Ready or not?
A century of prohibition is finally over. California may need some time to adjust.
It has taken more than 45 years, but California has legalized adult-use cannabis. The first try, in 1972, lost by a two-to-one margin. California managed to legalize medical marijuana in 1996, thanks to the chutzpah of Dennis Peron and the support of activists like Dale Gieringer and George Zimmer. 2010’s Proposition 19, bankrolled by Oaksterdam founder Richard Lee, got us closer, until finally, in 2016, Californians passed Prop. 64. It’s about time. Potheads are patient, persistent and effective.
Sacramento activists have been on the front lines for years, and we have lost a few good people along the way. Ryan Landers, Joy Cole and Bill Pearce were all instrumental in creating the Sacramento cannabis scene, and their absence makes this victory somewhat bittersweet. Credit must also go to Sacramento cannabis pioneers Aundre Speciale, Kim Cargile, Cody Bass and everyone who showed up at all the protests and all the City Council meetings. To everyone that gave their time, their money, their art, and risked their freedom to push California onto the right side of history, thank you.
Now, cannabis is extremely legal. If you are at least 21 years old, you can walk down the street with up to an ounce in your pocket, no problem. You can go to your friendly neighborhood pot shop and pick up a few prerolls after work. If you have a criminal record because you were arrested for possession of cannabis, you can get it expunged. Cities like Oakland and Sacramento have started programs to increase diversity in canna-businesses. These are all very good things.
But don’t go burning your medical marijuana card just yet.
Getting recreational cannabis is gonna be a challenge for at least a few months. The California Bureau of Cannabis Control has been slow to publish regulations, and as of this writing, only 100 temporary licenses have been granted by the state. Out of those 100 licenses, only 22 are retail businesses. And since cities and counties can make their own rules regarding cannabis, some places won’t see any cannabis businesses for a while, if at all.
Los Angeles isn’t even accepting applications until January 3. Sacramento County still hates anything cannabis-related, and Calaveras County can’t seem to make up its mind on whether or not to even allow cannabis businesses. Yolo County is the same way. Cannabis may be legal, but legally getting cannabis will be a challenge.
Even if there is a retail shop in your area, there is no guarantee that the shop will have any weed, because licensed cultivators and distributors are hard to find.
Amir Daliri, from the Sacramento-based LoCann Venture Management, had this to say: “I think there’s gonna be a crunch between licensed and unlicensed business suppliers. I think there is gonna be a drought. There are not enough licensed folks to meet the demand. I don’t think they can do anything about it, it’s just a normal growing pain of the market while they make the transition.”
He is most likely correct. Nevada, Colorado, Washington and Oregon all had similar problems at the beginning, and while Nevada is still struggling to keep up with demand, Oregon, Washington and Colorado are doing great, and making money gram over fist. When you think about the size of California (those three states have about 16 million people combined. Cali has 39 million, plus it sees 67 million or so tourists each year), it is easy to predict that there will be hiccups in the beginning. It should work itself out in a few months.
It won’t just be cannabis growers and sellers that will see an increase in business. All sorts of ancillary businesses, from lawyers to accountants to marketers to compliance firms, will jump into this new market. The real estate market in areas that allow canna-businesses has already seen rent prices skyrocket.
Chelsea Dudgeon runs Newell’s Botanicals, a small company that makes cannabis infused ointments and salves. Her ointment has won the Emerald Cup for Best Topical two years in a row, and she says that finding a space to make her lotions and creams has been a challenge: “It’s not so difficult to get a license,” she said. “It’s a real estate problem. As soon as some areas were zoned for cannabis, there was a massive land grab.
“As it stands, if you want to get the smallest type of license [maximum revenue $100,000],” she said, “you would qualify for a discounted permit. But because of the cost of rents in permitted areas, there is no way to make any money. Rents have gone from 65 cents per square foot to $6.”
She says the city needs to allow more areas to have canna-businesses so that smaller companies without deep pockets can have a chance to compete.
Getting funding for a cannabis company is tough. Because federal regulations are still in place, traditional investors are allergic to investing in cannabis. There are some private investment funds looking to get involved (there are even rumors that some NBA players are looking to invest on the low), but traditional routes like bank loans or Kickstarters don’t want to run afoul of federal law.
Speaking of federal law, there is no guarantee that U.S. Attorney General Jeff Sessions is inclined to leave canna-businesses alone, even if they are following state law. The Rohrabacher-Farr Amendment (formerly the Rohrabacher-Blumenauer Amendment), which prohibits the federal government from using its resources to go after canna-businesses that are following state law, may not survive. If that happens, Jeff “I used to think the KKK was cool until I found out some of them smoke pot” Sessions can go after all the legal pot businesses in the country. It would be an uphill battle, because states are making money. But most industry leaders think that the feds will maintain their hands-off approach.
As it stands now, though, weed is winning. The entire West Coast, including Alaska, has legalized cannabis. Massachusetts, Vermont and Maine have legalized cannabis. California is poised to take its place as the rightful leader in the cannabis industry.
The challenge will be to make sure that the small farmers have a chance to stay in business. Cannabis has been a decentralized commodity for decades. Capitalism loves monopolies. There has to be a balance.
And although cannabis is legal, smoking cannabis in public is not. Most cities don’t really enforce the no-cannabis-smoking rule too much, but this is something that must be addressed.
Cities must create spaces where cannabis users (especially tourists—most hotel rooms these days are non-smoking) can congregate and celebrate.
This is just the first step. The journey is not over. Battles never stay won. Activism is needed more than ever to ensure that the cannabis legalization movement, which started as movement toward social justice, maintains its freedom-loving ways and doesn’t get caught up in a capitalist race to the bottom.