Challenges Continue for Legal Cannabis in California
10 months ago
After years of wrangling, some portions of California’s cannabis community are breathing a little easier. The final 338 page-version of the state’s complex and controversial regulations governing all aspects of cannabis have been approved.
Now, marijuana businesses, investors and advocates can move forward working under a regulatory template. This is despite the fact that nearly all sides feel the rules either go too far or fail to address concerns voiced by many, including stakeholders, small businesses, farmers and consumers.
Some advocates define California’s Proposition 64 as the approval of “regulated” cannabis, as opposed to “legalized” cannabis.
Most Parts of CA Have Limited or No Access to Cannabis
Huge swaths of the state are still against having any form of cannabis in their communities. You can check out this city search to see how your local government is regulating cannabis in your town. What’s immediately clear is that there’s a profound lack of cannabis availability up and down the state.
Marijuana Business Licensing Falls Short of State Projections
Cannabis advocates such as members of California’s chapter of NORML don’t mince words when they discuss what they see as the failure of state regulators to address some of the most important components of cannabis legalization.
One of these failures is licensing. With just 89 of 482 California cities allowing retail cannabis, it became imperative for the state to quickly license as many qualified retailers as possible. This hasn’t happened.
To date, the state’s Bureau of Cannabis Control (BCC) has issued just 547 temporary and annual licenses to retailers—a staggering miscalculation of the state’s own estimate that 6,000 dispensaries would be licensed in the first year following legalization.
And Angelinos seeking legal, tested cannabis still have to travel some distance to find a dispensary. In Los Angeles County, 82 of 88 cities aren’t allowing retail cannabis sales.
Want Your Cannabis Delivered? You’re in Luck—for Now
One of the winners in the hotly contested regulatory battle between cannabis businesses and state regulators is the companies providing delivery services. Last month, the state determined that marijuana deliveries will be permitted throughout California. The ruling has generated a concerted pushback from law enforcement and other statewide organizations, who’ve vowed to fight on to quash the state’s decision.
For now, this is a big win for cannabis consumers who find traveling to dispensaries challenging or inconvenient. But because this ruling enables deliveries into jurisdictions where cannabis hasn’t been locally approved, it’s anticipated that anti-cannabis cities will join existing opponents to challenge the state’s decision.
Cooperatives & Collective Are Now Part of Marijuana History
Years ago, cannabis collectives and cooperatives were the go-to structure that paved the way for legalization. Though the BCC hasn’t tracked the number of nonprofit collectives operating in 2018, it’s estimated that hundreds of collectives and cooperatives had been growing vast amounts of cannabis—primarily for medical marijuana patients.
Now, these organizations must close or transition to meeting state regulations. Those that don’t will be subject to both civil and criminal penalties.
The long-term impact of these changes is unknown. But collective operators are concerned that this will negatively affect the most vulnerable members of the medical marijuana community, as many collectives don’t have sufficient resources to transition to a regulated business.
Mandatory Testing Ensures Safety, but Reveals Contamination Issue
One of the upsides of legalization is the ability for folks to consume lab-tested cannabis products. Recently, testing revealed that a very small percentage of vape cartridges contained a measurable percentage of lead. Even “high-end” cartridges were shown to contain traces of the heavy metal, which has no safe level of exposure, according to the Centers for Disease Control.
One theory is that the acidic oils in marijuana are helping to release the lead, pulling it out of the metals that make up cartridge tanks. But labs are also testing the empty cartridges themselves to determine their lead content prior to having contact with cannabis oil.
Fortunately, as of Jan. 1, 2019, vape cartridges sold in California will now be tested for lead, other heavy metals and mold—something that can only be considered a win for everyone in the cannabis community.
One of the questions raised by cannabis farmers and manufacturers is how many of California’s 52 licensed labs are ready and able to offer this new level of testing. To meet the new testing standards, labs must buy additional equipment and chemical compounds, plus train employees.
Marijuana consumers deserve to have faith in the safety of the products they purchase, but the downside of the latest regulations is that additional testing costs, which farmers and manufacturers currently absorb, will most likely be passed onto consumers.
Terpenes Are Now Subject to Testing
Another legalization victory for consumers consists of standardizing the reporting requirements for terpenes. Manufacturers who declare the presence of terpenes in their products must now back up these claims with testing.
Tests will verify that the types of terpenes in cannabis products are consistent with what’s stated on package labels. Tests will also confirm that the terpenes fall within 10% of the terpene content listed on packaging.
RELATED: TERPENES PACK A THERAPEUTIC PUNCH
Some Legal Cannabis Rules Just Don’t Make Sense
Cannabis farmers and businesses have done their best to fight against regulatory requirements that didn’t appear to be sensible or practical. But a few of these rules remain on the books, resulting in ongoing industry challenges.
For example, when vape cartridges are tested, labs must use a brand-new cartridge from a distributor. The cartridge must be in its retail packaging, including a battery, if sold together. The cartridges are broken to extract cannabis oil for testing, and the remainder of the cartridge must be disposed of via hazmat or a cannabis waste management company, adding yet another unintended cost and consequence to legalization.
A Brown Bag Solution to a Non-Problem
If you were one of the frustrated consumers struggling with opening infuriatingly complex marijuana exit bags, it’s time to celebrate. Mandatory cannabis exit bags were roundly viewed as environmentally insensitive, difficult to open and simply put, over the top. They were particularly denounced when compared to the much more lenient packaging rules for the alcohol and pharmaceutical industries.
Beginning next year, [cannabis retailers will forego exit bags and place your purchases into a simple, opaque bag] http://www.sfweekly.com/news/california-issues-final-cannabis-regulations/). Activists pushed hard to put a stop to this needless requirement and happily, they succeeded.
Cannabis Legalization by the Numbers
A little over a year since Proposition 64 changed the face of marijuana in California, the numbers are beginning to tell the story of legalization in the Golden State:
- Legal cannabis is selling for about $500 per pound.
- Though cannabis tax revenues increased every quarter in 2018, the $234.2 million collected by the state for cultivation, excise and sales taxes fell far short of the state’s estimate of $630 million in projected tax revenues.
- For the next fiscal year, Governor Gavin Newsom proposes a 51% increase in California’s cannabis budget, which would bring state cannabis spending to $201 million—providing that cannabis revenues meet the state’s projections.
- Retailers estimate that about 40% of the cost of marijuana goods is taxes.
- Only about 10% of grower applications have been approved and licensed by the state.
- A proposed way to help legal cannabis businesses move away from a cash-only system was to create a bank expressly for the legal marijuana industry. State Treasurer John Chiang determined that launching a state bank would take $1 billion in capital investments and wouldn’t become profitable for 25 to 30 years. So, it looks like this won’t be happening any time soon.
- A Sacramento-based testing lab falsified 700–800 certificates of analysis of cannabis products, likely prompting the state’s largest product recall since legalization.
- Cannabis farmers currently pay the state a whopping $148 per pound in cultivation taxes. Assembly Bill 286, sponsored by California State Treasurer Fiona Ma, would eliminate the farmer cultivation tax for three years, along with temporarily reducing the state tax paid by retailers from 15% to 11%. If passed, the bill would provide some much-needed relief to farmers and retailers still struggling to meet local and state regulatory requirements.
Photo credit: Valmir Dzivielevski Junior