Cannabis Compliance in 2024: A Transformative Year

Kim Anzarut, CEO and founder of Allay Consulting | Image Credit: © Kim Anzarut

As the cannabis industry continues its trajectory of growth and maturation, 2024 marked a pivotal year, particularly in regulatory and compliance landscapes. With global markets projected to reach $38.19 billion and new federal and state-level initiatives reshaping the industry’s operational framework, cannabis businesses faced a year filled with challenges and opportunities.

In this blog, we’ll unpack the key events and regulatory milestones of 2024, examining how they have redefined compliance requirements, and the strategies cannabis operators must adopt to thrive in an evolving landscape.

Rescheduling Marijuana: A Federal Shift

In May 2024, the Drug Enforcement Administration (DEA) proposed rescheduling marijuana from Schedule I to Schedule III under the Controlled Substances Act (CSA). This was a monumental step, signaling a federal shift in how cannabis is perceived and regulated.

The proposed rule, published in the Federal Register, launched a 60-day public comment period ending in July 2024. During this time, industry stakeholders, advocacy groups, and the public submitted extensive feedback. While the move to Schedule III could significantly reduce tax burdens under Section 280E of the IRS Code, it left hemp and synthetic tetrahydrocannabinol (THC) untouched, maintaining their unique classifications under the CSA. The new proposed hemp bill however would close many loopholes when it comes to derivative cannabinoids, but the bill has yet to be finalized. So far, the bill may redefine hemp to include "naturally occurring, naturally derived, and non-intoxicating cannabinoids." This change could remove many intoxicating derivative hemp-derived products like gummies, beverages, and edibles from store shelves nationwide.

Industry reactions were mixed. On one hand, the rescheduling offers potential relief and legitimacy. On the other, concerns linger about the pace of implementation and the implications for existing state-level regulatory frameworks.

If federal legalization does happen in 2025 this will be a major shift in the way cannabis companies are regulated. This will make compliance with Food and Drug Administration (FDA) and OSHA fundamental in the survival of cannabis businesses. As discussed many times in previous blogs, becoming compliant with FDA by becoming cGMP Certified in advance and becoming compliant with Occupational Safety and Health Administration (OSHA) standards will be key to increase the success of a business.

OSHA Steps Up Enforcement

OSHA compliance became a hot-button issue for cannabis cultivation and manufacturing facilities in 2024. OSHA launched targeted audits emphasizing fire safety, personal protective equipment (PPE), and respiratory protection, especially in high-risk extraction facilities. Technically OSHA has always had jurisdiction over cannabis companies, but just weren’t enforcing unless there was an incident or a complaint. Now that is changing due to many incidents resulting from a lack of regulation.

For Class 1 Division 2 facilities engaged in volatile solvent extraction, ensuring adherence to Hazard Communication (HazCom) standards and implementing proper spark-proof systems became critical. Failure to comply resulted in steep fines, pushing operators to reassess their safety protocols and invest in robust employee training programs.

OSHA’s increased attention underscores the agency’s recognition of cannabis as a legitimate industry requiring the same rigorous safety standards as other manufacturing sectors. Becoming compliant with OSHA standards is not an easy task, it takes time and effort to create a safe work environment and have a company that is prepared for an audit. OSHA is the highest fining department in the federal government and can cost a company hundreds of thousands of dollars in one short visit if the correct protocols are not in place. I recommend getting into compliance with these standards as soon as possible, not only to protect your workers, but to save you from business-ending shutdowns and fines as well.

California Leads State-Level Innovations

In March 2024, California unveiled a streamlined cannabis licensing process that consolidated environmental and safety compliance into a single application. This approach simplified the regulatory maze for businesses, reducing administrative burdens and expediting license approvals.

Other states took note, with similar initiatives introduced in Oregon and Massachusetts later in the year. These changes reflect a growing awareness among state regulators of the need for efficiency in fostering industry growth while maintaining public safety standards.

Banking and Financial Access

Access to banking services has long been a thorny issue for cannabis businesses. Despite legalization at the state level, federal restrictions left many operators reliant on cash, exposing them to security risks and complicating compliance efforts.

The SAFER Banking Act was passed by the Senate and this will provide protections for financial institutions. Hopefully these changes will help with the banking issues we have been dealing with from the beginning. SAFER Banking Act.

With federal legalization on the horizon, hopefully these financial burdens will be alleviated eventually. Keep in mind, that being compliant with federal standards can also lower your cost of insurance and help local banks work with your company by mitigating their risk.

Technological Innovations

Advancements in cultivation and processing technologies played a pivotal role in compliance management. Automated tracking systems, for instance, enabled real-time monitoring of inventory, improving traceability and reducing the risk of regulatory breaches.

Similarly, innovations in laboratory testing enhanced the accuracy of potency and contaminant analyses, addressing long-standing issues like lab shopping and potency inflation. Standardized testing protocols became a focal point for regulators aiming to protect consumer safety.

Evey year more and more technology innovations change the landscape of this industry. I personally have seen an insane amount of change since I started in the industry in 2014. I am excited to see what changes in the next 10 years.

Industry Outlook

As we look toward 2025, several trends and questions emerge:

1. The Outcome of DEA Rescheduling:

• Will marijuana officially move to Schedule III, and how will this reshape the industry’s regulatory environment? We still aren’t sure if this will happen in 2025, but we do know it will happen eventually. The DEA and the FDA have publicly backed the decision to reschedule though, so there is a possibility it might happen sooner rather than later.

2. Federal and State Alignment:

• Can federal rescheduling efforts harmonize with diverse state-level laws, or will discrepancies persist? I believe that the cannabis industry will be regulated a lot like wholesale food manufacturers where they have to abide by local and state regulations and with federal regulations as well. You will especially be required to have an FDA registration in order to sell across state lines, and some states will still opt-out of having a cannabis program all together. cGMP and OSHA compliance will be key in the success of your company.

3. Global Influence:

• How will international markets respond to US regulatory shifts, and what opportunities will arise for export and collaboration? If federal legalization goes into effect, there will be international opportunities. Many of my clients are working towards cGMP Certification to the 211 pharmaceutical standard to better position themselves to be able to sell internationally when it becomes available. Depending on your desired future of your company, it might be good to keep this in mind.

4. Proactive Compliance Strategies:

• With increasing scrutiny from OSHA and other agencies, proactive compliance—from documentation to employee training—will be essential for maintaining operational integrity. cGMP Certification and full OSHA compliance plans will be necessary for company survival. Better to be proactive rather than reactive when it comes to compliance.

The cannabis industry’s evolution in 2024 underscores the importance of adaptability and vigilance. Regulatory shifts, technological advancements, and a growing emphasis on safety and transparency have set the stage for a more mature and sustainable industry. For operators, embracing these changes is not just about avoiding penalties but also about building trust and credibility in a competitive market.

As 2025 progresses, the question is not whether the cannabis industry will continue to grow, but how well it will navigate the complexities of compliance to unlock its full potential. By staying informed and proactive, businesses can position themselves as leaders in a rapidly changing landscape.

About the Author

Kim Anzarut, CQA, CP-FS is the CEO and founder of Allay Consulting. Direct correspondence to: kim.anzarut@allayconsulting.com.