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Working with contractors in a field you have little experience in, such as security, can represent a major challenge for many legal cannabis operators (LCOs). Without significant experience or knowledge about contract law, it’s easy to fall prey to unscrupulous or incompetent vendors utilizing poorly worded contracts that put the LCO at a disadvantage or can lead to expensive and destructive lawsuits.

Contract disputes can become especially confusing, frustrating, and tedious when the LCO utilizes a multitude of vendors to cover all of its security needs. This creates a situation where vendors can easily defer responsibility for any mismanagement or poor performance on other vendors, leading to a merry-go-round of contractors playing the blame game with each other.

Taking an active role in both screening and managing your contracts is an essential part of designing your security system and avoiding common pitfalls, as Chris Eggers of CCSS explains in Chapter 15 of his book Securing Cannabis: A Comprehensive Guide To Increase Security, Reduce Costs, Reduce Liability, and Avoid Landmines. By carefully reviewing each contract and actively managing them rather than just trusting the contractors to manage themselves, LCOs can create a much more effective security system where each element works in tandem with the others.

Eggers relates that there are a multitude of pitfalls that LCOs can encounter when signing a disadvantageous contract. These include a lack of recourse for poor service, auditing, product, and labor warranties, vendor insurance, termination clauses, compliance and licenses, liability issues, and a general lack of accountability.

This lack of accountability is one of the primary problem areas LCOs face, as shown in the above example, which related the problem of multiple vendors. Vendors are incentivized to downplay their accountability in the face of failure, whether it be equipment malfunctions or the lack of efficacy for their part in the security system.

Many of these pitfalls can be avoided before they become a problem by carefully reviewing contracts before signing. Eggers lists a short guide that will help LCOs screen contracts to ensure they only sign contracts that work to their business’s advantage.

  1. Get multiple bids: Compare proposals from several vendors to help get an idea about the value of the services proposed.
  2. Ask questions: If there is something you don’t understand about the contract, do not be afraid to ask questions. Be wary of those who refuse or can’t answer.
  3. Don’t be afraid to push back: If you do not like the answer to a question or a term on the contract, you have the right to negotiate. If they refuse to budge on a point that is important to you, find another vendor.
  4. Define consequences for non-performance: Contracts need to define some kind of accountability for the vendor in case of poor or lackluster performance.
  5. Verify licenses and insurance: Research what licenses and insurance the vendor in question requires and ensure they have them.
  6. Consult an attorney: Unless the LCO has experience with or legal knowledge of contracts, it’s highly recommended that they consult an attorney before signing anything.

The book goes on to describe the essential parts of a contract that LCOs need to be especially aware of. For a typical contract, this includes:

  • Scope of Work (SoW)
  • Warranties
  • Exclusions
  • Contract Length
  • Payment Schedule
  • Consequences for Non-Performance

Eggers goes on to detail out the specific considerations that need to be made for more specific agreements, such as guard, equipment, and monitoring contracts. For example, guard contracts should include copies of SOP for typical and unusual security situations, equipment contracts should contain clauses for service calls, and monitoring contracts should specify whether or not they provide 24/7 services.

Monitoring and managing your vendors and contracts can be difficult to juggle with other job functions, especially if your facility utilizes many vendors for its security system. Working with a dedicated security specialist like Cannabis Compliant Security Solutions will outsource the management of your security vendors, which can help free up that labor so the LCO can dedicate their time to running their business.

The chapter ends with a comprehensive checklist for helping manage your contracts and vendor relationships to best serve LCOs manage their security system. To gain access to this checklist, as well as every other piece of information you need to create an effective and compliant security system, we recommend checking out the full book. Securing Cannabis: A Comprehensive Guide To Increase Security, Reduce Costs, Reduce Liability, and Avoid Landmines is now available here!