C<\/span>alifornia is the number one cannabis producer in North America \u2014 producing far more cannabis than it consumes. So some people might be shocked that the biggest problem facing its emerging legal adult-use system is on the supply side.<\/p>\n Attorney Marc Wasserman<\/a>, half of the Los Angeles-based law firm Pot Brothers at Law, is not one of those people; he said that most industry insiders could see this problem coming for at least a year.<\/p>\n \u201cIt was the beginning of 2017 when [state regulators] said, \u2018Yeah, we\u2019ll be done with these regulations by November,\u2019 and most of us laughed and said they were crazy \u2014 and they were,\u201d he said. \u201c<\/span>Same with LA: Permit applications were supposed to come out in October, then before Christmas, then on Christmas, then the first of the year, then it was Wednesday and then it was only open to pre-ICOs<\/a> [the 135 medical marijuana dispensaries operating in Los Angeles with city approval].\u201d<\/span><\/p>\n Los Angeles created a legal framework for adult use cannabis sales in early December<\/a>, but the city has fallen far behind<\/a> when it comes to getting licenses approved. And while most headlines<\/a> are focused on the city\u2019s delay in getting its adult use dispensaries up and running, it is worth noting that the City of Los Angeles will only begin licensing indoor growers after they license their pre-ICO dispensaries \u2014 which could take awhile.<\/p>\n For small businesses trying to secure a spot in the legal market, these delays are critical.<\/p>\n The cost associated with getting a facility in a zoned area \u2014 including the drafting of architectural plans, environmental impact reports and all other required steps \u2014 routinely runs $50k to $100k, but all those efforts will amount to nothing if the city won\u2019t grant them a temporary permit.<\/p>\n Wasserman said that, at this point, most of his clients are waiting in line.<\/p>\n In Los Angeles right now, Wasserman says there are \u201cs<\/span>hops all over the place operating illegally until enforcement really starts to ramp up\u2026 but the licensed shops are<\/span>\u00a0gonna run out of product eventually, and they\u2019re not gonna risk their state license by going to the black market.\u201d<\/span><\/p>\n And when that happens, the adult-use system could start to buckle as dispensaries struggle to find legal ways to restock their shelves.<\/p>\n In San Francisco, where a handful of medical dispensaries started recreational sales on Jan. 6<\/a>, the picture is similarly bleak when it comes to cultivator licensing. According to one longtime San Francisco grower, who asked to remain anonymous because of concerns about their pending applications, the city had not issued a single cultivation license as of Jan. 11.<\/p>\n \u201cWe\u2019re up against a city that didn\u2019t think about this process and took too long to start it; they didn\u2019t realize how much work and time it was going to take and how it would affect the people who need a local license to sell their products,\u201d the grower said. \u201cWe\u2019re at the mercy of the city right now\u2026 they\u2019ve\u00a0kind of<\/em> told us to shut down our grow, but also kind of not. Either way, we can\u2019t sell anything legally without local permits.\u201d<\/p>\n This isn\u2019t a matter of unqualified growers \u2014 the cultivator that Cannabis Now spoke with has already squared away their company\u2019s state-level permits and had several visits from the fire department, which must sign off on all facilities before a temporary license is granted.<\/p>\n \u201cIt\u2019s basically a wait and see situation,\u201d they said. \u201cAt one facility, they told us to just add some exit signs and we\u2019ll be good, the other we\u2019re still waiting for word back, but in both cases no permit has been issued.\u201d<\/p>\n Meanwhile, the retail end of the adult-use equation moves forward \u2014 for now.<\/p>\n Dispensaries may have their licenses, but they\u2019re still reliant on licensed cultivators for their next batch of inventory. Because of the \u201cgrace period\u201d carved out in the statewide emergency regulations, dispensaries have until July to sell off \u201cundocumented\u201d inventory purchased before the tracking requirements went into effect.<\/p>\n<\/blockquote>\n One dispensary employee who spoke on condition of anonymity said most dispensaries heavily overstocked in anticipation of this exact situation \u2014 and to take advantage of an enforcement blind-spot when it comes to taxes.<\/p>\n \u201cEverybody stocked up, because nobody knew what would happen,\u201d they said. \u201cA lot of people bulked up to avoid the excise tax: Before Jan. 1 there was no way to track the cost paid for inventory, so people said they paid $1,000 for a pound instead of $2,300 so the excise tax is only a couple hundred.\u201d<\/p>\n Seed to sale tracking<\/a> is supposed to make this sort of thing impossible moving forward, but the system has still not launched<\/a> and, like many crucial aspects of the adult-use roll-out, there are question marks surrounding its viability.<\/p>\n Some dispensaries are taking advantage of the supply side chaos \u2014 and the relative inexperience of new adult use consumers \u2014 when it comes to pricing. A dispensary employee who wished to remain anonymous told Cannabis Now that said their personal connections allowed them insight into several examples.<\/p>\n \u201cI know for a fact these dispensaries got an indoor strain from the same grower, but one place is charging $60 for an eighth, another place is charging $65 and then another is charging $60 for straight-up boof outdoor,\u201d they said. \u201cSome dispensaries have said outright they aren\u2019t paying more than $2,200 for packs moving forward, so they\u2019re just gonna keep buying greenhouse, light dep<\/a>, outdoor and straight boof.\u201d<\/p>\n Wasserman\u2019s take on the situation?<\/p>\n \u201cThe whole state is screwed, and we\u2019re not just talking about adult use \u2014 medical too, because it\u2019s all the same regulatory scheme,\u201d Wasserman said. \u201cOf the 482 cities in California, less than one-third of them have local permitting options, so what\u2019s happening is the majority of the state temporary licenses are being issued to retail shops or deliveries.\u201d<\/p>\n He said unless this situation is resolved, a supply bottleneck is more or less inevitable, which will affect the entire state.<\/p>\n \u201cWe haven\u2019t seen it yet, because the shops and everybody were able to flood their inventory by Jan. 1 and can sell all that outside of the track and trace system,\u201d he said. \u201cBut come July, the licensed shops will only be able to get product from licensed manufacturers or facilities and those licenses are scarce compared to the number of shops licensed. So that\u2019s going to be a problem until the state can catch up and get those licenses out.\u201d<\/p>\n It remains to be seen how this issue will be resolved, but it\u2019s certainly on the radar of regulators: In a pre-rollout interview with the LA Times, top cannabis regulator Lori Ajax voiced concerns about precisely this issue.<\/p>\n From the\u00a0LA Times<\/a>:<\/em><\/p>\n Ajax worries about whether California has \u201clicensed enough people throughout the supply chain, and geographically across the state, so people can continue to do business,\u201d which includes medical and recreational pot. \u201cThat\u2019s something I think about all the time\u2026 If you don\u2019t have enough distributors, if they are the only ones that can transport the cannabis, that would be an issue on Day One.\u201d<\/em><\/p>\n Of course, it\u2019s important to keep in mind that the emergency regulations governing California\u2019s legal cannabis system are just that \u2014\u00a0emergency regulations.\u00a0<\/em>That means they could change slightly or drastically moving forward.<\/p>\n Wasserman said that, if California\u2019s experiment with regulation is going to succeed, they\u2019ll have to.<\/p>\n \u201cIt\u2019s big time growing pains for regulation \u2014 and certainly overregulation,\u201d he said.<\/p>\n TELL US,\u00a0<\/strong>have you noticed a drop in quality at your local dispensary?<\/p>\n The post California Faces Potential Legal Marijuana Shortage<\/a> appeared first on Cannabis Now<\/a>.<\/p>\n
Industry insiders in San Francisco and Los Angeles are nervously eyeing local licensing delays for cultivators and processors and wondering how long the pre-2018 dispensary stockpiles will last. California is the number one cannabis producer in North America \u2014 producing far more cannabis than it consumes. So some people mightContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[148,50,80,488,2111,151],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/22812"}],"collection":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=22812"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/22812\/revisions"}],"predecessor-version":[{"id":22813,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/22812\/revisions\/22813"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=22812"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=22812"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=22812"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}San Francisco, A Storm on the Horizon<\/h4>\n
\n
Banking on Chaos<\/h4>\n
\n
\nRead More: California Faces Potential Legal Marijuana Shortage<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"