Your collective has a security guard at the door. But how are you protected behind the guard? – Cannabis Business Executive

By Paul Gerber

Theft by employees in the retail industry is rampant. Incident for incident, the cost of internal theft remains much higher than that of loss due to shoplifting. The National Retail Federation’s 2021 Security Survey, for example, demonstrated this clearly. The average dollar loss per dishonest employee was over $1,500 in 2020. By comparison, the average loss for a shoplifting incident was a mere $461, or less than a third of the amount for employee theft.

But employee theft from a cannabis establishment is so much more enticing. Even ignoring the desire for personal use, the product is so easy to sell to friends or on the street.

Although cannabis remains a cash business in many locations, modern point of sale systems and the proliferation of credit and debit cards make it difficult to steal cash, but store employees have a constant opportunity to steal merchandise. All they need is the desire and sufficient motivation to do so. What keeps most employees honest is a moral character, loyalty, respect for the law and their employer, and the desire to be viewed as trustworthy.

Studies have shown that employees can do a lot more damage than shoplifters because they are trusted and have an insider’s knowledge of store security measures.

Recently a cannabis dispensary in the Los Angeles, California neighborhood of Silver Lake was broken into and robbed of at least $1 million worth of marijuana and marijuana-related products. The owner believes it was “an inside job.” Since they obviously knew where everything was.

Preventing employee theft is a constant challenge for collective owners. The industry knows that it must put systems in place to prevent or deter internal theft. To be effective, loss prevention systems must be designed to reduce the opportunity, desire, and motivation for employee theft.

One way of reducing employee theft motivation is to show a deep commitment to preventing losses at every level and a policy to prosecute dishonest employees if warranted. Having systems in place to control shoplifting takes away the excuse that external theft is responsible for store inventory shrinkage and not employee theft.

But what if the employee is a professional thief? In other words, they steal from every employer they’ve ever had. One way to avoid hiring him is to run a detailed background search. An amazing amount of information can be gleaned instantly from simply knowing the employee’s name and date of birth. Add to that their SS number and current address and you can have a complete history. An investment of thirty dollars could save you thousands in lost merchandise. More in depth searches such as drug testing may be warranted in some cases but worth the cost. If your new employee will be making deliveries or picking up supplies for your business, a check of their driving history is warranted.

An insurance claim for employee theft may be denied if the insurance company can show that the collective owner neglected to use caution and did not perform background checks in their hiring process.