60 days of legal pot in California

The state of California issued it’s first licenses for cannabis businesses on January 1, and has issued about 2000 licenses (numbers change daily). Applications are being processed, but the Los Angeles licenses are just now underway. There are a couple of hundred retail stores licensed and opened, and about 1500 farms and processors so far. There are about a thousand applications currently in work, but that should be expected and so far backlogs aren’t an issue (Los Angeles missed by a mile on their staffing and budget guesses).

The existing operators are not rushing in with their completed paperwork and fee money in hands. While about 1500 farms have been licensed, Sonoma County alone has an estimated 5000 which could apply. The bulk of the potential licensees are not rushing to put in their paperwork.

CA was very thorough and comprehensive in it’s regulatory rules, much more far-reaching than any other state. The extent of the regulations is breathtaking. To comply is turning out to be very expensive and time consuming, putting most of the family-run operations out of the running. Those folks can’t use banks, so loans aren’t available.

Meanwhile, one individual/company now has 87 growing licenses, backed by private money. For years the states have crafted their laws and rules to favor the small farmer, and California was no different until hours before implementation, when the small-farmer protection clause [the big farmer exclusion clause] mysteriously disappeared. Those with access to large amounts of private capital could have at it.

Getting into the cannabis business in CA is expensive: State license fees are very high, local jurisdictions likewise overcharge the licensees, and environmental permits are expensive to get. Everyone needs a “team” of lawyers, expert consultants, and accountants. Those costs in the other states are a fraction of what it costs in CA.

The stores most likely to get a license now are existing medical marijuana “dispensaries”, some of which have been operating for years. They are already burdened by undesirable locations in business or industrial parks, lack of parking, and limits on signage and advertising. To comply with the new system in the city or county, limits on the store are even more onerous and expensive. There isn’t a mystery why the existing operators are not rushing in by the tens of thousands.

Then there is the ingrained culture of the farms and stores that have been operating for decades under loose laws that require extreme discretion, and under constant fear of being arrested by “the Man”. They are faced with a complete revamp of how they having been doing business, a total blow-up of everything they have learned.

I believe that the state truly wants to do this “right”, and they are driven to “capture” the entire market. And nearly everybody wants this to work. But “right” sometimes costs too much.

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