Playing by the Rules - Why Compliance is the Whole Ballgame
Download MP3Welcome to joint session, Diverse Voices in New York State Cannabis, the podcast where policymakers, legislators, thought leaders, licensees and advocates come to discuss the evolving landscape of cannabis in New York and beyond. I'm Herb Barbeau, former Director of Operations in New York's Office of Cannabis Management. Each episode, we bring you in-depth conversations with key voices shaping policy, business and advocacy, plus expert insights on the latest developments impacting the industry. And now for the episode. Welcome to episode 18 of season two of joint session.
Herb Barbot:This is Herb Barbeau, and in this episode, we'll speak with Sherri L. Tarr about the all important topic of compliance. But before our conversation with Sherri, let's take a spin around this week's news. And we have a lot of news given our break last week. First, on the international front, the United Nations Office on Drugs and Crime released its World Drug Report for 2025, and it's packed with data on how the cannabis landscape is shifting across the globe.
Herb Barbot:Cannabis remains by far the world's most commonly used drug, the report notes. About two forty four million people between the ages of 15 and 64, or four point six percent of the world's population, consumed cannabis in the past year, a number that has increased by thirty four percent over the past decade. Among those consumers, only twenty four percent are women. The gender gap in cannabis use in Asia is the largest globally, the report notes, as ninety in every one hundred people who used cannabis in the past year were men. On the rising popularity of medical cannabis legalization, the report notes that there is evidence of the effectiveness of cannabinoids in treating a few conditions, but for many other conditions, the evidence is limited.
Herb Barbot:As for adult use legalization, which is legal in Canada, Uruguay, and half of The U. S, the report notes that legislative approaches have also emerged recently in other countries, especially in Europe, with varying degrees of regulated access to cannabis for nonmedical use. Germany, Luxembourg, and Malta have regulated access by adults to nonmedical cannabis. However, a commercial supply chain for cannabis for nonmedical use has not yet been established in these countries that continues. This year, the report goes particularly deep on the environmental impact of cannabis cultivation and looks at how, overall, outdoor cultivation, assuming it is done ethically, is more climate friendly.
Herb Barbot:The U. S. Embassy and Consulate in Thailand published a notice on the Thai government's new regulations that aim to end recreational use of cannabis in the country. In a significant shift, Thailand's Ministry of Public Health has officially restricted cannabis use exclusively to medical purposes, rolling out new regulations aimed at preventing misuse and ensuring its benefits are channeled solely for health, the Thai government announcement reads. Medical cannabis has been legal in Thailand since 2018.
Herb Barbot:In 2022, cannabis became fully legal, which led to thousands of shops selling cannabis and to cannabis focused tourist experiences at spas and hotels. The backlash began brewing almost immediately, and the government made clear months ago they intended to impose new regulations in an effort to focus use to only medical purposes. In Japan, a group of researchers conducted a study that examined whether cannabis acts as a gateway drug among Japanese users. They conducted an anonymous survey of 3,900 cannabis consumers and found that the odds of cannabis consumers moving to alcohol, tobacco, methamphetamine, and other illegal drugs was two percent or lower, suggesting low probabilities of progression. Cannabis used in Japan typically follows alcohol and tobacco and rarely leads to further drug use, researchers concluded, calling for additional studies.
Herb Barbot:These findings challenge the Gateway Hypothesis in the Japanese context. As mentioned here this season, in episode five on the history of cannabis prohibition in The U. S, way back in 1937, New York City Mayor Fiorella LaGuardia established a committee to investigate what was then called the cannabis issue. Five years later, the committee released a report that found that the gateway theory was false and that cannabis use was not widely associated with addiction or juvenile delinquency. So maybe this Japanese study should be the last word on the gateway theory.
Herb Barbot:In The US, two years after lawmakers passed the bill to legalize cannabis for adult use, Delaware is prepared to launch sales. On August 1, existing medical cannabis operators with permission to expand into adult use sales can open their doors, the Office of the Marijuana Commissioner announced recently. These licensees pay $200,000 for an adult use cultivation license and $100,000 for a manufacturing or retail license, far steeper than new entrants into the adult use industry will pay. The $4,000,000 generated will, according to the Office of the Marijuana Commissioner, go toward grants for social equity applicants. Delaware has taken a major step forward by launching a legal adult use cannabis market that prioritizes equity, safety and accountability, said Governor Matt Meyer in the announcement.
Herb Barbot:In March, for the second year in a row, Virginia Governor Glenn Youngkin vetoed adult use sales legislation that lawmakers managed to send to his desk. The proposed legalization, which was vetoed last year, would establish the framework for retail marijuana, which endangers Virginians' health and safety, he wrote in his veto message. This November, voters will choose a new governor, and a group of lawmakers is preparing a new adult use sales plan built upon the vetoed bills to present to their colleagues under the new administration. The group, called the Joint Commission to Oversee the Transition of the Commonwealth into a Cannabis Retail Market, met for the first time recently. In addition to selecting a chair and vice chair, the group heard an overview of the state's cannabis laws and regulations from the state's Division of Legislative Services and its Cannabis Control Authority.
Herb Barbot:During public comment, Chelsea Higgs Wise, executive director of marijuana justice, who lives in Virginia, spoke first and urged the lawmakers to maintain focus on small businesses and equity. Damian Fagan, the former chief equity officer at New York's Office of Cannabis Management, spoke in his new role as an executive fellow at the Parabolo Center. He told lawmakers that the most fundamental decision they could make in an effort to create an equitable industry is establishing a true two tier market. New York took this approach, and it essentially means that an entity that grows cannabis cannot also sell it. The idea is to prevent consolidated control of the industry.
Herb Barbot:He said the model has its critics, but that New York's rapid sales growth and high numbers of small businesses has proven them wrong. The commission will meet again in August and twice again this year. The next governor, depending on who it is, could finally open a door that slammed shut when Jankin took office four years ago. In Pennsylvania, five months after first announcing their plans to introduce a bipartisan adult use bill, Senators Dan Lachlan and Sherif Streep introduced Senate Bill 120. If passed, the bill would require that temporary regulation be in place within six months to allow for swift sales.
Herb Barbot:The bill would also allow existing medical cannabis operators to expand into adult use. Laughlin and The Street have worked together on adult use in the state since 2021. This year, Lachlan aggressively pushed back against the House passed adult use bill that would have allowed for state run retail. No adult use program in The U. S.
Herb Barbot:Has state run stores. In Pennsylvania, public support for adult use has been in the majority for years, and two consecutive governors have called on lawmakers to deliver an adult use bill to their desk. However, Republicans in the legislature have been largely immovable. A lawyer who teaches at the Rutgers University Camden School of Law published a paper in the Journal of Studies on Alcohol and Drugs called Pseudoscience in the Detection of Marijuana Based Impairment, We Can and Must Do Better. The crux of author William McNichols' argument is that the existing tools used to measure cannabis impairment fall woefully short.
Herb Barbot:But that hasn't stopped these tools from being used in courtrooms. Existing tools making this on the spot medical legal determination are inadequate, owing in large part to their lack of scientific rigor. Part of the reason that alcohol has good options to measure impairment is because it's been widely used for so long and is considered a fairly simple, small, water soluble molecule. Cannabis, on the other hand, has been described as cannabinoid soup because it is so varied. Drug recognition experts, police officers with training to spot cannabis impairment, also don't work because it's not science based at all, but is merely a police officer's lay opinion, encrusted with some of the trappings belittle or none of the substance of science, according to the author.
Herb Barbot:The author continued by urging the substance use science community to take the lead in establishing an informed marijuana impairment detection policy rather than leave it to cops. Legalization of marijuana use must be accompanied by urgent efforts and dedicated funding for the development and implementation of practical, accurate and objective methods for on the spot determination of whether a person is dangerously impaired by marijuana, the author wrote. Lastly, in New York, during OCM's June meeting, Acting Executive Director Felicia Reed highlighted the investigative work that the office's new Trade Practice Bureau is doing on inversion, license stacking, and violations of the true party of interest rules. Inversion, or the practice of out of state cannabis being sold in the state's legal market, is a growing concern for regulators. A few weeks ago, New York regulators issued the state's first inversion related recall and highlighted it at the meeting.
Herb Barbot:The office recalled about three dozen products from Indegro LLC, a brand that its owner has said is producing New York grown, limited batch, high quality cannabis using sustainable, buy secure methods. The recall will issue because according to the recall notice, the products use materials sourced from an entity that is not licensed by the OCM, which is a serious violation of cannabis law and public health standards. The next step is for OCM to conduct a full evaluation and consideration of all possible regulatory responses, which may include presentation of the matter to OCM's Office of Administrative Hearings and a recommendation to the CCB for license revocation. Taylor Randy Lee, spokesperson for the office told Cannabis Wire. The grounds for the revocation depends on the license issue, Lee continued.
Herb Barbot:To ensure any imposed discipline remains intact, OCN must review the totality of circumstances of the violation, and that is exactly what we are doing here. As always, thanks to Cannabis Wire for the news. Check out Cannabis Wire at cannabiswire.com. Our guest today is Sherry L. Tarr, JD, founder of sixty eight Partners LLC, a consulting firm that helps CBD, hemp and cannabis brands, licensed applicants and licensed operators build sustainable businesses that have a transformative impact on consumers and patients.
Herb Barbot:As Sherri likes to say, she has witnessed firsthand the good, the bad and the totally avoidable. Welcome, Sherri.
Sherri Tarr:Thank you so much. It's great to be here. Finally, I made the podcast.
Herb Barbot:Finally, yeah. I know we have talked about this for about a year now, and it just
Sherri Tarr:We have.
Herb Barbot:Just worked out now. So I'm really glad to have you. And I think this is obviously a crucial aspect of being an applicant and a licensee, but especially being a licensee. And as you said, many compliance issues are totally avoidable. And if they're not avoidable, they're resolvable.
Herb Barbot:But people have to know what they're doing and get professional assistance. So please tell us a little bit about the work you do and how you became how you came to be known as the compliance queen.
Sherri Tarr:Oh, the queen of compliance. Right? Thank you for that. Gosh. What I've been doing and by the way, it's eight years now for me.
Sherri Tarr:We're celebrating my eighth year in cannabis, which is, like, eighty, in in her cannabis years. Right? And I know you can relate to that, Herb. So, the work I have been doing, as you alluded to, has been in helping license applicants get their licenses. So I was doing applications early on long before New York even got set up.
Sherri Tarr:I was doing applications across the country. Also, help to get CBD and cannabis brands products on the market and doing that compliant compliantly. And now, like like, the market itself and and people's businesses have evolved, and my focus has been, still helping people run a real business and helping them to do that compliantly because we are in a compliant excuse me. We are in a heavily regulated space. So operating successfully demands that you do that compliant with the regulations.
Sherri Tarr:You know, my background as as you and I have talked about, I come from pharma. I come from commercialization of FDA regulated products. So to me, compliance is not just for the sake of compliance. Compliance is the way. Compliance is the segue to building a sustainable product, sustainable business, a sustainable operation when you're operating in a regulated space like cannabis.
Sherri Tarr:So just to complete the answer, what am I doing And what I what I have been doing and what I'm doing now is, again, I'll give you I'll give you an example. I'm helping right now a newly licensed retail operator get set up from from, you know, beginning to end, literally how can them establish what's that?
Herb Barbot:In New York?
Sherri Tarr:Yes. Yes. Super excited about this one. Can't give the details just yet. I've got a building anticipation, but it's in, Lower Westchester, Eastern Bronx.
Sherri Tarr:Very excited. Terrific location. Terrific team. And, you know, it's everything across across all operations and helping them set up, do that compliantly, and do that successfully. In other cases, compliance is not just a one off thing.
Sherri Tarr:Compliance is an ongoing way of operating your business. So clients that I've had since I got into this crazy space, 2017, have been doing ongoing fractional compliance support with them and helping businesses grow with market expansion, product expansion, and frankly license expansion. So if you've been running your operation compliantly for years, you're now ideally positioned to leverage that licensure, avail yourself of, for example, partnerships, avail yourself of market expansion because you've demonstrated your capacity to run a successful and compliant and clean operation, helping basically protect and grow businesses, protect with best compliance practices, and grow businesses by helping them navigate the regulations, leverage their licensures, and now doing a lot of work on pairing brands and businesses with each other so that there's an intrastate product and market expansion. That was a mouthful, but I'll pause there and give you the oxygen.
Herb Barbot:No. You know, I I was talking to a compliance person from California earlier this week. Really, what comes down to compliance is the whole ballgame, right? If you're not operating in a compliant manner and the state comes after you, the regulator comes after you, then you're in big trouble. Can you talk a little bit about what the most common compliance violations you see, wherever you may be in the supply chain?
Sherri Tarr:Yeah. I'm going to pick up actually on where you left off with your comments about the compliance person you spoke to in California. Compliance is the whole ballgame, and not only from the perspective of avail, you know, leaving yourself vulnerable to regulatory oversight. But let's let's look at it in a different way. How about availing yourself of opportunities that now the market is moving in that direction where there's a opportunities, where there's other deals and joint venture opportunities.
Sherri Tarr:If you've been compliantly operating and running your business, your cannabis business, like a real business, then you're positioned in a favorable way. You're not behind the eight ball. You're not scrambling. So this is answering the now the question that you asked about what are the common things? What are
Herb Barbot:And I imagine that that would be part of the due diligence that a partner is gonna be doing.
Sherri Tarr:Absolutely. You literally just nailed it. Right? So no deal is going to get consummated until it passes compliance muster period. So what I'm seeing now is things are coming due.
Sherri Tarr:That corner that you cut years ago or even months ago, that document that you failed to file, or that bad advice that you got and took and it didn't work out and you didn't fix it back then, those are creating problems now, whether that's slowing down the the process of consummating a deal, whether it's maybe devaluing or undervaluing your business depending on, you know, what kind of discussions and deals you're looking to explore. And then to answer your question, just basic things that I'm seeing. So, you know, my expertise and where the whole queen of compliance really started was my expertise is packaging, labeling, marketing, and advertising, the compliant commercialization of products. This is not just, hey. You can't have a bright green koala.
Sherri Tarr:Sorry, California. It doesn't work. You can't have it's it's much deeper than that. It's how do you commercialize that is bring your product and your business to a market and operate and sell within it and do that consistent with the regulations. And by the way, I don't see regulations or compliance there with as a barrier.
Sherri Tarr:I see see those as tools. Mhmm. Okay. Here are the regulations. How do we work with these?
Sherri Tarr:How do we how do we get your product from Massachusetts to New York and on those shelves? How do we make sure that you're not spending money, that you don't need to fixing labels and packages and your marketing and advertising when you want to do product or market expansion, intrastate or interstate? How do you minimize, a, the errors and b, the cost of compliance by just doing it right in the first instance. Mhmm. Right?
Sherri Tarr:And that involves bringing the right advisers, the right professionals to advise and ask the right questions and help you navigate these tricky regulations. I'm seeing people making assumptions that packaging and labeling is morphable, and they can get away with x or y. And the truth is that it's gonna cost a lot more money to fix that later than it would be to just bring in somebody to eyeball what you're doing and course correct before you've you've put the car on the racetrack, and now you're probably gonna, you know, expose yourself to a crash or or some or something.
Herb Barbot:So how is it that you help a a new licensee? So you you you mentioned that there's a dispensary that's gonna be opening soon that you're working with. So what is it that you're you're doing with them?
Sherri Tarr:Everything? Alright. So, you know, compliance is a multilane highway. Right? And setting up your business like a real business and operating it so that you are, as I call it, prepared to exit.
Sherri Tarr:And you don't necessarily you're not actually exiting necessarily. Although, in some form or fashion, all businesses will change and and exit. Either you're gonna do that on your own terms or you're gonna do that on somebody else's terms. And so compliance and setting up these businesses is a multilane highway. There's product proper product curation.
Sherri Tarr:There's people as in your staffing. There's your premises. Are your premises set up properly, compliantly, and in a way that is gonna avail you of doing business From a compliance perspective where I've seen problems that could have been avoided, this falls under the category of PLMA, the packaging, labeling, marketing, and advertising. Interiors and exteriors, what your displays look like, what your exterior looks like. Mhmm.
Sherri Tarr:That is all regulated. And I'm seeing I've seen some people not pass inspections or run into trouble eventually because they didn't have the right lens on their interior and exterior design. So to answer your question by way of example, with the retailer, I'm helping across all I call them the the p's. It used to be the five p's of marketing. Now it's the five p's of establishing your licensed operation.
Sherri Tarr:It's the product. It's the people. It's the premises. And then your profit. Right?
Sherri Tarr:So how do you protect the profit from a security standpoint, and how do you make how do you make it? So I'm I'm helping in those ways. And by the way, as I said, compliance is a multilane highway. I'm a subject matter expert in a couple of those lanes. I'm a generalist in the others.
Sherri Tarr:I'm not an accountant. I'm not an architect. I'm I'm I'm I am an attorney, but there are some legal issues that that that I'm not bringing on. So or that I'm not taking on. So I bring on from my network and my experience in the industry.
Sherri Tarr:I bring on those subject matter experts to make sure that the books and records are probably properly maintained. The that the that the structure is designed and built for compliant and successful operations. And then hopefully we keep those, the need for an attorney, as absolutely minimal as possible.
Herb Barbot:Now, do you have clients in different parts of supply chain? Do you have cultivators, processors, as well as Yeah,
Sherri Tarr:I love that. I love that question. Actually, I have equal amount of clients across the supply chain. One of my longest term clients is a big cultivator out on Long Island. I've been with them for many, many years.
Sherri Tarr:So appreciate the mutual respect and loyalty, and they've built we've built quite a successful operation and have obtained every licensure that was available for us to apply for because, again, we were operating compliantly along the way with with every license that we had. And so we were positioned to just apply for another one, and we had the operations and the infrastructure set. So yes, am working across the supply chain. Another area Can
Herb Barbot:you talk a little bit about the different compliance requirements and different types of licenses?
Sherri Tarr:Absolutely. So, obviously, on the supply side, processors and cultivators have different requirements, SOPs.
Herb Barbot:Standard operating procedures?
Sherri Tarr:Standard op yes. Standard operating procedures. Thank you. By the way, everybody has SOPs, or everyone should have SOPs. And just as a footnote to that, do not rely on AI to write your SOPs.
Sherri Tarr:I cannot cross examine. I cannot call to the stand AI yet. I'm sure somebody's working on how we're gonna get an AI up how we're gonna get one of them to the witness stand. But I I had this discussion at Benzinga. I just attended and and and spoke at the Chicago conference, and this came up a lot.
Sherri Tarr:There's a lot of conversation around, you know, how you're running your business now and how you ran it then is gonna be outcome determinative. And so, obviously, I I was integral to those conversations, and this is an issue that came up. SOPs, everybody has to have them, and there's now sort of this lazy reliance on AI. So I've decided to land somewhere in the middle. If you need to rely on AI, do that to set up a framework.
Sherri Tarr:Mhmm. But have have an expert work out the specific SOPs for your specific operation, for your specific regulations in your specific state, for your specific operation. And make sure that you're triple checking that those SOPs because it's garbage in garbage out. Right? So whatever you tell it to do, it's gonna give you, and it's not always accurate.
Sherri Tarr:And when it doesn't know, it'll do its best, but it's really the best approach is to use a professional. Right? Don't hire a dentist to repair your ACL. Bring in the expert. Right?
Sherri Tarr:So you get a good result the first time. And to fur just to further answer your question. So and bring it down to an an actual example. With processors, for example, in New York, as you know, in a unique, and I applaud this, that New York has what's called that type three brand license. So processors who are not actually packaging and labeling experts now can do white labeling agreements with brands inter and interstate.
Sherri Tarr:That's awesome.
Herb Barbot:Can you first describe what you mean by white label?
Sherri Tarr:Yeah. So for some
Herb Barbot:It's reason not it's not specific to the cannabis industry. This is done.
Sherri Tarr:Oh, no. No. No. So it's a literally, like, a a non cannabis specific example just popped into my head. Mhmm.
Sherri Tarr:I like Costco. I don't have a problem saying that. I've been known to shop there. So Costco has a Kirkland brand. Right?
Sherri Tarr:So some other company is that's actually their product, but they are licensing basically their product under a white label, which Costco so Costco is essentially white labeling somebody else's product and calling it the Kirkland brand. Mhmm. Let me give you another example how this is so useful and such a great commercialization tool. This is why I'm excited. There's you know, over the years, you can get a little not not bored, but it's it's, but I'm a nerd.
Sherri Tarr:I get excited about new license types, especially that allow for new products and new businesses to get on the market. And so when the type three came out, I really, really enjoyed that one, and it's so useful. So let's talk about white labeling in the context of the cannabis industry, specifically New York. So with a type three license, if you are asset light, don't have a license, you can apply, but you have a product, you have a brand, you can apply for and get a type three license, aka the branding license, and then do a partnership agreement, a white labeling partnership agreement with a type one or type two processor in New York because type three is specifically and fully non plant touching activities. So in order to get your product on the market without the building the infrastructure, without having to have a factory, without even having to have your own equipment, unless you put it into your your partner processor's location, you could have that agreement.
Sherri Tarr:They basically process your product for you, package and label your product for you, and then you get to you, the brand, gets to market that product under your own label Mhmm. Brought to you by fill in the blank processor in New Jersey. It would be called a manufacturer. And and let me just because the queen of compliance has got to get we gotta do the shout out for compliance. Here's where that compliance piece is inextricably linked to that partnership deal.
Sherri Tarr:That processor probably is not trained and hasn't set up SOPs for packaging and labeling and making sure that the packaging and labeling is accurate. And both the brand under product liability laws, both the brand and the processor are gonna be responsible and held liable or at least, you know, they'll be brought in if there's an issue when Joey gets into mommy's gummies. Because by the way, it's not just the regulators and competitors that business owners and cannabis need to be aware of. The plaintiff's lawyers, and I was one, so I get to say this. I know the game, and they are waiting in not just in the wings.
Sherri Tarr:They're they're getting ready. So it's so essential for the processors and other product handlers to be to minimize their risk of exposure with proper compliance practices, proper SOPs, and that also the brand owners are also have the right guidance for compliant packaging, labeling, marketing and advertising.
Herb Barbot:Alright. So now in August, right, from August through October, and some people would say, finally, New York State will begin the seat to sail effort. How do you think this will impact the work that you do in compliance?
Sherri Tarr:Well, it's like almost all integrations. I anticipate there will be some challenges. The specific implications for compliance will reveal themselves once this starts to happen. But for businesses that have already established proper procedures. Not that this will be a flip of a of a switch, but it should be fairly manageable.
Sherri Tarr:Now one of the areas that I'm looking gonna be looking at and where there's probably going to be issues is it's going to be imperfect. And but tracking of products has to be perfect. That's the expectation from the OCM. I think there's going to be some some errors in inventory management and the recording of label labels. I think there's gonna be some challenges there.
Sherri Tarr:Yeah. So they'll just need to have the the right guidance. I'm not I'm not the technician.
Herb Barbot:Mhmm.
Sherri Tarr:I'm gonna make sure that we have the right support. By the way, this is also where, you know, having the right you asked me earlier, what am I doing for operators, specifically the retailer? Having the right vendors and the right products and service providers as part of your operations is so are your service providers? Is your POS wired for compliance? Is your POS and your are your processes, are they going to be integrated?
Sherri Tarr:Is that going to be a reasonably seamless process? Does that make sense? Mhmm. So I'm also evaluating vendors and strategic partners and other service providers so that they are compliant with New York's regulations or whatever state regulations, wherever state I'm working, wherever the client is. It's all a it's like a chenga game.
Sherri Tarr:Everything needs to to balance. Everything needs to be aligned. When you start to pull one and there's a weak there's a weak thread, it's gonna expose other other weak areas. So as they say in Chicago, compliance is like vote it's like voting in Chicago. Do it early.
Sherri Tarr:Do it often. Yeah. Some New York people won't get that or maybe they will, but you understand. That that that's a that's the that's the clunky question to what I think could be a clunky process. And I anticipate that there'll be ish the yeah.
Sherri Tarr:There'll be there'll be challenges to that to that integration.
Herb Barbot:So what should a licensee do once they receive a letter just informing them that there's going be a compliance visit or worse, there was a visit and there were some findings?
Sherri Tarr:Typically, shouldn't be that many surprises, right? Like, you know that you the the o the OCM, for example. But, I mean, obviously, I've been involved in other states and have, you know, intercepted or staved off potential problems. So there shouldn't there shouldn't be any surprise visits. And if there are, if you've been operating compliantly and you've got nothing to hide, then you're to be okay.
Sherri Tarr:If you get an email or letter and they come in a variety of forms, Herb, you know, this is a supply chain. There is compliant issues from lab to label. Sometimes you're just down on the supply chain. You're not the person that committed the violation, but you're getting cc'd on the letter indicating that there's a problem upstream or downstream. And your product, whether you're the brand owner or you're the processor or you're right?
Sherri Tarr:Your product is implicated. So everybody is going to be responsible for taking some sort of action if your product is implicated no matter where you are. If you are the culprit, if you are the one that, you know, if you're the lab and you didn't provide the proper documentation, unfortunately, for your downstream clients, your processors, your manufacturers, your your cultivators, your brands, they're
Herb Barbot:Well, give an example. So there's a batch that for some reason, OCM finds that the testing was invalid for whatever reason. So what happens then?
Sherri Tarr:Yeah, it's a great question. You should have a compliance person on your team that you either for that they're either getting those emails or you're forwarding it to them immediately. So you asked me what's the first thing they should do? The first thing they should do is is is respond properly. The last thing you should do is ignore it.
Sherri Tarr:So it doesn't it's not like wine. It doesn't get any better in time, and it doesn't get any better if you stick it on the shelf and and let it let it sit. So bring
Herb Barbot:in And your you're everybody across the supply chain, right? The cultivator and Everybody.
Sherri Tarr:So that's an interesting example and timely example that you use because there was a recent quarantine situation. So here's the good news. A quarantine is not a recall. A quarantine is an opportunity for an error potentially to be corrected, may need to be retested, and then they can be put back on the shelves. So there's standard operating procedures for what to do when you get any particular type of notice, whether it was a quarantine notice, whether it's a notice of an of an inspection, whether it's somebody else has been affected.
Sherri Tarr:So there has been a recall of x batch that could arguably bring into scrutiny other batches. So I think to answer your question, the first thing to do is open the email and read the email and call your compliance professional. And by the way, and you know, you've heard me say this, I am the queen of fractional compliance. I believe that given how challenging financially it is to operate in this space, I created a model so that people had almost no excuse not to be not to have a compliance professional. And by the way, your lawyer is not necessarily your compliance professional.
Sherri Tarr:Not all compliance experts are lawyers. I just happen to be one or both. But again, this goes back to the don't have your dentist repair your ACL. Your real estate lawyer is not going to be the one that's best positioned to promptly and properly respond to an email that come from your state regulator or other oversight authority for that matter. So bringing compliance professional and hopefully you have processes and procedures and the right people in place that you can respond promptly.
Sherri Tarr:I am not a fan of fighting with your regulators on these issues. For the most part for the most part, these are matters that can be resolved with minimal damage if they're responded to promptly and properly.
Herb Barbot:So I wanted to sort of compare and contrast the different jurisdictions in which you do some work. Can you can you sort of describe the regulatory frameworks and the compliance efforts of those various states?
Sherri Tarr:Oh, we don't have three days. I'll give you I'll give you a
Herb Barbot:Just briefly, just to highlight some distinctions Absolutely. Between
Sherri Tarr:So some states like Illinois where I've done several license applications, and I'm actually licensed, in the state of Illinois, and I practice law there for many, many years. That is a state not dissimilar to New York and New Jersey in the sense of the size of the population and their products liability and consumer protection laws, which really are at the core of the framework for the cannabis many of the cannabis regulations. So to state that another way, the regulations and the regulatory framework in Illinois is very much FDA aligned, not dissimilar from New York, which really did prioritize compliance. New Jersey also prioritized compliance. The frameworks though are different in the details, particularly on packaging, labeling, marketing, and advertising.
Sherri Tarr:Every single state, unfortunately, is different. This is the good news. It's the bad news. So everybody is is wanting federal legalization. Careful with that.
Sherri Tarr:There's some problems there. In one respect, states have their say in not only whether cannabis products can be sold, but how they can be sold. So the regulatory frameworks are quite different, very much so in the packaging, labeling, marketing, and advertising area. Also, I'm not a GMP expert. That definitely is is in my umbrella, but not all states actually are, required GMP compliance, which I'm not I'm not particular fan of.
Sherri Tarr:But if you're gonna go from one state to another, one state didn't have GMP compliance and another state did, You need to be very, very mindful of that difference in that regulatory framework and how you operate.
Herb Barbot:Explain GMP?
Sherri Tarr:Good manufacturing practices. That's on your the manufacturing side. You know, in pharma, it's all GMP compliant. It's not necessarily the case in every state in the cannabis industry. And just one more thing about the different regulatory frameworks.
Sherri Tarr:It's a matrix, and it's constantly evolving. You know, there's the state, there's there's federal, there's state, and there's law. And then there's different regulations for different operations. So it's truly Mhmm. The most complex.
Sherri Tarr:I mean, I'm a regulatory nerd. I come from a regular a regulatory background decades of operating in a regulated space, whether it's pharma and doing, you know, pharmaceutical and medical products liability litigation as a lawyer. I'm used to regulatory environments. It is a complex made tricks like no other. This is, like, the truth, and I'm not saying that to overdramatize.
Sherri Tarr:I'm saying that by way of comparison, having worked in hyper regulated spaces. So, again, you know, get help. It's it's not something that, you know, you should burden your director of operations with or your head of retail or your, you know, your lead farmer if you're a cultivator. It's a separate beast that needs that that's manageable and should be its own compliance, I should say, should be its own separate line item in your budget. It's separate from legal.
Sherri Tarr:It's separate from everything else, but it it's it's separate, but it's absolutely essential. It's really the core of your successful operations. And particularly, when I talked earlier in our in our discussion today about market expansion, I'm seeing a lot of that where single state operators from one state are now migrating, if you will, and expanding into other states. That's where an understanding of the unique regulatory environment for that other state becomes really, really important. It's not just a cut and paste, and it's not just, oh, we're gonna go from St.
Sherri Tarr:Louis to New York City. That's not the way it works. Sorry, Kansas, but we're not in Kansas anymore. This is the state of cannabis.
Herb Barbot:I would imagine your cannabis compliance effort with a licensee is not just you and the boss in an office, right? This has to be communicated and filtered down throughout the staff. So how is that done?
Sherri Tarr:Oh my gosh. What a great point. Yes. You're a thousand percent right. It's cross functional.
Sherri Tarr:Most of the time, yes, I'm hired. And if you will report into the C Suite, the leadership. Right? However, it's like a binder. You can have your best strategic operating plan, but if it's sitting on the binder in the in the CEO's office and nobody on your team knows what it is, it's useless.
Sherri Tarr:Right? So same thing with compliance. Usually, I'm brought in, I also interface with other managers and other heads. It's it's literally, I think the word that I use is is the right word. It's cross functional, and it's cross operational.
Sherri Tarr:And my interactions, there's no hierarchy when it comes to compliance and making sure that everybody's on board. And let me give you an example. It happens to be on the retail side, but but I've done it on the cultivation side as well. I did this with my cultivator. You know, it's great to have somebody like myself come in and do a presentation on the compliance and regulations and how they pertain from the minute the door opens and a customer walks in.
Sherri Tarr:Really go through the whole process so that everybody can understand what's going on in the back of the house, what's going on in the front of the house, why what you're doing and what you're saying. For example, if you're a budtender, by the way, this is going to get a lot of scrutiny.
Herb Barbot:Mhmm.
Sherri Tarr:What budtenders are saying, how they are communicating and messaging about products is going to become very, very troublesome for retailers at some point. Mhmm. Back in the day when I was in pharma and then when I when I sued the pharmaceutical industry for regulatory violations and misrepresentation of safety and efficacy, you know who you know how many sales reps I deposed? Hundreds of sales reps about how they were trained to communicate about the safety and efficacy of the products. Now budtenders are being put in that same situation.
Sherri Tarr:And it's, you know, careful what you ask for. You wanna be treated like a mainstream industry. Well, that's exactly what's what's happening is, you know, as I mentioned earlier, the plaintiff's lawyers are firing up their complaints, and they're gonna start to come after these operators and these these product owners. And these poor budtenders if they're not properly trained. And by the way, it's not just, hey.
Sherri Tarr:Let the brand come in and train on how to sell. That's great. That's great. And I and I'm partnering with those trainers and helping them to craft the message so that it they don't go outside of what is going to be considered acceptable messaging around product use, product application. I kinda went off the rail there a little bit, but that's a hot area for me.
Sherri Tarr:And and I I'm all about I want these businesses to be successful, so I'm pointing that out because those budtenders are front of the on the front lines, essentially, just like pharmaceutical sales reps are on the front lines for these companies. And that means that they're gonna be on the front line of litigation when it happens. So to answer the original question, just to give you a little bit more color on that issue, when people can understand the whole process of compliance and why it's important, compliance from one of my other areas is lab to label. How does a product actually get on the market? And what is that how did that label actually get there?
Sherri Tarr:And who decided what's gonna go on that label? All of that, if people have just a general understanding of how the knee bone is connected to the thigh bone and how what you do affects what your colleague does and how it all in the aggregate affects how the business operates. And so, yes, it's top down. It's bottom up. It's cross cross functional is is the best way the best way that I can I can describe a good compliance program, which is is by definition a well run business in cannabis?
Herb Barbot:So any final advice for applicants or licensees when it comes to preparing and being compliant?
Sherri Tarr:It's a great question. I mean, have so many pieces of advice, but I think overall, well, what I'd say is run your business like a real business. You know, it's all fun and games until somebody's eye gets poked out or somebody gets punched in the in in the gut, which you will. So set up your business. Here's the here's the advice.
Sherri Tarr:How you operate is outcome determinative. So set up your business, and I don't mean, like, what kind of corporate structure. I mean, how you set up your business to run it Mhmm. Compliantly. The earlier that you do that, the better.
Sherri Tarr:The less cleanup that you have to do in Aisle 9 down the road, the better. That said, compliance is like jello. There's always room for more. So wherever you are in your business, even if you haven't been cleaning your windows, so to speak, for several years, there's still time to clean the window. If you hit a bump in the road, you've been going along smoothly kinda on your own, and you're getting a little bit nervous, trust your gut.
Sherri Tarr:You're nervous because something's probably coming down the pike, and you know that you cut a corner a little while ago. You know, just get in there early. Like, it's like a car in a way. The sooner and more often you maintain it and fix problems, the better the outcome. Run your business like a real business because if you prepare to exit Mhmm.
Sherri Tarr:If you prepare to exit from the beginning, you will be positioned to take that punch in the gut, which is gonna come. It's going to come. You'll be able to pivot when the market shifts like it's doing right now.
Herb Barbot:Mhmm.
Sherri Tarr:And you'll be positioned and prepared for a nice outcome that you might not have expected. Maybe you you expected you weren't gonna ever exit. You're gonna hold on to this business forever. I'm seeing companies that said that five, six years ago, and now they're either on the chopping block or they're on the selling block. So that's my advice.
Sherri Tarr:Prepare to exit. That's how you should operate your business at any point. And the earlier, the better.
Herb Barbot:Alright, well Sherry, this has been terrific. Where can people find out more about the work you're doing or reach out if they have a compliance need?
Sherri Tarr:I love it when people reach out. My website, which is easy to remember, it's 60eight,thedigitsix,thedigit8partners.com. And then my email is sherry,likethewine,onlysweeter,sheri@68partners.com. LinkedIn. There's LinkedIn.
Sherri Tarr:I'm I couldn't get the queen of I couldn't get the queen of compliance, in in my LinkedIn profile, but Sherry with an l, tar on LinkedIn. Message me anyway. Don't put your message in a bottle because it'll take too long to get to me, but I'm pretty accessible.
Herb Barbot:All right. Terrific. Well, thank you very much again.
Sherri Tarr:Thank you so much. It was a pleasure.
Herb Barbot:That's it for this episode of Joint Session Diverse Voices in New York State Cannabis. If you found today's discussion valuable, consider leaving a rating and review on your favorite podcast platform. It helps more listeners find the show. Better yet, share it with colleagues, advocates, and anyone interested in the of cannabis in New York. Joint Session is produced by me, Herb Barbeau, together with executive producer Robert Curtis from Simlev Media.
Herb Barbot:Special thanks as always to Cannabis Wire. You can follow us on Instagram at joint session pod and on LinkedIn at joint session podcast. If you have any comments, questions or topic suggestions, reach out to me at herb. Joint sessiongmail dot com. Until next time, this is Herb Wabo.
Herb Barbot:Thanks for listening.
