond to the security incident;
• The ability to recover from the security incident.

Each layer of security increases the ability to deter, detect, delay, respond, and recover from a security incident. In addition, security-specific Standard Operating Procedures (SOPs) should be established to allow staff to be aware of security protocols and to react appropriately (more on SOPs later).

Physical Security

In addition to surveillance cameras, many stores implement additional security features such as access and intrusion controls (e.g., electronic card readers equipped with door contact sensors and electric strike), advanced locking systems, motion detectors, glass breaks, and silent alarms. Many retail stores will also install a camera viewing station directly outside your receiving area so you can confirm that an approved individual is at the door before opening it.

Importantly, your retail store security will be connected to external security companies such as a ULC listed central monitoring station, which keeps tabs on your closed-circuit television (CCTV) and other security systems and will notify local emergency authorities in the event of an alarm. It is also strongly recommended that you establish a strong relationship with the emergency service stations within your community, including the police and fire department. The more familiar they are with your retail store operation, including its physical make-up and layout, the better equipped they will be to respond in the event of an emergency.

While it is not required by the AGCO that you employ security guards at your retail store, many retailers will opt to do so as an added layer of protection. This is a great way to strengthen your retail store security and to provide comfort to your patrons, staff, and members of your community. Additionally, it is common to employ a Head of Security (or similar position) who can manage all security-related aspects and personnel of your retail store, which frees up significant bandwidth for your retail store manager to focus on other aspects of the operation.

Designing a robust physical security plan is of utmost importance for your retail store operation (photo taken from Body and Spirit Cannabis at 361 Yonge St, Toronto).  

ORGANIZATIONAL SECURITY

 The retail store’s hierarchy system, which stipulates the direction, responsibilities, and flow of information between positions within the organization, should be understood by all employees of the store. It is recommended that you develop an organizational chart that identifies all key positions, along with their responsibilities, and make it accessible to all employees. By understanding who to report to, your employees will be well equipped to respond to an alarm or emergency in an effective and timely manner.

 Responsibilities of The Store Manager and Owner

 The Retail Store Manager (RSM) and Retail Store Owner (RSO) are responsible for ensuring that all applicable physical store requirements set out in Section 2.0 of the Registrar’s Standards for Cannabis Retail Stores are strictly adhered to. Additionally, the RSM and RSO are responsible for:

• Implementing a Security Awareness and Training program for new employees, and ongoing training of all employees;
• Developing and maintaining company Standard Operating Procedures (SOPs) and policies related to security;
• Ensuring secure transportation of cannabis either back to OCS in the event of a product recall, or to another authorized store controlled by the RSO;
• Maintaining and ensuring a system and policies that protect customer information;
• Managing all cybersecurity, IT infrastructure, and potential operation threats that could compromise the security of the company;
• Investigating and taking corrective and protective actions for any security concerns, incidents, breaches, loss or theft, operational risk, adverse information, threats, security/fire/hazard alarms, and safety incidents.

 SOPs and Staff Training

 Successful retailers will strive to establish a culture of security and safety within their store from the outset. This is best achieved by training and educating your staff on the risks associated with the retail store, and how to properly respond in the event of an emergency. A great way to educate and train your staff is to develop and implement a robust set of Standard Operating Procedures (SOPs), which are the blueprint for how your employees should operate in a given situation. 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 and emergencies.

It is imperative to have a comprehensive set of SOPs that encompass all aspects of the retail operation, and this is especially true for security-related measures. A strong set of SOPs will be comprehensive, concise, and unambiguous. They should clearly identify who is responsible for responding to a given alarm or emergency, and who to report to. They should contain contingency plans (where appropriate) in the event that something unexpected happens. They should also be “stress-tested” during mock-up training scenarios to assess your employee’s comprehension of the SOPs and therefore the quality of the SOPs overall.

SOPs you should consider developing for your retail store security include:

• General security protocols
• Alarm systems
• Cash handling
• Video Surveillance (CCTV) protocols
• Emergency Action Plans (e.g., burglary, break-and-enters, power failures)
• Opening and Closing Procedures
• Transportation Manifest and Security
• Record Keeping and Inventory Management

TIPS FROM THE SURVEILLANCE SHOP

To give you first-hand insight into all that goes into designing a robust security system, we caught up with Claudia Pietrantonio from The Surveillance Shop, a Canadian based company that specializes in commercial security camera systems, intrusion alarm, access control & intercom.

 Can you tell us about The Surveillance Shop’s role working with Cannabis Retailers?

Government requirements make security a major investment in any cannabis project and this is absolutely the case with retail. Our job as a security integrator is to educate our customers on not only what they need to meet government requirements but also on products and services that help them run their businesses safer and more efficiently.

What should retailers be considering when developing a security program for their store?

There are three important questions to ask yourself before requesting quotes on your project:

1. Do you intend to have more than one store?
2. Do you see value in a keyless environment?
3. Are things like real-time customer traffic/heat mapping important to you?

Basic requirements for a cannabis retail store start at a camera system that provides coverage of the storage, retail, entrances, and receiving areas as well as an intrusion system. We always recommend coverage throughout corridors/transitional areas and ask our customers what other areas are important to you?

The next step in building your system is asking yourself if you ever intend to own more than one store. If the answer is no, you are can likely get away with a basic recorder intended for small businesses – this would be the most cost-effective solution. If the answer to this question is yes, you need to start considering systems that allow for centralized control and user management. This is critical when you have many users spanning multiple locations.

Do you recommend retailers implement access control systems?

As a retail store, you are not required to implement an access control system to comply with government requirements. However, we strongly recommend access control at a minimum on your main employee entrance and on your secure storage room. This is not just a good practice is something that just makes practical business sense for most people. It allows you to do things like limit the time period employees can access the store or secure storage (why would someone need to access secure storage at 3 am?), allows you to keep track of the time people are coming and going (time and attendance) and removes the need to call a locksmith if keys are lost or employees are terminated.

Are retailers starting to use more advanced security tools?

We always ask our customers to consider if a technology such as video analytics (that provide some real-time intelligence) is important to them. These would allow you to do things like heat mapping to show activity in your store and send alerts if a customer waiting has been waiting for longer than they should. While these technologies can be pricy, some retailers prefer to have that added layer of security included in their program.

BOTTOM LINE

 Establishing a robust security program that will protect your store, including its customers, employees, and assets, is the foremost goal of all cannabis store retailers. Hiring professionals who have experience working in the cannabis retail space is a great way to ensure your store gets the security program it needs and is on the right side of compliance. Additionally, working with experts will ensure that you don’t overspend on security features you don’t need.

We finish off by leaving with you some advice from Barry Davidson, who is a leading cannabis security expert with the Hyde Advisory and CannaNavigators:

“The importance of integrating your security and safety systems into your business operations cannot be understated. In a retail environment, especially high-profile and high-value cannabis retail, this is a true imperative to the success of your business. Don’t be oversold but don’t go short because both of those choices have consequences.”

Be sure to check out next week’s article on insurance coverage for all aspects of your cannabis retail store, which will be published Wednesday, August 19th.

CANNDELTA IS HERE TO HELP

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 info@canndelta.com or toll-free at 1 (877) 274-6777.