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What is Looping in Cannabis Retail and How Can I Prevent It?

What is looping? At Cova, we understand that legal cannabis compliance is likely the top concern of any dispensary owner or investor. As we have said many times before, “No license equals no business”.

The truth of that statement should be self-evident to every dispensary owner or investor after events that transpired in Colorado in December of 2017, leading to over a dozen arrests and 26 license revocations. What caused local authorities to hand down such serious consequences? A practice known in the retail cannabis community as “looping”.

Let’s discuss what looping is and how your legal cannabis enterprise can effectively protect itself from those engaging in this illegal and potentially dangerous technique.

What is Looping?

In a nutshell, looping is an illegal practice that cannabis buyers use in an attempt to get around Colorado’s transaction limits at a cannabis dispensary, which state that a customer may buy and possess no more than 28 grams of cannabis in a single transaction.

Essentially, buyers will “loop” around the block after making one purchase, then come back in for a second one at the same location a few moments later. These dedicated individuals are then able to purchase and possess many times the legal weight limits specified in Colorado’s cannabis dispensary laws. In some cases, they may even rotate through multiple dispensaries in an attempt to further disguise their actions.

Who is Liable?

We can look to Sweet Leaf’s story as a cautionary tale of who is held liable for looping or other major cannabis compliance issues.

After nearly a year of appeals and legal fees, Sweet Leaf reached a deal with Colorado’s Marijuana Enforcement Division. The owners agreed to sell all 26 licenses (retail, processing, and cultivation) to pay the $2 million in taxes and fines they are facing. They must destroy any remaining inventory and are barred from owning or investing in Colorado cannabis companies for the next 15 years. Seven of the 15 budtenders arrested had charges dropped and the rest are awaiting trial dates or negotiating plea deals in the face of felony drug charges.

So it seems liability for looping falls not only on the business owners, but the individuals executing looped transactions as well. This means your budtenders could quite literally be placing their personal freedom on the line, and should be trained to prevent looping before it occurs.

How Can I Protect My Dispensary from Looping?

If the above information has you worried, have no fear. There is some good news: looping is both easily detectable and preventable as long as you are tracking the proper customer information and have made the requisite investments into your operational technology and staff training programs.

Retail cannabis owners have two options when it comes to tracking daily customer purchases, manually or automatically. The first option leaves your business open to intentional or unintentional mistakes and major liabilities like fines, suspension or loss of license, and even arrest. But a POS system made with the cannabis industry in mind can automate compliance with daily limits, making the process foolproof.

The easiest way to ensure compliance at all times with cannabis sales limit regulations is by selecting a POS system for your dispensary that automatically tracks purchases along with customer IDs, and warns budtenders if they are about to make a sale that would put them out of compliance. This will quite literally block any customer from looping through your dispensary and protect your staff from potential serious legal dangers.

To put things in perspective, consider Sweet Leaf’s consequences. Millions of dollars in fees, loss of 26 licenses, staff facing felony charges, and the owners barred from operating or investing in a Colorado cannabis business for 15 years. This doesn’t even include the money invested in renovations, application and licensing fees, staff training, and all other costly business expenses.

Now compare all of that to the relative cost of a high quality POS system that can protect a business from these compliance issues. The logical choice becomes quite clear.

Cova Has Built-In Regulatory Compliance Features in All Major Markets

Cova’s cannabis retail POS system handles daily limit compliance from beginning to end in five automated steps.

  1. Every customer’s age and ID are verified with Cova’s scanner and a customer profile is created.
  2. Whenever that customer makes a purchase, it is tracked and linked with their profile, recording the total amount of cannabis products sold.
  3. If a customer returns on the same day, the system will provide the amount already purchased and the amount left before they hit their daily limit.
  4. The system will make all necessary conversions between flower and concentrates/edibles as well.
  5. Once the daily limit has been met, Cova will intuitively block future sales, making it virtually impossible for staff to violate local laws.

See how Cova can protect you and your staff from costly compliance errors. Book a demo today.


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