by Terry Blevins, President/CEO of Armaplex Security
Many businesses are willing to put a security guard in their cannabis business, but don’t often think about the possible consequences (implications) of that decision.
I often ask business owners: Would you want your security guard to kill or injure an intruder in order to prevent him from taking your cannabis product or cash? The answer should be “no,” because the use of force to protect property is not allowed by security officers and would put you and your business in a precarious position from a liability perspective, not to mention causing a potential reputational issue. If the answer is “no,” then I ask: “Have you had that discussion with your security company and/or the guards that work in your business?” The use of physical force is a serious responsibility, especially if it is done by one of your employees or contractors, and at your request, and should not be taken lightly.
Even more serious is the use of a firearm by security guards, which can bring on a series of additional liabilities and concerns. How would you feel personally if one of your security guards killed or injured someone while trying to protect a small amount of product? How would you feel if an innocent bystander was killed during the incident? If you tell your guard not to draw his weapon in case of an attack, then you are defeating the purpose of having an armed guard and may be creating other liabilities with these instructions.
Are you aware that a security guard is the last measure you should put in place and only after you have secured the site with robust physical barriers, employee procedures and security technology?
You should be suspicious of security companies whose first line of defense is always a security guard. Most shrinkage or loss in the cannabis industry is due to factors that can be controlled by measures other than hiring a security guard. Every cannabis business will suffer some loss of product or cash on a monthly basis and most of the time there is some insider (employee, contractor or partner) involvement in this.
Some examples of measures that can prevent insider theft:
- Employees should not be allowed to have bags or baggy clothing in areas where product or cash is kept. Employee and contractor lockers should be used.
- Employee policies and procedures that require two individuals to be present when accessing large amounts of cash and/or product
- Alarm devices and access control systems that only allow certain employees, into certain areas, during certain hours
- A requirement that all transactions take place on camera can help to prevent theft and may also serve as verification if someone is wrongfully accused
Are you 100% sure that if one of your security guards injured or killed someone, your insurance would cover you? How about if they just touch someone and that person claims assault?
All insurance policies have exclusions, and many have “Assault and Battery” or other exclusions that mean the insurance company would not pay a claim if your security guard used physical force (any bodily contact) on a person, even in the course of his duties. Even if you contract with a licensed security company, its policy may have these same exclusions that place you, and them, at risk of not being properly covered. This exclusion may be as subtle as no coverage for providing security for a business that is involved in illegal activity (cannabis is still a Federal offense).
These are steps you can take to protect yourself and your business:
- If you hire guards directly, your insurance company must know that you are doing this in order for you to be covered in the case of an incident.
- If you contract with a security provider, you should ask this security company to list you as a co-insured on its insurance policy
- Have your attorney review both your policy, and the security company policy, to make sure that cannabis businesses are not excluded and insure that there are no other exclusions, such as “Assault and Battery,” that put you at risk.
Are you 100% sure that your security guards are fully licensed and compliant to perform their duties under local and state laws that regulate security companies, as well as cannabis companies?
All security companies are heavily regulated due to the need for trust and accountability as they are entrusted with our most valuable assets, and sometimes with our lives. Cannabis security companies and guards are even more heavily regulated and scrutinized than other security companies. State and local cannabis regulations require that security companies and/or guards that are used by cannabis companies must be properly licensed and insured.
Things you should do:
- Have your attorney review the contract with the security company and make sure that it meets the BCC and/or local requirements
- Visit, or call, the state and/or city agency that licenses security guard companies to make sure the company is licensed. (In California this site is: https://search.dca.ca.gov )
- Make sure that you have these documents on hand during any compliance check:
- A copy of the security company’s license
- The security guard’s personal card (city of L.A. also requires first aid card)
- Your contract with the security company
- The insurance binder from the insurance company that lists you as a co-insured
- Any other documents required by law or regulation
Were you aware that in most states you cannot hire security guards directly (even if they have guard cards) without your business being licensed as a Proprietary Private Security Employer?
Out of all the cannabis businesses that hire their guards directly, most have no idea that this is required. The supervision of security guards cannot be performed by someone who is not an expert in security. Any company that hires security guards must have a license to do so and must have a manager on staff who has proven experience in security management and completed a written test and background check (California requires this license). Your insurance company will also want to look at the manager’s qualifications in order to ensure the manager is experienced and doesn’t present a risk to the policy.
This is only a partial list: There are many other things that you should consider when hiring security personnel at your cannabis site, and you should do everything you can to be informed and to protect you and your business.
There are many misconceptions regarding security in the cannabis industry regarding what is required under state and local laws and even some security companies don’t fully understand these. The only way for you to protect your company is to be proactive, to work closely with your attorney and to use a reputable security company.
About Terry Blevins:
Terry Blevins has over 30 years of experience in Law Enforcement and Security and has worked as an Industrial Site Security Subject Matter Expert for the U.S. Department of State. With a master’s degree in Security Management and extensive training in conducting threat and risk assessments from private industry as well as the Federal government, Blevins is considered a qualified physical security expert.
Additionally, Blevins is considered one of the foremost cannabis security experts in the U.S. He has studied many cannabis businesses in California and other states, learning what works and doesn’t work, including industry better and next practices and has drawn from those to develop the security strategies that he includes in the numerous cannabis security plans he has completed. He has also studied local and state regulations and understand what must be provided with applications in order to successfully compete for a license.
Bureau of Security and Investigative Services
For more information about regulatory compliance for your cannabis business, contact our California cannabis attorneys at firstname.lastname@example.org.