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Love It Or Liability? Considering The Impact Of The ACMPR Physical Security Exemption

Health Canada just announced this week that a new exemption license for Licensed Producers and Applicants of Medical Marijuana, under the ACMPR, will be available for application to reduce the amount of security features necessary within medical marijuana operations.  While saving money on initial and existing operational expenses is certainly an attractive carrot to nibble on, there are serious consequences that can happen as the result of this seemingly tasty treat. It’s really not as satisfying as one might think it is. There are some key elements to consider when deciding between whether or not to apply for this exemption or not.

The Benefits

The exemption states that, if approved, an operation could move forward with less physical hardware such as vaults and video cameras which usually make up some of the larger security related expenses. As ideal as this sounds, LP’s and applicants will still be required to secure the perimeter area, interior areas, access/entry points and all areas of  the facility except for the cultivation, processing, and related rooms. When it comes to vaults, their pricing ranges according to the security level designation and can incur costs from $10,000’s of thousands for a lower level vault to 100,000+ for level 10. Our friends at International Vault have shared some valuable insight on this topic that you can check out here. Many LP’s have already invested millions of dollars into their operations and set up while new applicants are on the brink of doing the same as they enter into the medical marijuana field. Many have shareholders and external investors that also have a vested interest in the day to day operations and overall success of the site and business. 

The Liability Risk

Truly, this sounds like a liability nightmare from our standpoint since any business with ample valuable product and inventory must take carefully calculated steps in order to secure their investments properly and to meet basic insurance requirements. A good place to start would be on the frame of thought, “How will this impact my insurance?” and “What would my underwriter say?”

More risks to consider include the liabilities at the workplace with regards to ‘health and safety’ issues and the potential loss of product or unintentional/accidental loss of product through not following ‘good business or operation practices’ or the site’s Standard Operational Procedures. Remember that this is an ‘exemption’ application and what that could mean in the very near future, or even years out if things change quickly or if the government decides to change or revoke the program, is that this could very negatively impact your operation by incurring a lot of unnecessary expenses, it could interrupt operations as new policies are implemented and given a sharp timeline to execute which could result in profit loss and unfortunate delays. This could also mean that if one of the situations mentioned above actually happens, which is very likely, then Health Canada could revoke the exemption and have all operations fall back under the current ACMPR standards or an updated version thereof to address whatever issue arose as a result of the exemption. This is a costly risk to weigh carefully before making a move in either direction. The concern to consider is how saving a dollar today may in fact cost you three dollars tomorrow in unforeseen expenses.

The Solution

With that said, there are ways to reduce expenditures in a way that doesn’t leave operations vulnerable to possible misplacement of product and/or unmonitored illicit activity within the processing and cultivation rooms, in weighing out Work Safe concerns and liabilities, in addition to ensuring that the monitoring of operational practices are congruent with the standards laid out in the legislation.

At Tri West Integrated Solutions, we strive to ensure that our partners and clients are as educated as possible so that they can make the best decision in meeting their security needs as they move forward with the exemption or by remaining compliant with the current ACMPR standards. Ultimately, it’s imperative for your operation to always be in compliance with new or existing insurance standards as well depending on the size of the site. There are several factors from compliance to insurance to operations to health/safety to the exemption itself are all things to look at equally when making such an important and weighted decision.

The new regulations specifically talk to the storage area(s) for current Licenced Producers or Applicants which were previously the ‘vault’ as per the Security Directive are now ‘secured rooms or areas’. What is now optioned is to forgo the requirements of a physical vault and the Licenced Producer or Applicant MUST have at a MINIMUM is as follows:

  • A secure room that still requires all the security that was previously required for the VAULT by way of intrusion system and sensors, full and detailed video surveillance that works in all conditions, and access control for all entry/exit points that logs and records all person(s).
  • This room doesn’t need to have ‘free and clear’ space on all sides and ceiling as per the regulations but needs to be physically built to prevent unauthorized entry through the entry/exit points and walls/ceiling/floor, as well as allow ‘good production practices’ for a clean zone.
  • In addition to the physical security requirements for the ‘storage’ room the Licenced Producer or Applicant will be required to have a RPIC or ARPIC present and only person(s) required to be in the storage area(s) for their work are allowed.
  • The area must be constructed in a manner that allows for ‘good business practices’ for the cleanliness and ability to sterilize the area.  

 

Things to consider under the new regulations for the storage room(s) in place of the vault:

  • The security requirements are lesser than the security directive in regards to the physical security but there are still requirements for layered security under the exemption regulations.
  • Insurance underwriters for this space are looking to possibly adopt the model used for the jeweller industry. This means for the Licensed Producer, the higher the value or risk area or history of the site/business, the higher the fees without the proper security and storage areas. This is why for any facility of size or scale it would be strongly recommended, and beneficial, to have a proper vault and security in place to protect and insure their products and business.
  • The physical requirements of the storage room(s) is to be built to a standard that is not detailed at this time but WILL prevent unauthorized entry through the doors or walls or ceiling or floor. This will require the room(s) to be constructed of hardened material as well, the doors and door frames will need to still be steel and commercial grade at a minimum.

 

The new regulations specifically removes the requirement for 24/7 visual recording devices and motion detectors within the areas where cannabis plants are cultivated, propagated, harvested or trimmed and/or where seeds will be present. The Applicant or Licenced Producer is still required to meet the following:

  • Full visual identifying video at ALL entry/exit points to the rooms as noted above.
  • Full intrusion detection systems for all entry/exit points to the rooms/areas noted above as well around these rooms/areas.
  • All perimeter, exterior, and interior subdivision C areas not listed above will be required to meet all previous and current regulations for security and setup.

 

Things to consider under the new regulations for the rooms with plants or seeds:

  • The interior areas (cultivation, propagation, harvesting or trimming and/or where seeds will be present) no longer require, under regulations from Health Canada, for visual recording or motion/intrusion detection. The Licenced Producer or Applicant will want to consider their operational procedures for having some form of visual recording in those areas as well as for their insurance as that may or will become a requirement.
  • Insurance and coverage will most likely depend directly on location, size of operation, and value of the site and operation, as well as the history of incidents or activities at site.  
  • All these factors should be reviewed at the design/approval to build phase to finalize how the facility will operate and if under ‘best practices’ do they want to cover themselves and their staff from a ‘health and safety’ standing as well as from confirming all operation standards are being followed day in and day out. With regards to the visual monitoring, these systems are used for multiple applications such as – security, operations and confirming of operations, health and safety, and compliance with any internal/external/governmental/underwriter requirements. For these reasons the visual monitoring of your site should be viewed from several mindsets aside from ‘what do I need to pass regulations today’ to ‘what do I need to meet the regulations today and tomorrow, insurance, my operational standards, the health and safety of all my staff, and properly protecting my investment’.

 

As such, Tri West Integrated Solutions is willing to offer a complimentary site evaluation to help identify risks and offer guidance as to which direction might serve your operation and pocketbook best so that if Health Canada ever chose to suddenly revoke the exemption, change the regulations, or new insurance standards require new layers, your investment is still protected appropriately.

Contact us today at 1-877-890-5663