There has been much talk about the updates that are coming to the California marijuana industry. However, when they were announced last Friday, they went largely under the radar. That’s because many of these biggest changes either won’t be felt until further down the road, or were not addressed at this time.
“That first step that Neil Armstrong took on the moon, everybody noticed, but by step number 43, nobody really cared anymore,” Hezekiah Allen, the executive director of the California Growers Association, said. “We’re sort of there. Everything to do with cannabis is a little exciting, but this is just one foot in front of the other, to be honest.”
Most of the changes announced were considered “business-friendly,” and came from the three agencies that oversee the California marijuana industry: the Department of Food and Agriculture, the Department of Public Health, and the Bureau of Cannabis Control.
One of the biggest changes from Friday’s announcement was that the regulations for a unified supply chain—allowing companies that hold medical licenses to do business with those that hold only adult-use permits—were made permanent. These regulations, a portion of the emergency industry rules passed last November, were only temporary. “I can’t overestimate how big of a deal that would have been if that change had not been made permanent,” said Max Mikalonis, of Sacramento-based K Street Consulting, which tracks California marijuana policy.
Also, the Bureau of Cannabis Control, which regulates retailers and delivery companies, made changes to the laws that address product delivery. Two of the changes that stand out are a change in the monetary value of product that delivery drivers can carry, it was bumped up from $3,00 to $10,000, and a ban on the “ice cream truck model.” The former change is fairly self-explanatory, drivers can now carry a maximum of $10,000 worth of product. The latter is a little more complicated, but essentially it means that drivers must receive orders and stock their vehicles at a physical location before making their deliveries. The goal here is to avoid trucks that are stocked similarly to a retail store, drive around filling online orders. Mobile Fulfillment, as it is known, was basically banned last year.
There were also some changes made geared at small businesses. One change allows multiple licensed growers and sellers housed in a single facility to use the same common areas, like bathrooms and break rooms. Another cleared up unnecessary overlaps for security and testing samples, and there were a handful of changes from the Growers Association that do things like expand water source protection and the transportation of immature plants.
One major and yet-to-be-settled dispute is in regards to acreage caps for cultivation. The state’s Growers Association filed suit in January over what it says is a loophole being exploited by large, commercial-scale cultivators. Basically, the association wants an acreage cap instated that would encourage competition between smaller growers and the larger growers by leveling the playing field and making it so the commercial-scale operations cannot physically get bigger and bigger. Right now the basic rules of capitalism are in place—large companies with the assets to expand can do so as they wish, and smaller growers get by as they can. These are larger issues that many didn’t expect the addressed in this round of regulations, but it is a topic that we expect to see brought up for regulation in the future.
Perhaps the most significant change facing the California marijuana industry wasn’t addressed: Whether the state will allow previously untested product to be returned to distributors for testing so that it can be sold after July 1, when only lab-tested products can be sold to customers. This is the proverbial elephant in the room. “There is this open question of, ‘What happens to 2017-2018 product on the shelves?’” Max Mikalonis said. “Because that wasn’t touched in the transition-period regs, [it] may mean a lot of product will need to be destroyed come July 1. A better solution would be to allow it to be returned to distributors to be tested and see if it’s clean or not.” This is still the biggest question facing California’s marijuana industry, as it could leave millions, if not billions, of dollars worth of product unable to be sold, which could have ripple affects throughout the state.
If you’re a California grower, and you’re concerned about the July 1 deadline, do yourself a favor and get our GreenLite Screener. It will quickly screen your product and let you know if it will pass a full-blown lab test. Better safe than sorry.