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Free CCO Practice Questions

10 free, exam-style Certified Cannabis Compliance Officer (CCO) practice questions with answers and explanations. No signup required. Work through them below, then take the full free CCO practice test to study every exam domain.

Question 1

A dispensary owner wants the highest level of assurance an independent CCO can provide that the business complied with state regulations over the past year. Which type of engagement should the CCO perform?

  1. A review engagement, which provides limited assurance
  2. An examination engagement, which provides reasonable assurance
  3. An agreed-upon procedures engagement, reporting only findings
  4. A compilation engagement, which presents information without testing
Show answer & explanation

Correct answer: B - An examination engagement, which provides reasonable assurance

Question 2

A CCO determines that a cultivation operator has high inherent risk and weak internal controls. To keep overall audit risk acceptably low, the CCO must adjust the only component of the audit risk model within the CCO's direct control. That component is:

  1. Inherent risk, by changing the operator's business model
  2. Materiality risk, by lowering the reporting threshold
  3. Control risk, by strengthening the operator's controls
  4. Detection risk, by performing more extensive testing
Show answer & explanation

Correct answer: D - Detection risk, by performing more extensive testing

Question 3

While auditing a dispensary, a CCO discovers a single sale of a low-cost product to an underage purchaser. The dollar amount is negligible, yet the CCO concludes the finding is material. The BEST justification is that:

  1. Materiality is determined solely by the dollar value of the transaction
  2. A single transaction can never be material to a conclusion
  3. The violation's nature, not its dollar amount, makes it material
  4. Every finding must be reported as material regardless of size
Show answer & explanation

Correct answer: C - The violation's nature, not its dollar amount, makes it material

Question 4

A cannabis retailer subject to IRC §280E is preparing its federal income tax return. Under §280E, which cost may the business still subtract from gross receipts?

  1. Cost of goods sold (COGS)
  2. Retail store rent and utilities
  3. Advertising and marketing expenses
  4. Salaries paid to retail sales staff
Show answer & explanation

Correct answer: A - Cost of goods sold (COGS)

Question 5

A cannabis cultivator receives a single cash payment from a distributor. At what point is the cultivator required to file IRS Form 8300?

  1. When the payment exceeds $10,000
  2. When the payment exceeds $5,000
  3. When any cash payment is received
  4. Only when the annual cash total exceeds $50,000
Show answer & explanation

Correct answer: A - When the payment exceeds $10,000

Question 6

An investor agrees to acquire a 25% ownership interest in a licensed dispensary. To remain compliant, the operator must:

  1. Report the change to the regulator at the next annual renewal
  2. Obtain regulator approval before the change takes effect
  3. Proceed with the transfer, since minority owners are exempt
  4. Disclose the change only if the investor will manage operations
Show answer & explanation

Correct answer: B - Obtain regulator approval before the change takes effect

Question 7

During a dispensary audit, the CCO finds that the physical inventory of a product is 5% lower than the quantity recorded in the state seed-to-sale system, with no waste, destruction, or transfer records explaining the gap. The CCO's MOST appropriate initial conclusion is that the discrepancy:

  1. Is within normal tolerances and requires no action
  2. Reflects a routine software synchronization error in the tracking system
  3. Should be resolved by adjusting the system to match the count
  4. Signals possible diversion that must be investigated and reported
Show answer & explanation

Correct answer: D - Signals possible diversion that must be investigated and reported

Question 8

While reviewing a dispensary's security system, a CCO notes that cameras cover the sales floor and entrances but not the limited-access room where product and cash are stored. This is BEST classified as:

  1. Acceptable, because cameras cover all public areas
  2. A security deficiency in surveillance coverage
  3. A minor documentation issue with no compliance impact
  4. A staffing problem best resolved through additional training
Show answer & explanation

Correct answer: B - A security deficiency in surveillance coverage

Question 9

A CCO identifies a control gap that creates a reasonable possibility that material noncompliance will not be prevented or detected on a timely basis. How should the CCO classify and communicate it?

  1. As a significant deficiency, communicated orally to staff
  2. As a minor deficiency, noted only in the CCO's internal working papers
  3. As a material weakness, communicated in writing to governance
  4. As an isolated exception, excluded from the formal report
Show answer & explanation

Correct answer: C - As a material weakness, communicated in writing to governance

Question 10

Near the end of an engagement, a dispensary owner asks the CCO to leave a known labeling violation out of the final compliance report, arguing it would look bad to investors. According to the CCO Code of Ethics, the CCO should:

  1. Comply, because the CCO owes a fiduciary duty to the client
  2. Omit the finding if the owner agrees to fix it later
  3. Remove the finding but note it verbally to the owner
  4. Decline and report the violation accurately in the report
Show answer & explanation

Correct answer: D - Decline and report the violation accurately in the report

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