Cannabis Supplier Due Diligence Checklist 2024

Here’s a quick guide to vetting cannabis suppliers in 2024:

Legal compliance: Check licenses, permits, and adherence to state/federal laws
Financial health: Review financial records, credit, insurance, and emergency plans
Product quality: Verify lab testing, contaminant checks, potency consistency, and storage
Supply chain: Assess growing methods, harvest procedures, transportation, and inventory tracking
Production capacity: Evaluate output volume, facilities, staff expertise, and growth plans
Environmental practices: Look at energy use, water conservation, waste management, and eco-friendly packaging
Technology use: Check cultivation tech, extraction methods, R&D efforts, and proprietary innovations
Market reputation: Consider customer feedback, awards, partnerships, and public perception
Security measures: Assess facility security, data protection, employee screening, and anti-theft protocols

Area	Key Checks
Legal	Licenses, law compliance
Financial	Records, credit, insurance
Quality	Lab tests, safety checks
Supply Chain	Growing, transport, tracking
Production	Output, facilities, staff
Environment	Energy, water, waste practices
Technology	Growing tech, extraction methods
Reputation	Reviews, awards, partners
Security	Facility, data, employee checks

Use this checklist to thoroughly evaluate potential cannabis suppliers and minimize risks.

Legal and Regulatory Compliance

Checking if your cannabis supplier follows laws and rules is key to avoid risks and get good products.

1. Licenses and Permits

Make sure suppliers have the right licenses to work legally. Check with state agencies to confirm their licenses.

State	Agency to Check
California	Bureau of Cannabis Control (BCC)
Colorado	Marijuana Enforcement Division (MED)
Oregon	Liquor Control Commission (OLCC)

2. State and Federal Laws

Check if suppliers follow state and federal cannabis laws. Remember:

37 states allow medical marijuana
13 states have made cannabis use less illegal
18 states allow recreational use

3. Product Tracking Systems

Suppliers should use systems to track products. BioTrack is a common tool for this.

BioTrack Use	Details
Where it’s used	38 states, Puerto Rico, and 7 other countries
What it does	Tracks products from growing to selling

4. Manufacturing Standards

Suppliers should follow Good Manufacturing Practices (GMP) for safe products.

GMP Covers	Examples
Facility	How the building is set up
Equipment	Tools used for making products
People	Who works there and what they do
Records	Keeping track of what’s done

Suppliers need a plan to check that they’re following these rules.

Financial Health Check

Checking a cannabis supplier’s money situation helps make sure they can do business well. This check helps avoid problems and makes sure the supplier can keep working.

1. Look at Money Records

Check the supplier’s money records to see how they’re doing. This means looking at:

How much money they have and owe
How much they make and spend
How much cash they have

Look for:

What to Check	Why It’s Important
High debt	Might mean money troubles
Low cash	Could be hard to pay bills
Up and down income	Might not be stable
Strange spending	Could mean problems

Good money records show the supplier is careful with money.

2. Check Credit and Ask Others

Look at the supplier’s credit score. A good score means they pay bills on time. Also, ask other businesses about the supplier. This tells you if they’re good to work with.

3. Make Sure They Have Insurance

The supplier needs good insurance. This protects against problems. Check if they have insurance for:

Type of Insurance	What It Covers
Business	General problems
Product	If products cause harm
Worker	If workers get hurt
Property	If buildings or tools break

Make sure their insurance is enough for what they do.

4. Check Their Emergency Plans

The supplier should be ready for problems. They need plans for:

Bad weather
Supply problems
Broken equipment
Not enough workers

Good plans mean they can keep working even when things go wrong.

Product Quality and Safety

Making sure cannabis products are good and safe is key for suppliers and buyers. Here’s how to check if your supplier keeps products safe and high-quality.

1. Lab Testing

Check if the supplier tests products in good labs. Look for:

What to Check	Why It’s Important
Right tests for each state	Follows rules
Quality control tests	Makes sure products are good
Clear reports	Shows test results
Quick action if tests fail	Fixes problems fast

Good testing helps make sure products are safe and work well.

2. Checking for Bad Stuff

Products need to be clean and safe. Make sure the supplier checks for:

What They Check	Why It Matters
Germs and mold	Can make people sick
Toxins from fungi	Can be harmful
Things that shouldn’t be there	Like metals or pesticides
Meets state rules	Follows the law

Checking for these things keeps products safe to use.

3. Getting the Strength Right

Products should be as strong as they say they are. Check if the supplier:

Tests how strong products are often
Makes sure products are always the same strength
Puts the strength on the label clearly

When products are always the same strength, people know what to expect.

4. Storing Products Well

Keeping products stored right is important. Look at how the supplier stores things:

Storage Method	Why It’s Good
Clean, dry place	Keeps products fresh
Careful handling	Stops things getting dirty
Follows state rules	Meets legal requirements

Good storage keeps products safe and working well until people use them.

Supply Chain Overview

1. Growing Methods

Cannabis suppliers start by growing plants. They do this in:

Indoor spaces
Greenhouses
Outdoor farms

Growers pick plant types, take care of them, and make sure they grow well. They also:

Plant seeds
Water plants
Check plant health
Keep pests away
Pick plants when ready

When looking at how a supplier grows plants, check these things:

What to Check	Why It’s Important
Plant types	Affects how strong and good the plant is
Growing place	Affects how healthy plants are
How they grow	Affects quality and sameness
Pest control	Stops bugs from hurting plants

2. Harvest Steps

Picking plants at the right time is very important. It affects how good and strong the final product is. Good suppliers should:

Step	Why It Matters
Pick at the right time	Makes sure plants are strong and taste good
Handle plants carefully	Keeps plants clean and not damaged
Dry plants well	Keeps plants good and stops mold
Cure plants	Makes plants taste and smell better

3. Moving Products

Moving cannabis products safely is very important. Suppliers need a good way to move products. They should:

What to Do	Why It’s Important
Keep trucks in good shape	Makes sure products move safely
Train drivers well	Stops accidents and follows rules
Plan best routes	Makes delivery faster and cheaper
Keep products safe	Stops theft

4. Keeping Track of Products

Suppliers need to know how much product they have and where it is. A good system for this should:

What It Does	Why It’s Helpful
Show product amounts right away	Helps know exactly how much is there
Make reports by itself	Makes keeping track easier
Guess what people will want	Helps have the right amount of products
Check if following rules	Makes sure everything follows the law

Production Capacity

This part looks at how well a supplier can make products and grow with your business.

1. Output Volume

Checks how much a supplier can make in a set time.

When looking at how much a cannabis supplier can make, think about:

What to Check	Why It Matters
Making schedule	Shows if they can meet your needs
Tools and machines	Tells if they have what they need to make a lot
Workers and training	Shows if they have enough skilled people
Quality checks	Makes sure they keep things good when making a lot

2. Facility and Equipment

Looks at if the supplier’s building and tools are good enough.

Make sure the supplier’s place is:

Clean and well-kept
Has the right machines
Follows the rules
Can grow bigger if needed

When checking their building and tools, look at:

What to Check	Why It Matters
Building size and layout	Shows if they can make a lot
Tool condition	Tells if their tools work well
Use of new tech	Shows if they work fast and well
Following rules	Makes sure they do things right

3. Staff Expertise

Checks if the supplier’s team knows what they’re doing.

The supplier’s team should have:

The right skills and experience
Ongoing learning
Good knowledge of the rules
Good talking and planning skills

When checking the team’s skills, look at:

What to Check	Why It Matters
Team background	Shows if they know their job
Learning programs	Tells if they keep getting better
Rule knowledge	Makes sure they follow laws
Talking and planning	Shows if they can handle big jobs

4. Growth Plans

Looks at how the supplier plans to get bigger.

Check if the supplier plans to:

Buy new tools and tech
Make their building bigger or open new ones
Hire and train more people
Work with other businesses

When checking their growth plans, look at:

What to Check	Why It Matters
New tool plans	Shows if they’ll work better in the future
Building growth	Tells if they can make more later
Hiring plans	Shows if they’ll have enough workers
Business partners	Tells if they have help to grow

Environmental Practices

Checks if suppliers use methods that are good for the environment.

1. Energy Use

Looks at how suppliers try to use less energy.

When checking a cannabis supplier’s energy use, look at:

What to Check	Why It’s Important
Use of sun or wind power	Shows they care about the environment
Machines that use less power	Cuts down on energy use and costs
Lights	Affects how much power they use and how plants grow
Ways to control temperature	Affects power use and plant health

Some suppliers are using sun power to run their business. For example, some growers put up solar panels to make electricity and use less power from other sources.

2. Water Use

Checks how suppliers try to use water wisely.

Growing cannabis needs a lot of water. Suppliers should use ways to save water, like:

What to Check	Why It’s Important
Systems that reuse water	Wastes less water
Drip watering	Puts water right on plant roots, less water dries up
Collecting rain	Saves rain for uses that don’t need clean water
Ways to grow that use less water	Uses less water but keeps plants healthy

For example, systems that reuse water can help growers catch and use water again that would have been wasted. This saves water and makes less dirty water.

3. Waste Management

Looks at how suppliers deal with waste and try to recycle.

Cannabis suppliers should have a plan for dealing with waste, including:

What to Check	Why It’s Important
Recycling	Sends less trash to dumps
Composting	Turns plant waste into good soil
Getting rid of dangerous waste safely	Stops harm to the environment
Using less packaging	Makes less waste from product wrapping

Some cannabis companies are starting to compost and recycle. This helps lower how much they hurt the environment and uses things again instead of throwing them away.

4. Eco-Friendly Packaging

Checks if packaging is good for the environment.

Cannabis suppliers should use packaging that’s good for the earth, like:

What to Check	Why It’s Important
Packaging that breaks down	Makes less plastic waste and doesn’t hurt nature
Packaging that can be recycled	Helps things be used again and makes less waste
Less packaging	Makes less waste from extra wrapping
Packaging made from good stuff	Made from things that grow back or have been used before

Packaging that’s good for the earth not only makes less waste but also helps lower how much cannabis products hurt nature. Suppliers should try to use packaging that’s better for the earth to be kinder to nature.

Technology Use

This part looks at the tech suppliers use to stay ahead.

1. Growing Technology

Checks what new growing methods and tools suppliers use.

When looking at a supplier’s growing tech, check these things:

Tech	How It Helps
LED Lights	Uses less power, grows more plants, keeps plants healthy
Water Growing	Saves water, grows more plants in less space, plants grow faster
Weather Control	Keeps temperature and wetness just right, plants grow better
Auto Watering	Saves water, needs fewer workers, plants grow the same

For example, LED lights can grow more plants while using less power. Some suppliers use water growing to save water and fit more plants in less space.

2. Getting Plant Stuff Out

Looks at how suppliers get the good stuff out of plants.

When checking how a supplier gets plant stuff out, look at:

Method	How It Helps
CO2 Use	Gets good stuff out, leaves little waste, doesn’t hurt nature
Alcohol Use	Gets good stuff out, leaves little waste, costs less
Boiling	Gets good stuff out, leaves little waste, makes it taste and smell better
Cooling	Makes the good stuff clearer, takes out bad stuff, lasts longer

For example, using CO2 is popular because it gets good stuff out and leaves little waste. Some suppliers also use boiling to make things taste and smell better.

3. Learning New Things

Checks if suppliers are trying to make better products.

When looking at what new things a supplier is learning, check:

What They’re Learning	How It Helps
Plant Growing	Grows more plants, makes stronger plants, makes plants taste and smell better
Getting Stuff Out	Gets better stuff out, leaves less waste, works faster
Making Products	Makes products work better, body uses them better, people like using them more
Following Rules	Makes sure they follow new rules, less chance of problems, people trust them more

For example, some suppliers are learning how to grow better plants to get more and stronger plants.

4. Special Ideas

Checks if suppliers have their own special ways of doing things.

When looking at a supplier’s special ideas, check:

Kind of Special Idea	How It Helps
Product Ideas	Only they can make some products, can sell more than others, can make more money
Way of Doing Things Ideas	Only they can do some things, can work faster, can spend less money
Tool Ideas	Only they can use some tools, can make better products, can sell more

For example, some suppliers have their own special kinds of plants or ways of getting good stuff out of plants that only they can use.

Market Reputation

This part looks at how well-known and trusted suppliers are in the market.

1. What Customers Say

Check what customers think about the supplier. To do this:

Ask for people to contact who have worked with them before
Look at online reviews from different places
Read what customers say about their experiences

Good suppliers will have many happy customers.

2. Awards and Praise

See if the supplier has won any awards. Look for:

Awards from big groups in the cannabis industry
Mentions in cannabis magazines or news
Taking part in big cannabis events

Suppliers with awards are often good to work with.

3. Who They Work With

Check who the supplier works with. This includes:

Other good cannabis companies
Well-known experts in cannabis
Groups that bring cannabis businesses together

Working with good partners often means the supplier is good too.

4. How People See Them

Look at what people think about the supplier. Check:

News stories about them
What they post on social media
What they say to the public

Suppliers that people like are often good to work with.

What to Check	Why It’s Important
Customer Reviews	Shows if people like their products
Awards	Shows they’re good at what they do
Business Partners	Shows other good companies trust them
Public Opinion	Shows what most people think about them

Security Measures

Good security helps keep your cannabis supplier’s business and products safe. Here’s what to look for when checking a supplier’s security.

1. Building Safety

Check how the supplier keeps their buildings safe:

Safety Measure	What It Does
Locked storage	Keeps products safe
Cameras	Watches for problems
Alarms	Warns about break-ins
Strong doors and windows	Makes it hard to get in
Fences	Keeps people out who shouldn’t be there

Good building safety stops theft and damage.

2. Keeping Information Safe

Look at how the supplier protects important information:

Protection Method	What It Does
Safe data storage	Keeps information private
Computer protection	Stops hackers
Up-to-date software	Fixes security holes
Safe ways to talk online	Keeps messages private
Following data rules	Meets legal requirements

Good information protection stops data theft and computer attacks.

3. Checking Workers

See how the supplier makes sure their workers are trustworthy:

Worker Check	Why It’s Important
Background checks	Makes sure workers have good histories
Safety training	Teaches workers how to keep things safe
Special ways to get in	Only lets the right people in
Keeping secrets	Makes sure workers don’t share private info
Following work laws	Meets legal requirements

Good worker checks stop problems from inside the company.

4. Stopping Theft

Check how the supplier keeps products from being stolen:

Anti-Theft Method	What It Does
Safe packaging	Makes it hard to take products
Product tracking	Knows where products are
Safe moving	Keeps products safe when moving
Counting products	Knows if anything is missing
Following tracking rules	Meets legal requirements

Good anti-theft methods stop products from being stolen or lost.

These security checks help make sure your supplier keeps things safe and follows the rules.

Conclusion

Regular Updates

Check your suppliers often to make sure they’re still good. The cannabis world changes fast, so you need to stay up to date. New rules come out, and suppliers can get better or worse over time.

Look at your suppliers every 6-12 months. This helps you:

Benefit	Explanation
Stay current	Know about new rules and changes
Make good choices	Pick the best suppliers for your needs
Help suppliers improve	Tell them what they can do better

Customizing the Checklist

Make this checklist fit your business. Think about what you need most. This could be:

Certain types of products
Following specific rules
Using less energy or water

When you change the checklist to fit your needs, you can:

Advantage	Result
Focus on what matters	Look at the things that help your business most
Make better choices	Pick suppliers that match what you need
Build strong partnerships	Work well with suppliers who understand your goals