By David Kerr
The Operating Plan is the cornerstone of the Washington State Liquor Control Board application approval process. In working with clients, we’ve encountered a couple routine stumbling blocks and common errors applicants encounter in putting together their operating plans.
The Liquor Control Board already knows the rules. One mistake that applicants make in their Operating Plans is that they simply recite the LCB’s rules back to the LCB. For example, the LCB requires labeling, so people will write “I will label all my products in conformity with WAC 314-55.”
The Liquor Control Board already knows you are going to comply with the rules (they will make sure of that!). Let me make a football analogy: the rules in football say you need to gain 10 yards for a first down. If you were explaining this to the Liquor Control Board you can’t just say “I plan on gaining 10 yards to get a first down.”
What you need to do is lay out the series of plays you are going to run in order to gain those 10 yards. It is the difference between the rulebook and your playbook. So don’t just recite the rule, tell the Liquor Control Board how you’re going to get that first down.
If the minimum weren’t acceptable, it wouldn’t be called “the minimum.” You may have heard this expression before, but really think about it carefully. There exists some minimal level of information that the Liquor Control Board needs to approve your license application.
Making sure you clearly demonstrate that you meet the minimum qualifications is critical. Sometimes applicants focus on small details in one or more areas that they feel comfortable with, rather than making sure they clearly demonstrate that they have covered each of the basic minimum qualifications.
At this point, you may be saying to yourself, “Well, I’m just not the sort of person that only does the minimum!” Good, but remember, the Liquor Control Board does not give points for extra credit.
The idea that you’re going to wow the liquor control board with your dazzling products and unique marketing strategies is a bit like assuming you’re going to impress the Department of Motor Vehicles photographer by wearing formal attire. It’s certainly permitted, but the DMV does not care.
What the Liquor Control Board cares about is making sure you meet each and every one of the minimum qualifications. Make it easy for them to determine that. This means any unnecessary detail could actually impede your application because it will take the investigator longer to get through and might obscure where and how you meet the minimum qualifications.
Security and traceability: Fully addressing security and traceability is of primary importance. Here is what you need and where — very generally speaking — you can get it. And I have even more good news; someone else is ready and willing to give you mostly everything you need.
Security: Cannabis industry-based security firms are cropping up everywhere. This is great for applicants because any security firm worth its salt is going to provide you with a security system on your floor plan that details exactly how the security for your operation meets the minimum qualifications. This should come with a detailed inventory of the equipment, and if you know the right guys (as we do), then they should be able to overlay the actual security system on the scaled drawing of your floor layout.
Of course, there are some areas of security where you’re somewhat on your own, most especially transportation. This is an area where you’ll really want to put some time and energy into giving the LCB a well thought-out process.
Traceability: Just as with security, several firms are recognized by the LCB as having systems that meet all of the requirements. These firms make point-of-sale systems that track everything the LCB needs to check up on your operation. This is a big deal because it not only takes care of traceability, but also packaging in most instances.
Once again, the leading firms all provide free quotes ready-made for your operating plan. Just like transportation above, waste disposal protocols are a common section of good operating plans because if some unscrupulous character wanted to get rid of some product on the sly, they could very well choose to try to smuggle it out in the form of waste. Again, think carefully about this piece.
Employee training: Successful operating plans require details on employee training. Describing what kind of training you are going to do with new employees and on a continuing basis is required.
There is an advantage to clearly thinking through your training and following through with it once you are up and running. You see, if an employee should make a thoughtless mistake that violates the LCB’s rules, the very fact that you trained them otherwise will mitigate your penalty. It’s nice to incorporate such training from the get-go and it will let your investigator know you’ve really thought this thing out.
Need help, ask for assistance. So, with the proper quotes from the tech and security companies and some thought as to your own operation, it’s really just a matter of organizing the plan in a way that your LCB investigator can understand.
However, we all need some guidance from time to time. If you are still feeling a bit overwhelmed by the process and need some technical questions answered or simply want someone to read over your Operating Plan to ensure it’s as easy to understand as possible, then please feel free to reach out to us.
Attorney David Kerr serves business clients throughout the state, including an emphasis on the emerging legal, regulatory and compliance issues facing new cannabis businesses.