California may have legalized pot for recreational use, but the state is being accused of hampering the supply chain by issuing too few licenses to growers.
Owners of retail outlets for cannabis sales are already reporting backlogs as demand exceeds supply since weed became legal in California at the beginning of this year.
They have also expressed concern that lack of supply will encourage users to support black market operators unless the state speeds up its licensing process for legal marijuana growers.
Owners of many California pot shops began stockpiling weed in anticipation of increased demand when recreational use became legal on January 1. Despite this, some have reported backlogs as the lack of sufficient legal operators is hampering the supply chain. They want to see more licenses granted to retailers, growers and distributors to accelerate supply from the fields into retail outlets.
One San Diego shop owner, Will Senn who has three dispensaries and is planning to open three more, including an outlet in LA, says the black market will boom unless the state increases the tempo at which it is granting licenses to marijuana growers. This possibility poses a huge threat to the legal retail industry.
California’s top pot regulator, Lori Ajax, says the state has legalized cannabis so it must ensure that the product is made available.
She also expressed concern that users would be forced to go to the black market if they were unable to source their supply legally.
California has issued in the region of 1 900 licenses in all categories of the cannabis industry – retailers, distributors and growers – and only about 20 licenses state-wide have been approved for product testing.
When one considers that there are about 15 000 marijuana farms operating illegally in Humboldt County alone, a clearer picture emerges about the scale of the problem.
Red-tape is “tantamount to prohibition”
Complicating the supply chain is all the red-tape involved to operate legally in the cannabis industry. While it is legal to operate in a given state, the use of cannabis can be banned in a city within that state. This has resulted in established cannabis growers being stranded in counties that have banned pot or have imposed such tight regulations that it is strangling the pot industry.
Some people have described these rules and regulations as being “tantamount to prohibition” and say that it is frightening away prospective investors in an industry expected to reach the $7 billion mark in the not too distant future.
These barriers are complicating efforts to get pot from the fields and into stores.
Take Calaveras County as an example – this previously pot-friendly county has left its marijuana growers stranded in an about-face when officials reversed course and declared pot farms illegal.
Law enforcers have devised complicated procedures in an effort to keep a tight control on the industry. This has been the cause of criticism by many pot-related business owners who describe this red-tape as creating more confusion and less efficiency.
The operating chain
Generally, retailers must augment their stock by contacting a distributor.
The distributor then collects the cannabis from a grower.
That marijuana is then tested at a warehouse by a properly licensed testing company. The product is tested for potency, pesticides and other contaminants. Only once the consignment has been approved can it be collected for distribution to the retail outlet.
All consignments of cannabis that fails the test are returned to the grower who must either rectify the problems or destroy the product.
To date, only about 20 licenses have been issued to companies that test the quality of cannabis. This is creating further backlogs in the demand-and-supply chain.
Initial euphoria about legalizing cannabis for recreational use in California is rapidly subsiding as there appear to be more questions than answers for an industry being bogged down in red-tape.
These questions include:
—-> Why is pot being subjected to such hefty taxation?
—->Why can’t banks be legally allowed to do business with members of the cannabis trade?
—->Why can’t the Federal Government change its stance on cannabis – the feds still classify marijuana as a schedule one drug in the same category as heroin – when the plant has now received sanction by more than half of the states in America?
The cold facts
The bulk of the pot being sold via legal outlets in California is from plants that were harvested in 2017. In terms of the new regulations, that cannabis stock can only be sold until July 1, provided they are correctly labelled.
Despite the fact that officials are fully aware that these supplies will soon dry up, no one can explain how the supply chain will continue to operate in an industry where there are too few licensed operators to meet the demand.