Take a deep breath. The first full year of legal cannabis is almost over in California.
Since the state started regulating adult-use marijuana sales at the beginning of 2018, entrepreneurs looking to break into the California cannabis market have scrambled to get temporary state licenses, scrutinized an evolving set of rules, weathered supply chain slowdowns and wondered if the nation’s attorney general, Jeff Sessions, would launch a federal crackdown before they could even get a whiff of victory.
By most accounts, therocky roll-out of legal sales has harshed the early euphoria of legalization.
Many California cities and counties have either failed to regulate cannabis businesses or explicitly banned them, leaving eager startups to clump together in the jurisdictions that permit them to operate. Cannabis purveyors interviewed over the course of the year said they’ve felt squeezed by geographic restrictions and the cost of regulatory compliance – and concerned that the combination will only allow the black market for marijuana to persist.
As legal pot enters its second year in California, the industry is still operating under a set of emergency regulations while the state agency tasked with rulemaking, the California Office of Administrative Law, reviews a set of proposed regulations released in early December.
Here’s what happened this year in California weed – and a few things to watch in 2019.
The roll-out and the comedown
Some California cannabis consumers started 2018 with a tour of local dispensaries. One couple interviewed by The Desert Sun said they had hit three weed shops before 9 a.m. on Jan. 1. A dispensary in Cathedral City, West Coast Cannabis Club, reported brisk sales — four times higher than usual — on the first day of legalization.
But before the month was through, Sessions announced the reversal of Obama-era guidance directing federal law enforcement to take a hands-off approach to state-legal marijuana operations. Cannabis industry observers watched pensively.
Tim Morland, director of compliance and policy at the cannabis distributor River Distributing, said a shortage of licensed retailers dampened sales.
“There are really not enough retailers for the amount of supply that we had,” he said.
The phasing in of new packaging, labeling and potency standards also rattled retailers and distributors alike. Businesses faced a July 1 deadline to either sell old, non-compliant inventory or toss it in the trash. In the hustle to adopt the new standards, many pot shops resorted to selling non-compliant products at fire-sale prices – only to discover restocking their shelves would be slower than expected as a result of a laboratory testing bottleneck.
Recent revisions to labeling requirements have helped, Morland said, easing some of the earlier supply chain problems.
“The amount of regulations, different versions of regulations we had – it was kind of hard to adjust to new sets of rules,” he said.
The California state legislature also approved a flurry of cannabis laws in 2018. Here are some highlights:
- Assembly Bill 1793 streamlines the process for residents with prior cannabis-related convictions to expunge their records or get reduced sentences.
- Senate Bill 1294 creates the framework for a program aimed at helping people from demographic groups typically impacted by cannabis criminalization disproportionately, including black and latinx people, through technical or financial assistance. (Latinx is a gender-neutral term used as an alternative to Latino or Latina. )
- Assembly Bill 2255 prohibits licensed veterinarians from dispensing cannabis to an animal patient.
- Assembly Bill 2404 prohibits licensed cannabis businesses from disclosing a consumer’s personal information to a third party, except to accept payment or with the consumer’s consent.
- Assembly Bill 2914 prohibits licensed cannabis companies from selling any product that combines marijuana and alcohol.
In the fall, law enforcement publicized a series of search-and-seizure actions against unlicensed cannabis businesses. In one raid, officers bagged $9,000 in cash and 1,150 marijuana plants from a dispensary operating in the unincorporated community of Thousand Palms.
Some entrepreneurs said they were encouraged by the crackdowns on illicit rivals, who they believe undercut prices compared to operations that follow state regulations.
Knowing the owners
Regulators also beefed up financial disclosure requirements. Under proposed rules released in December, licensed businesses would be bound to report all of their individual owners, including the trustees of trusts, board members and managers with an interest in the licensed company. They would also have to divulge loan agreements and profit-sharing deals they strike with people like employees, consultants, attorneys and landlords.
“You want to have a clean money trail,” said Jeff Breier of Hardcar Security, which transports
cannabis products and cash for cannabis companies. “If they don’t like it, they’re hiding. If you have nothing to hide, you don’t care that they check into you.”
Other industry observers were less sanguine. Chris Lindsey, senior legislative counsel for the Marijuana Policy Project, said that in some cases, the proposed rules could subject investors with even just a sliver of a stake in a cannabis company to undergo deep background checks.
“It started to look like, in a lot of these kinds of arrangements, you’d have to go through a real heavy vetting process,” Lindsey said.
Victory for delivery – for now
Another proposed tweak to state rules would loosen restrictions on marijuana delivery companies, explicitly allowing them to deliver pot to anywhere in the state, apart from public land or land leased by a public agency.
Proponents of the measure said it would help to chip away at the black market by allowing consumers in communities that otherwise ban pot shops to have cannabis products delivered to their doors instead.
“We really thought that allowing statewide delivery was a good decision because it provides a means for people in those areas to get access,” Lindsey said.
The potential rule change would effectively negate local regulations in places like Indian Wells, which bars delivery services and other cannabis businesses from the city.
In August, David Gassaway, Indian Wells planning director, called proposed rules opening up deliveries to cities like his “an affront to local control and an override of the will of the voters.” The League of California Cities also slammed the switch as “extremely troubling.”
Source . https://www.desertsun.com/story/money/2018/12/26/year-california-weed-highs-lows-and-what-happens-next/2372135002/