In July, The Tyee uncovered an auditor’s report from 2022 that says BC’s Liquor and Cannabis Regulation Branch (LCRB) is understaffed and lacks key tools to ensure licensed cannabis retail stores follow the law.
About the Report
The report on Compliance and Enforcement of Cannabis Retail Stores was conducted by the Internal Audit & Advisory Services (IAAS) in the Ministry of Finance as part of a multi-phase audit of compliance and enforcement practices across government.
The LCRB is responsible for reducing cannabis-related threats to public safety and ensuring administrative requirements are met by licensees. The branch monitors for compliance with legislation and regulations, policies, and license terms. It also conducts regular inspections and educates licensees to encourage voluntary compliance.
The audit assessed the LCRB’s compliance and enforcement oversight of cannabis licensees.
The cannabis industry Is dynamic and constantly changing to reflect the competition market. The IAAS found that, “The LCRB and its compliance and enforcement team need a modern and sophisticated program to be ready to adapt to these changes. With new license types being established and ongoing evolution of the cannabis sector, it is important that the LCRB is positioned to quickly adjust their activities as needed.”
Areas of Improvement
The IAAS identified areas of improvement for the LCRB to strength their compliance and enforcement program and create more efficient and effective processes.
The areas of improvement include:
- Key cannabis risks: the LCRB can improve their monitoring procedures around some risk areas including minors accessing cannabis illicit sales, online sales, and deliveries. Due to limited assessment and monitoring of these risks, the auditor says that the branch is unable to confirm that legal requirements are upheld or quantify the risks on an industry level. The LCRB should ensure all compliance risks are appropriately monitored.
- Risk-based approach: the LCRB does not use a systemic risk-based approach to guide its activities and could not demonstrate that its compliance monitoring is focused on the highest risk areas. It should implement a risk-based approach.
- Tools and Resources: historical resourcing challenges have resulted in large, unsustainable inspection workloads at the LCRB. Challenges with a new IT system are contributing to documentation issues and creating inefficiencies for inspection staff. The LCRB should address these critical issues.
- Documentation and data integrity: there are inconsistencies with how staff document their work such as inspection procedures and key decisions. The LCRB can provide staff additional guidance, focused training, and supervisory review to improve consistency and documentation quality.
- Leveraging data analytics: the LCRB collects licensees data but it isn’t used in a meaningful way to inform compliance activities. It should be used when planning compliance work.
The report also identifies 14 recommendations for the LCRB. These include:
- The branch could improve their procedures for actively monitoring risks such as licensee websites, tied houses, and inducements.
- Historical staffing challenges and a fixed inspection approach have resulted in unsustainable workloads for many staff. Inspection targets are not consistently being met. It would benefit the LCRB to focus on sustainable inspection targets and consider strategies to help improve recruitment and retention.
- LCRB staff require a variety of tools to conduct their job duties including scan guns but they are not available for all inspectors. Inconsistency in scan gun availability may limit their effectiveness.
- After receiving their cannabis licensee, retailers are subject to a 30-day, 6-month, and 12-month administrative inspection for their first year of operation. Thereafter, inspections reduce to an annual inspection cycle. The report found that inspections were not consistently conducted on-time. This is due to a variety of factors such as large inspection workloads and staff vacancies.
- The Minors as Agents Program was paused during COVID-19 and has yet to be launched for cannabis. The auditor says that the program should now be in place as it is critical to monitoring compliance over a key public safety risk.
For a full list of recommendations please refer to the report.
Possible Changes for B.C. Retailers
The province is currently embarking on work to gradually enable cannabis-related tourism and hospitality opportunities, which are currently limited by provincial and federal laws. It is also reviewing B.C’s cannabis market controls, including the restrictions on the retail license cap.