Protecting your business from theft goes beyond complying with state regulations. And the biggest risk you face might surprise you.
Like banks and jewelry stores, cultivators deal in a high-value product and a cash-heavy business that can appeal to thieves. As part of an emerging industry, growers are still on a learning curve when it comes to preventing and dealing with instances of criminal activity, but there is much to learn from consultants, security contractors and other cultivation businesses.
Cannabis Business Times interviewed four of these experts to provide 32 security tips for growers, covering the gamut — from picking the right system to fostering a culture of honesty, with the goal of ensuring you are running a safe and secure operation.
CHOOSING A SYSTEM
It’s important to choose the right security system for your business, both in terms of meeting essential state requirements and getting the most value for your investment.
1 A monitoring system has a dual role: security and compliance
Unlike in most industries, security systems for the cannabis industry must do more than protect against crime.
A security system “needs to start out, at its core, as a compliance verification system for the state,” says Noah Stokes, founder and CEO of CannaGuard Security in Oregon.
“The design, equipment and placement of a security system needs to be tailored to this need to prove compliance. In a nutshell, you are buying cameras to look at yourself.”
If you run a convenience store and your cameras go down for a time, the risk is private and limited to your own desire to capture illegal acts on camera. If you are a grower, however, the stakes are much higher.
“In Oregon, if your cameras are down for more than 30 minutes at any point, the OLCC (Oregon Liquor Control Commission) — the regulators — must be notified,” says Stokes, who worked with the OLCC in crafting the regulations for recreational marijuana in the state. “In a normal system, you never even know the stuff was down because you don’t monitor it that closely. You look at it when you get robbed.”
Every state’s regulations spell out compliance requirements for security systems, some even down to the camera resolution required, so, at a minimum, reading and meeting these requirements is a must.
2 Find a security company that has experience with regulated systems
You don’t want to pay a lot for an expensive system that’s not tailored to your state’s specific requirements. Inquire about the firm’s experience installing systems for heavily regulated industries and familiarity with state requirements.
“All the things that go into it — the server, the power supply — need to be meticulously designed and selected. The more experienced the better, because they will have done all the trial and error with somebody else,” says Stokes, who has been involved in the security and technology industry for years and has worked with more than 1,000 licensees nationwide.
3 Make sure they understand local requirements
To comply with security requirements, local rules are just as important as state rules. In Colorado, for instance, the state requires off-site storage of 30 days of recorded video, while some cities require much more, according to Tim Cullen, CEO of Denver-based cultivator Colorado Harvest Company.
4 Pick a company vested in the cannabis industry
You can tell if a company is really knowledgeable and enthusiastic about the cannabis industry. Listen to how they talk about your business and how well they understand your goals.
5 Make sure they give you options
Don’t let a security firm tell you that, because you run a high-risk business and monitoring requirements are strict, there’s only one (probably very expensive) option available. Depending on the situation, “[It is possible] to get a set-up that is significantly less expensive, but very reliable,” Stokes says.
Essentially, it’s less about cost than value: Get the right stuff the first time, but don’t overpay.
6 Leave room to expand
Choose a security system that is easy to build on, Stokes recommends. “Regulations change. Your facility changes.” It is worthwhile to buy quality equipment that allows for expansion and sudden changes down the road, especially in brand-new markets such as Oregon.
“In Colorado and Washington, people were ripping out systems three or four times to try to stay [current] with regulation,” he says. “Barely eking by on the first inspection is not a viable option in real life. It’s not a long-term solution.”
7 Go ‘beyond compliance’
Doing the minimum to get a green light from state regulators is not a good idea. “What the state needs to get your doors open is probably not what you want in real life in the all-cash cannabis business,” Stokes says. “Just because the state says you’re good to go does not mean you should stop there, because people can still steal from you.”
8 Install cameras for full rooms
If you are opening a grow operation and a security contractor doesn’t ask you where bulky items (e.g., big plants, equipment) and obstructions will eventually be located, that’s a red flag. Cameras that are blocked are not helpful (and not compliant). Smart placement, to maximize viewing areas, is way more important than the raw number of cameras, Stokes says.
9 Don’t cheap out on monitoring
Colorado and Washington State have mandated 24-hour camera coverage. If you hire a contractor to watch your cameras, make sure they are licensed and have the background to handle a business like this, stresses Trevor Richie, deputy director of Tacoma, Wash.-based Olympus Consulting Group, LLC, a cannabis industry security consultancy specializing in data-driven “protective intelligence,” a method of creating a matrix from various incidents to predict or prevent crimes.
“They are not just there to watch the cameras — they are there to provide protective services.”
WHAT YOUR SECURITY SYSTEM SHOULD DO
Your security system and protocols need to help you accomplish the goal of stopping crimes before they start.
10 Early detection is critical
Security systems should focus on early detection to prevent someone from breaking in, suggests Stokes. Exterior cameras should send real-time notifications to multiple people, including an off-site video-monitoring company.
“Most criminals will scope out a building to see what kind of response they get,” Stokes says. “If someone comes out and tells them to go, they leave and don’t come back.”
11 Real-time notices should be sent around the clock
It doesn’t matter if a vault is unexpectedly opened at 2 p.m., or the system is disarmed at 2 a.m. — owners and managers need to know. It takes just one unscrupulous employee with the right access to pull off a major heist.
12 Protect your highest-value assets
Understand which parts of your operation offer the most “return” for criminals. Some may think the first priority is to protect the plants, but they should be primarily focused on their dry storage, says Tony Gallo, senior director of Dallas-based Sapphire Risk Advisory Group, a security general contractor that works with cannabis businesses on loss-prevention programs.
“If you are going to rob a grow facility, would you steal 2,000 plants, or would you break into the dry storage facility and steal $5 million worth of product?” he poses.
A security system and internal protocols, must be designed around these risk probabilities.
HORROR STORY: One grower had 130 cheap, generic cameras from China installed for $50,000, passed inspection — and had to begin replacing them on day three of operation because they began breaking down. None of the wires were labeled during installation, so replacing the cameras was even more difficult. Eventually the client had to replace the entire system, and learned he could get the same coverage with fewer, better placed, high-quality cameras.
13 Take storage seriously
Colorado Harvest stores all of its finished product in vaulted safes that are bolted to the floor. This means that even if a thief gets into the lobby — with alarms going off and lights flashing — they still have to deal with trying to get to the actual product. “You’re not going to pick up a 2,000-pound safe and run out the door with it,” says Cullen.
14 Have a strong security fence
A security fence kept Colorado Harvest from being breached by a car trying to ram the roll-up door at the grow facility. “They caused some damage, but were not able to get through the door,” says Cullen.
15 Use the same external security a bank would use
For Colorado Harvest, external security means audio and visual cameras, security guards, concrete bollards, and high decimal alarms and strobe lights if security is breached.
A system should allow you to be aware of who is hanging around your facility. What vehicles are lingering? Are they taking pictures? Writing? Drawing? These are key indicators of potential trouble, according to Richie.
16 Inside jobs are more likely
Realize that external dangers are actually not the biggest threats to your grow operation — internal/employee theft is. Despite this, the lion’s share of security assets invested in are meant to prevent people from breaking in, says Gallo, who spent 17 years as director of loss prevention and safety for a major company providing security for more than 1,300 high-risk businesses.
Cullen invested in both. “Our internal security protocols are as robust, if not more robust, as our exterior security protocols,” he says.
STRATEGIES YOU CAN IMPLEMENT
Good security goes way beyond technology. Many workplace strategies exist that businesses can use to minimize the chance for trouble.
17 Understand who’s behind most breakins
Most break-ins at Colorado Harvest facilities have been in the middle of the night, clearly spontaneous and inexpert, Cullen says — “Young men with rocks, and probably with alcohol involved.
“When we first started [in 2009], we had visions of ‘Mission: Impossible’-style attacks happening to our building, people rappelling through the ceilings and such,” he says.
This does not seem to be the reality for most growers. So while high-tech security matters, keep this in mind.
18 Don’t hide your security system
“If you have a good security system, let people know about it,” Stokes says. “… You want cameras that can be seen, and you want them to be eye-level. … You want [people] to know there’s a presence there. Just putting up warning signs is not enough. An actual criminal is not going to be deterred by a sign if you do not have [visible] cameras.”
Tell everyone about your security setup: subcontractors, employees, managers, visitors. Detail your security protocols on your website. Remember, the primary goal is to deter crime, not catch people in the act.
Cameras placed at eye level also are much more likely to get a clear shot of someone’s face.
This goes for outside as well. According to Cullen, some growers try to disguise their facilities, but “if you know what you are looking for, these facilities are pretty easy to spot,” he says. “They have new HVAC on the roof, new power poles, new transformers.”
“We’ve taken the approach of making our buildings look almost impossible to get into,” he says.
19 Don’t make it easy for employees to beat the system
In an all cash-business, the temptation to steal will be greater. Eliminate opportunity for temptation. Have protocols in place, such as restricted access to DVRs. Stress the need to keep individual security codes private.
20 Create an environment that fosters honesty
To minimize employee-theft risks, “establish … set policies, procedures and guidelines that will spot losses and be able to … identify who did it and how it’s being done,” Gallo says.
For example: Where are your employees processing and tending buds? Do you have cameras and a visible video monitor posted there? Do employees know that recordings are being checked regularly?
Think Twice Before Arming Employees
It may surprise some that the advice Sapphire Risk Advisory Group’s Tony Gallo offers the cannabis industry — and other high-risk businesses — is that employees not be armed. He is blunt on this issue. “Could you kill somebody?” he asks. “Last year, two pawn brokers were killed because they actually pulled their guns, had the guns on the robber, but could not pull the trigger. So the robber shot them.”
Even if you do fire, the outcome is often not good. “Do you want to get into a gun battle? What if you miss? What if someone else gets ahold of the gun?” he says.
In Gallo’s experience working with high-risk businesses, the risks outweigh the benefits of having armed employees.
“What do robbers want? They want the cash and the cannabis. Give them the cash and the cannabis, and go home and have dinner with your [family],” he says.
21 Maintain inventory tracking and protocols
Colorado Harvest uses a spreadsheet that tracks all inventory through the growing and processing phase, with the goal of eliminating shrinkage.
How does it work? Only production managers are allowed to cut plants down. This person weighs the plant and enters all vital data. After the trimmer breaks the plant apart, the separated parts are weighed again and must equal what was entered originally. This level of record keeping, checking and back checking continues through the process — drying, bud trimming, curing and packaging.
“We never have one person who is in control of the product all the way through the process,” Cullen says.
22 Have set cashhandling policies
Regularly scheduled cash counts throughout the day let employees know that money is being closely monitored. Have specific people handle cash, and set policies for securing cash after a sale or delivery. A cash-counting machine can be a good investment, Gallo says.
“All of this sets the tone. It starts with the owner, the management — what they allow and don’t allow, and how other people react to that,” he says. Internal thefts usually occur because the right policies and procedures are not in place, or are not consistently followed.
23 Have ‘whistle-blower’ systems in place
Most people are honest and do not like to see people stealing. Gallo recommends having a drop box, confidential 1-800 number or some other way for employees who suspect theft is going on to notify management.
Even if the system is never used, just the fact that it is in place can act as an effective deterrent.
HORROR STORY: A grower with a good-quality security system suffered a robbery at the hands of an employee who knew the system well, had keys, knew where the DVRs were stored and where shipments came in — and used someone else’s code to disarm the system. The thief stole $500,000 — and took all the DVRs (and therefore, all the evidence), which were sitting right next to the safe.
24 Have strict visitor and employee identification protocols
Put protocols in place going above and beyond what the state requires, Richie advises. “Make sure doors are secure … badges are worn [and that] those badges have photo IDs. Do spot checks. Basic, commonsense security protocols can help a great deal.”
Richie cautions that it’s easy to become lax about maintaining protocols such as set times for people to be on site, check-ins, check-outs, and verification of visitor data.
“I’ve been on site visiting several facilities in Washington where … they do not require me to verify the name on my badge [with a government-issued ID]. So really, they have no idea who I am.”
25 Consider guards
If your cost-benefit analysis allows it, 24-hour security guards are a very good investment, Richie says.
Gallo issues a caution regarding armed guards, however: While appropriate in some situations, he advises considering what a gun battle or shooting would do for your business’s reputation in the community (not to mention the physical dangers). This is especially pertinent in a retail environment.
26 Train for the worst-case scenario
Employees should be trained using proven protocols in how to react in an armed robbery or active shooter situation.
27 Follow through on prosecutions
Thieves only know to take their risk seriously if you are willing to follow through on prosecutions, even for minor infractions. “As thieves [in Colorado] have been unsuccessful, and are being caught and prosecuted, the word gets out pretty quick that this is very difficult,” Cullen says of targeting grow facilities and dispensaries.
28 Produce continuously, rather than in bursts
If perpetual production (vs. cranking up production seasonally or in response to orders) is feasible for you, it has a security advantage.
“We are on a perpetual production cycle, so we never have a whole warehouse that’s finished at any one point,” Cullen says. “… 90 percent of the plants are in progress”—meaning a labor-intensive effort is still required to get the raw material ready for sale. For thieves, this does not have smash-and-grab appeal.
Staggered production also means you can maintain a constant workforce, rather than having to hire temps for high-production periods. Maintaining a familiar, loyal staff has obvious security advantages.
HORROR STORY: A grower did not have a good trash-disposal system. An employee would frequently palm buds with his latex gloves, and when he pulled his gloves off to throw them away, the bud would be wrapped inside the glove. Later, he would retrieve the buds from the trash. Better trash-handling policies, such as putting trash into a compactor and stored in a secure environment, could have prevented this.
29 Reach out to law enforcement and address misconceptions
One of Olympus’ clients has had the police chief and local Chamber of Commerce president out to tour their facility. This is an excellent way to create dialogue with local authorities and beneficial security strategies.
For Colorado Harvest, educating law enforcement means communicating the differences between black-market and legal grows, how plants are tracked and the level of security. Cullen recently had 40 police chiefs from Alaska tour one of his Colorado production facilities. The message he believes he left them with is, “This is not just a bunch of hippies growing weed. This is very much a business conforming in a highly-regulated environment.”
IF YOU’RE GROWING OUTDOORS
30 Outdoor cultivation sites need a different approach
“With indoor grows you have control over points of entry, whereas outdoor grows could have potentially a great deal of entry points,” Richie says. “Scaling fences is a prime example.”
For a co-op farm in Washington, the primary concern was intrusion at night. Securing the perimeter proved a challenge, partially because not all participants were willing to pay for security. “With a large grow, like our client who sits on 80-plus acres, it behooves the entire facility to invest in security services,” Richie says.
Richie recommends several layers of fence to act as a deterrent and give the police or security guards time to get to the intruder.
“Where one exterior fence exists, place another one offset 4 to 6 feet,” he says. “In between these two, place anti-intrusion measures such as razor wire or barbed wire. No reasonable person would ever need to go between those fences.”
31 Use one security solution for co-ops
Richie is a proponent of a “single security” solution for co-ops of any size, where a single manager oversees the operation, and shared payment, from all members, for security measures is built into the agreement. This allows an overall security plan to be designed for the facility or farm as a whole.
A BONUS TIP FOR GREENHOUSE GROWERS
32 Keep things free and clear in and around your greenhouse
Create distance between a greenhouse and other structures in your grow area, and don’t let line-of-sight-blocking debris build up against the outside walls. Similarly, keep things clear and open inside; make sure monitoring devices are not covered. “You want to be able to have the support structure to grow, but you also want to keep a sharp eye on the product,” Richie says.
Transportation security is a key concern for cannabis growers. In some places, such as Oregon, says CannaGuard Security’s Noah Stokes, current rules don’t allow professional transport companies to handle marijuana (though they will when recreational gets off the ground). So, many well-known security companies will not work with the industry.
Drivers need ways to secure cash, such as with safes in their cars, Tony Gallo, of Sapphire Risk Advisory Group, says. “Don’t let them carry more than a certain amount before going back to the grow to drop it off,” he says.
Training in armed robbery awareness is critical. How should drivers react to an armed robbery? How can they spot potential trouble? “You can’t have delivery drivers texting and not paying attention. Companies need to take steps to rectify those issues,” Olympus Consulting Group’s Trevor Richie notes.
Richie recommends verifying upfront that the person you are meeting is there. “Verify their face. Take someone with you. For extra security, have the cash given to someone separate.”
Cullen has armored cars pick up cash to deposit daily, and no longer ever keeps cash in stores.
James Sturdivant is a writer, journalist and marketer. He has written for and edited newspapers, trade magazines and research papers, and is currently a content marketer for a web design firm.