Why Third-Party Audits Are the Most Underused Compliance Tool in the Cannabis Industry

It is the new year, and I felt it might be a good time to talk a bit about a compliance tool that any cannabis company can implement to be more prepared for the cannabis roller coaster in 2026!

As the cannabis industry matures, so does its regulatory landscape. State requirements are tightening, federal expectations are on the horizon, and operators are increasingly judged not only by the quality of their products but also by the robustness of their internal compliance systems. Despite this shift, many companies still approach compliance reactively rather than proactively, waiting for inspectors, recalls, or enforcement actions to expose gaps.

Yet one of the most effective tools for strengthening compliance, the third-party audit, remains significantly underutilized across the industry.

In more mature regulated markets such as food, dietary supplements, and pharmaceuticals, third-party audits are considered standard operating practice. They are a routine mechanism for identifying weaknesses, ensuring safety, and preparing for regulatory scrutiny. In cannabis, however, many operators still view audits as something to be feared or avoided, not leveraged.

This article explores what a real audit looks like, why operators often avoid them, the critical differences between internal and third-party audits, and how these assessments can uncover problems long before regulators arrive. For an industry working hard to build credibility, consumer trust, and operational consistency, third-party audits are not just beneficial, they are essential.

What a Real Internal Audit Looks Like

Internal audits are the backbone of a robust compliance system. When conducted correctly, they provide objective insight into how well an organization adheres to its own written procedures, regulatory requirements, and quality standards. These audits are conducted by an internal employee, not necessarily someone who is trained as an auditor.

A structured internal audit typically includes:

1. Audit Planning

The auditor (ideally trained and impartial) reviews applicable regulations, internal standard operating procedures (SOPs), facility documentation, and previous audit results. A risk-based audit plan is created, prioritizing processes with the highest potential for safety or compliance failures.

2. Document Review

Auditors examine:

• SOPs and work instructions
• Training records
• Batch records
• Equipment calibration logs
• Sanitation logs
• Deviation, corrective and preventive action (CAPA), and change-control documents
• Inventory reconciliation records
• Safety documentation (safety data sheets [SDS], personal protective equipment [PPE] policies, hazard analyses)

This review ensures that procedures not only exist but are complete, current, and realistic.

3. Operations Walkthrough

Auditors walk the facility to observe real-world practices. They assess how closely day-to-day operations align with written procedures, noting inconsistencies, inefficiencies, or potential hazards. This is often where the biggest gaps surface, when employees’ real work diverges from what SOPs describe.

4. Personnel Interviews

Employees are asked to describe their tasks, explain critical quality steps, and identify challenges. This helps assess:

• Training effectiveness
• Process understanding
• Cultural alignment with compliance

5. Gap Analysis

Auditors compare actual practices to regulatory requirements and internal standards. Deviations are documented clearly and objectively.

6. Corrective and Preventive Action (CAPA) Plan

A well-designed internal audit ends with a prioritized CAPA plan that assigns responsibilities, timelines, and measurable outcomes.

7. Follow-Up

Compliance improves only when findings are revisited and closed. Mature organizations treat follow-up as integral, not optional.

When done correctly, internal audits function as an early-warning system. When done poorly, or not at all, issues fester beneath the surface until uncovered by regulators, customers, plaintiff attorneys, or the media.

The Limitations of Internal Audits: Why They Can’t Stand Alone

Internal audits are an essential part of any quality management system, but they also come with inherent limitations that operators need to understand. In many cannabis facilities, internal audits are conducted by employees who are knowledgeable about daily operations, but not formally trained as auditors. This can create significant blind spots. Recognized auditor certifications such as Certified Quality Auditor (CQA) or Certified Professional in Food Safety (CP-FS) require extensive training in hazard identification, regulatory interpretation, and objective assessment — skills that most in-house staff have not been trained to apply.

Another challenge is familiarity bias. Employees see the same equipment, procedures, and facility layout every day. Over time, problem areas become “invisible.” It’s common to see a stack of internal audits marked as perfect, only for a third-party auditor to uncover numerous missed violations. Fresh eyes are often more effective at identifying issues that internal staff unintentionally gloss over simply because they have become part of the everyday environment.

Internal audits are also influenced by workplace politics. Employees may hesitate to document deficiencies if they are concerned about implicating coworkers, disrupting team dynamics, or disappointing supervisors who expect flawless audit results. The pressure to maintain appearances can lead to underreporting of issues, creating a false sense of compliance and security.

For these reasons, while internal audits are undeniably important, they cannot replace the objectivity and rigor of third-party assessments. A mature quality management system relies on both: internal audits that maintain day-to-day accountability, and external audits that deliver unbiased evaluation, deeper expertise, and higher-level oversight. Together, they create a more accurate picture of compliance and ensure that gaps are identified and addressed before they turn into regulatory problems.

Why So Many Operators Avoid Third Party Audits

Despite the clear benefits, many cannabis businesses hesitate to conduct internal audits, let alone hire external auditors. Several common factors contribute:

1. Fear of Finding Problems

In younger industries, operators sometimes take a “don’t look too closely” approach, hoping that if they avoid uncovering issues, they won’t have to address them. Unfortunately, regulators do not share this philosophy, and problems ignored today often become fines, recalls, or closures tomorrow.

2. Limited Internal Expertise

Many facilities lack trained internal auditors who truly understand:

• Current Good Manufacturing Practices (cGMP) principles
• Occupational Safety and Health Administration (OSHA) expectations
• International Organization for Standardization (ISO) frameworks
• State cannabis compliance rules
• Quality-management systems

Without this expertise, internal audits may lack rigor or fail to address root causes.

3. Resource Constraints
Audits require time, personnel, training, money, and organizational discipline. Some companies struggle to see the value when no problems have surfaced yet. That is, until an issue arises. At that point, they often find themselves scrambling to achieve compliance under pressure, rather than building strong systems proactively.

4. Misconception That Finding Violations Is a Sign of Weakness
In the cannabis industry, there is often a cultural fear that audits imply something is wrong. In reality, in mature regulated sectors, finding violations is a sign of strength. It demonstrates that a company is committed to continuous improvement, willing to identify gaps, and ready to make meaningful changes that support long-term growth.

It’s common for clients to ask for a checklist or extra time to “prepare” before a third-party audit, but this approach can actually slow progress. Staging an audit masks real issues and prevents auditors from seeing the conditions that need attention. Allowing auditors to review true day-to-day operations helps uncover violations right away, giving the organization the opportunity to learn from them and improve overall compliance.

5. “We Passed Our Last Inspection, We’re Fine.”

Passing a regulatory inspection only reflects compliance on a snapshot day. It does not guarantee ongoing quality or operational control. Internal audits reveal whether the underlying systems actually work and continue to work.

6. Lack of Leadership Buy-In

Compliance thrives only when supported by leadership. If executives prioritize production speed over structured quality systems, audits may feel like an unnecessary slowdown.

The reality is that avoiding audits does not reduce risk, it magnifies it. Unseen gaps are the most dangerous.

Internal Audits vs. Third-Party Audits: What’s the Difference?

Both internal and external audits are necessary, and both offer distinct advantages. However, they are not interchangeable, and both need to be included in a robust and effective quality management system.

Internal Audits

Internal audits assess compliance with:

• Company SOPs
• Written quality policies
• Internal safety requirements
• Management expectations

Their strengths lie in:

• Familiarity with operations
• Ability to audit frequently
• Lower cost
• Direct access to personnel and documents

However, internal audits may be limited by:

• Inherent bias
• Blind spots
• Pressure from management or internal politics
• Limited regulatory expertise

Third-Party Audits

Third-party audits are conducted by external experts with specialized training in regulatory requirements, industry standards, and facility best practices.

These audits provide:

• Objective, unbiased findings
• Cross-industry insight and benchmarking
• Deeper understanding of regulatory expectations and finding solutions to correct non-conformances
• Greater credibility with investors, insurers, and regulators
• More comprehensive gap analysis

Third-party auditors for quality assurance or employee safety often have backgrounds in:

• Food safety/Food and Drug Administration (FDA) regulation
• Pharmaceutical regulation
• OSHA compliance
• Cannabis regulatory enforcement

Their insights extend beyond checking boxes; they evaluate whether systems are robust, sustainable, and scalable.

When to Use Each

• Internal audits should occur regularly (monthly or quarterly).
• Third-party audits should occur bi-annually, annually, or before major milestones, such as:
  • State inspections
  • cGMP certification or re-certification
  • Facility expansion
  • New product lines
  • Licensing changes
  • Mergers or acquisitions

Used together, internal and external audits form a complete compliance ecosystem.

How Third-Party Audits Uncover Problems Before Regulators Do

Regulators walk into a facility expecting compliance. They do not guide, teach, or help operators fix problems, they enforce. Third-party auditors, however, identify and address gaps long before an inspection occurs, and can assist your company with how to actually solve the problem. Many third-party auditors have the experience to find cost effective and creative solutions that most people without their experience wouldn’t think of.

Here are some common issues that third-party audits catch early:

1. SOPs That Don’t Reflect Reality

Many cannabis facilities have procedures that were copied, inherited, or created quickly during licensing. Over time, operations drift, and SOPs no longer align with actual practices, a serious regulatory risk.

2. Training Gaps

Auditors frequently find:

• Missing training records
• Employees signing training forms without true understanding of information
• Outdated or incomplete curriculum
• Inconsistent onboarding processes

Regulators routinely cite training violations; third-party audits catch them early.

3. Documentation Failures

Inadequate documentation is the single most common gap in cannabis compliance.

Audits often reveal:

• Incomplete batch records
• Missing sanitation logs
• Unverified equipment calibrations
• Unrecorded deviations

These issues can lead to product holds, recalls, or license penalties.

4. Facility Design Deficiencies

Many facilities were not built with compliance in mind. Third-party auditors catch issues such as:

• Poor personnel or material flow
• Cross-contamination risks
• Incorrect HVAC or filtration
• Improper plumbing fixtures
• Inefficient sanitation design—usually floors, walls, and ceilings

Correcting these before regulators notice is critical.

5. Safety Gaps

OSHA citations have increased significantly in cannabis.

Audits frequently identify:

• Inadequate PPE programs
• Lack of hazard communication and other required SOPs
• Poor chemical storage
• Respiratory protection failures
• Incomplete safety training

These issues expose employees and the business to serious risk.

6. Supply Chain and Supplier-Verification Weaknesses

Third-party audits often uncover:

• No approved supplier list
• No Certificate of Analysis (COA) verification process
• Inconsistent incoming-material testing
• Lack of ingredient traceability

A single contaminated or mislabeled ingredient can lead to recalls.

7. Failure to Close the Loop on CAPAs

Many companies create corrective actions but never:

• Investigate root causes fully
• Document effectiveness checks
• Update SOPs accordingly

Third-party auditors ensure CAPAs drive real improvement.

Why Third-Party Audits Matter More as Regulations Evolve

With federal rescheduling on the horizon, regulators are increasingly signaling that cannabis manufacturing must align with established quality systems, especially cGMP. As more states adopt stricter requirements, and as federal involvement increases, third-party audits will become the norm.

They provide:

• Evidence of due diligence
• Proof of continuous improvement
• Documentation supporting recalls, investigations, and legal challenges
• Competitive advantage with investors and partners
• A roadmap for meeting future federal requirements

What the cannabis industry considers advanced today will soon be the baseline.

A Tool the Industry Can No Longer Ignore

Third-party audits offer the cannabis industry what it needs most: objectivity, credibility, and clarity. They help operators discover gaps before regulators do, strengthen internal systems, build consumer trust, and prepare for increasingly sophisticated regulatory expectations.

As cannabis continues transitioning from an emerging market to a regulated consumer-product industry, audits are no longer optional, they are foundational.

Companies that embrace them will be better prepared for inspections, more resilient to market changes, and more capable of sustaining long-term growth. Those that ignore them may find themselves learning hard lessons under the scrutiny of regulators, litigators, and consumers.

In a rapidly evolving industry, the question is not whether you will be audited, it’s whether you will be ready. With federal rescheduling around the corner, now is the time to take a closer look at your internal compliance and be prepared for whatever the future brings.

About the Author

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