Detecting Internal Theft at a Cannabis Business

Since preventing shoplifting and other methods of external theft is usually the priority of cannabis security plans, internal theft can sometimes be overlooked.  On average, employees cause about 90% of all theft losses. Additionally, when asked, 60% of employees stated that they would steal from their employer if they knew they wouldn’t get caught according to the FBI. Despite the obvious dangers of internal theft, there are preventative measures that cannabis business owners can take to protect their products.

Types of Internal Theft

Employee theft, whether it be intentional or unintentional, typically happens in one of five ways: theft of inventory, data, service, payroll, or cash:

• Inventory theft is when an individual steals a physical product for their personal use or gain. 
• Data theft is when some type of information is taken without the company’s consent. This could include things such as banking numbers, client information, or trade secrets. 
• Service theft includes any time an employee might offer to do their job at an unauthorized discount. 
• Payroll theft is anytime someone cashes a check that is either not their own or is written without the company’s knowledge. Additionally, payroll theft would also include instances when employees either falsely document work they have not done or record hours that they were not actually at work. 
• Lastly, cash theft occurs any time an employee pockets incoming money without the company’s knowledge. This could be through stealing cash from drawers, or falsifying transactions and/or documents and pocketing the difference. 

Detecting and Preventing Internal Theft

In addition to intentional instances of internal theft, some theft could potentially be done by accident and without ill intent. As a precaution, cannabis business owners should utilize some proactive ways to prevent internal theft.

Cannabis business owners should use a professional agency to conduct a background check on all potential employees. This will determine if there are any discrepancies or red flags in the individual’s application. Once hired, cannabis business owners should strive to create a Culture of Honesty that discourages theft and provides opportunities for anonymous reporting.

Conversely, management should regularly review the theft policies and procedures within the company with employees. Employees should understand that internal theft is a serious issue and how instances of theft are handled by the company. 

One of the best ways to detect internal theft is to ensure thorough reporting of all access to cannabis products and each transaction. Security systems such as video surveillance, alarms, and access control systems ensure that areas with cannabis are monitored and that access to these areas is tracked. The use of point-of-sales systems and seed-to-sale inventory tracking systems also ensures that cannabis is always accounted for.

Additionally, creating accountability among employees is important and can be done by establishing policies requiring the handling of cannabis to only be conducted by two or more employees, preventing the opportunity for any one employee to be alone with cannabis. 

When working together, partners are more likely to hold each other accountable. They will work together to accomplish their goal as both would like to receive credit, rather than letting each other down. Also, with the consequences lined out from your expectations, they are more likely to keep each other in check. This helps reduce any possibilities of theft when they know there are another pair of eyes on them. One important factor to consider when placing co-workers together is the friendship level of the two. If the pair is close, they will be more likely to cover up for each other or take chances that unfamiliar duos would not be comfortable doing.

One of the most successful ways for management to reduce the risk of internal theft is to allow for anonymous reporting. When employees can report suspicious activity anonymously, they are more likely to report it. Many employees are afraid to report internal theft out of fear of retaliation from another employee. Additionally, if employees know that anyone can report them, they may be more inclined to not perform illegal activity. The more eyes on each other, the better.