The cannabis industry in the United States has seen exponential growth over the past decade, transitioning from a largely illicit market to a burgeoning legal industry with stringent regulations. As cannabis becomes more mainstream, the need for regulatory oversight and quality assurance has become paramount. This is where secret shopper programs come into play as across the United States, various states have implemented or are considering secret shopper programs as a means to enhance regulatory enforcement in their cannabis industries.
In this blog post, we will explore the broader role of secret shoppers in the cannabis industry nationwide, highlighting their importance in regulatory compliance, consumer safety, and market integrity. Using Massachusetts as a case study, we will delve into the operational aspects of these programs, their impact on the industry, and the challenges and future prospects of secret shopper initiatives in the cannabis sector.
What is a Secret Shopper?
A secret shopper, also known as a mystery shopper, is an individual hired by a company or a third-party service to anonymously evaluate the quality of service, compliance with regulations, and overall customer experience at a business. Secret shoppers act as regular customers, making purchases, asking questions, and sometimes interacting with staff to assess various aspects of the business. The goal is to provide unbiased feedback that can help businesses improve their operations and customer service.
Key Objectives of a Secret Shopper
Evaluate Customer Service: Assess the friendliness, professionalism, and helpfulness of staff.
Check Compliance: Ensure that the business complies with company policies and legal regulations.
Assess Product Quality: Evaluate the quality and presentation of products or services.
Measure Cleanliness and Ambiance: Inspect the cleanliness and overall atmosphere of the business.
Provide Detailed Reports: Document their experiences and findings in detailed reports that are used for performance assessments and improvements.
How Does a "Regular" Secret Shopper Compare to a Cannabis Secret Shopper?
While both regular secret shoppers and cannabis secret shoppers share the goal of evaluating businesses anonymously, their specific tasks and focus areas can differ significantly due to the unique nature of the cannabis industry.
Regular Secret Shopper
Focus on General Retail or Service Industries: Common in industries such as retail, hospitality, banking, and restaurants.
Typical Tasks: Making purchases, returning items, asking about products, assessing customer service, and evaluating the cleanliness and ambiance of the store or restaurant.
Compliance Checks: Ensuring adherence to company policies and legal standards such as proper handling of returns, adherence to promotional policies, and employee conduct.
Cannabis Secret Shopper
Focus on Cannabis Retailers and Dispensaries: Specifically targets businesses within the cannabis industry.
Typical Tasks: Purchasing cannabis products, verifying the accuracy of product labels (e.g., THC and CBD content), checking for proper packaging, and assessing the effectiveness of age verification processes.
Compliance Checks: Ensuring compliance with state and local cannabis regulations, such as verifying the age of customers, ensuring products are free from contaminants, and checking for accurate potency labeling.
Additional Safety Focus: Testing products for contaminants like pesticides, mold, and heavy metals to ensure consumer safety.
Comparison of Specific Objectives
Age Verification:
- Regular Secret Shopper: May check if employees properly verify the age for age-restricted products (e.g., alcohol or tobacco).
- Cannabis Secret Shopper: Regularly tests if dispensaries are strictly enforcing age restrictions, as selling cannabis to minors is a significant legal violation.
Product Quality and Safety:
- Regular Secret Shopper: Evaluates the quality of goods or services offered.
- Cannabis Secret Shopper: Focuses on both product quality and safety by ensuring cannabis products are free from harmful substances and accurately labeled with potency information.
Regulatory Compliance:
- Regular Secret Shopper: Ensures compliance with general business regulations and company policies.
- Cannabis Secret Shopper: Ensures adherence to specific cannabis regulations, including proper packaging, labeling, and adherence to state laws governing cannabis sales.
While the fundamental role of secret shoppers in assessing and improving business practices remains consistent across industries, cannabis secret shoppers have a more specialized focus due to the unique regulatory environment and safety concerns in the cannabis industry. Their work is crucial for maintaining high standards of compliance, safety, and consumer trust in a rapidly evolving market.
Secret Shopper Programs in Legal Cannabis States
Several legal cannabis states in the U.S. have implemented secret shopper programs to ensure regulatory compliance, protect consumer safety, and maintain high standards within the industry. These programs are critical in addressing issues such as THC inflation, underage sales, and product contamination. Here are notable examples from Massachusetts, Oklahoma, and Colorado.
Massachusetts
The Massachusetts Cannabis Control Commission (CCC) has a well-established secret shopper program aimed at ensuring compliance with state regulations on packaging, labeling, and product safety. This program includes purchasing products to verify THC and CBD levels, ensuring accurate labeling, and testing for contaminants. The CCC’s initiative has been praised for its effectiveness in driving higher compliance rates and enhancing consumer trust in the legal cannabis market.
Oklahoma
Oklahoma recently launched its secret shopper program under House Bill 3971, which authorizes the Oklahoma Medical Marijuana Authority (OMMA) to conduct undercover inspections of licensed medical marijuana dispensaries. The program mandates that at least 50 dispensaries be inspected annually, focusing on compliance with state regulations and ensuring product safety. This initiative aims to weed out non-compliant operators and enhance the overall integrity of the market.
Colorado
Colorado’s Marijuana Enforcement Division (MED) has rolled out a secret shopper program specifically targeting underage sales. The program sends under-21 individuals to retail shops and medical dispensaries to attempt purchases, ensuring businesses adhere to age verification laws. This initiative is modeled after similar compliance programs in the liquor industry and is part of the state's broader efforts to maintain strict regulatory standards and protect public safety.
Why Secret Shopper Programs Are Essential
The recent lawsuit against Jeeter pre-rolls in California illustrates the importance of these programs. The lawsuit alleges that Jeeter inflated THC levels on their product labels, misleading consumers about the potency. Independent tests revealed significant discrepancies between the advertised and actual THC content, prompting legal action. This case highlights the potential for fraud in the cannabis industry and underscores the need for secret shopper programs to verify product claims and ensure regulatory compliance.
Overall, secret shopper programs play a crucial role in maintaining the integrity and safety of the legal cannabis industry. By conducting undercover operations and rigorous testing, these programs help prevent deceptive practices, protect consumers, and uphold high regulatory standards. The examples from Massachusetts, Oklahoma, and Colorado demonstrate how effective these initiatives can be in fostering a trustworthy and compliant cannabis market.
Real-Life Example: Jeeter Pre-Rolls in California
The Jeeter Pre-Rolls Lawsuit
In California, the Jeeter brand of pre-rolled cannabis products has come under scrutiny due to allegations of inflating THC levels. A class-action lawsuit was filed against DreamFields Brands Inc. and Med for America Inc., the producers of Jeeter, accusing them of systematically overstating the THC content in their products to deceive consumers. The lawsuit, filed in Los Angeles County Superior Court by plaintiffs Jasper Centeno and Blake Wilson, claims that Jeeter pre-rolls advertised THC levels significantly higher than what independent lab tests revealed.
For instance, the Baby Jeeter Fire OG Diamond Infused 5-Pack Pre-rolls were labeled as containing 46% THC. However, independent testing found the actual THC content to be between 23% and 27%, an alleged inflation of 70% to 100%. Similarly, other Jeeter products also showed significant discrepancies between advertised and actual THC levels.
Basis of the Lawsuit
The lawsuit is based on California Department of Cannabis Control regulations, which allow a 10% margin of error for THC concentration. The plaintiffs argue that Jeeter's products far exceeded this margin, thus misleading consumers and violating state laws. The lawsuit aims to hold Jeeter accountable for these discrepancies and seeks damages and restitution for affected consumers.
Response from Jeeter
Jeeter has strongly denied the allegations, describing them as "baseless and ludicrous." The company claims to comply with all state-mandated testing procedures, including independent third-party testing, and insists that its products meet all regulatory requirements. Jeeter argues that the lawsuit aims to damage its reputation and business practices, and they remain committed to proving their compliance and integrity through legal channels.
Importance of Secret Shopper Programs
The case of Jeeter pre-rolls highlights the critical need for secret shopper programs in legal cannabis states. Such programs can help prevent issues like THC inflation by providing independent verification of product labels and ensuring that consumers receive accurate information. Here’s why secret shopper programs are essential:
Ensuring Accurate Labeling and Potency: Secret shoppers can purchase products anonymously and have them tested to verify that the THC and CBD levels match the labels. This helps prevent deceptive practices and ensures consumers get what they pay for.
Protecting Consumer Safety: By testing for contaminants and verifying product safety, secret shopper programs can prevent harmful products from reaching consumers.
Maintaining Regulatory Compliance: Regular, unannounced checks help ensure that businesses adhere to state regulations, promoting a culture of compliance within the industry.
Building Consumer Trust: Transparency and accountability foster consumer confidence in legal cannabis products, encouraging more people to buy from regulated markets rather than the illicit market.
The Jeeter lawsuit serves as a clear example of the potential for fraud and the need for robust regulatory oversight in the cannabis industry. Secret shopper programs play a vital role in maintaining the integrity and safety of the market, benefiting both consumers and reputable businesses.
Criticism of Cannabis Secret Shopper Programs
While cannabis secret shopper programs have been praised for enhancing compliance and protecting consumers, they have also faced several criticisms and challenges over the years. These criticisms primarily revolve around logistical, financial, and operational issues.
Logistical and Financial Burdens
Implementing and maintaining secret shopper programs can be resource-intensive. States must allocate significant funds to hire, train, and coordinate secret shoppers, as well as conduct comprehensive laboratory testing of the purchased products. This can be a substantial financial burden, particularly for states with limited budgets. Additionally, coordinating secret shopper visits and ensuring that they cover a representative sample of businesses can be complex and time-consuming.
Perceived Intrusiveness and Resistance from Businesses
Some cannabis businesses view secret shopper programs as intrusive and argue that they add unnecessary stress and financial strain, particularly for smaller operators. Business owners may feel that these programs disrupt normal operations and create an atmosphere of mistrust between regulators and the industry. This perception can lead to resistance and pushback from businesses that feel over-regulated.
Effectiveness and Focus
Critics argue that secret shopper programs sometimes focus too much on minor infractions rather than addressing more significant compliance issues. For example, while the programs effectively catch age verification violations, they might not always address broader issues such as systemic THC inflation or contamination. This narrow focus can divert resources away from tackling more impactful problems, potentially undermining the overall effectiveness of the programs.
Balancing Regulation and Industry Growth
Finding the right balance between stringent regulation and fostering industry growth is another challenge. Excessive regulatory pressure from secret shopper programs can stifle innovation and make it harder for new businesses to enter the market. High compliance costs and the threat of penalties can create barriers to entry, reducing competition and limiting consumer choice. Ensuring that regulations do not hinder the growth and development of the industry is crucial for maintaining a healthy market.
Despite these criticisms, the benefits of secret shopper programs in ensuring compliance and protecting consumers are significant. Addressing the logistical, financial, and operational challenges, while maintaining a focus on both minor and major compliance issues, can enhance the effectiveness of these programs. Balancing regulatory oversight with industry growth will be essential for fostering a robust and trustworthy cannabis market. The experiences of states like Massachusetts, Oklahoma, and Colorado highlight both the successes and challenges of these programs, offering valuable insights for other states considering similar initiatives.
Future of Cannabis Secret Shoppers
Secret shopper programs are an essential component in maintaining the integrity and safety of the legal cannabis industry. These initiatives help ensure regulatory compliance, accurate labeling, and product safety, thereby fostering consumer trust and protecting public health. By conducting undercover operations and rigorous testing, secret shoppers play a crucial role in identifying and addressing issues such as THC inflation, contamination, and underage sales. The programs implemented in states like Massachusetts, Oklahoma, and Colorado have demonstrated significant benefits, driving higher compliance rates and enhancing the overall credibility of the legal cannabis market.
However, these programs are not without challenges. They face logistical and financial constraints, resistance from businesses, and questions about their effectiveness and focus. Balancing stringent regulatory oversight with the need to support industry growth and innovation remains a critical concern. Despite these hurdles, the overall impact of secret shopper programs is overwhelmingly positive, providing a robust framework for ensuring that cannabis products meet high standards of quality and safety. As more states consider adopting similar initiatives, the lessons learned from existing programs can help refine and improve their implementation, ultimately supporting a safer and more trustworthy cannabis industry.
