Do you want to break into the cannabis industry? Do you prefer to try this in the state of California? Well, you can, but you have a few hurdles to go through. Are you up to it? Well, if you don’t already know, the state of California allows only a dual license system. This means that if you want to start a cannabis business, you have to get a license for the state and the city or county where you will do business.
Even though, the state of California has introduced recreational cannabis in its legislature, the dual license system does not allow cannabis sales in about 65 percent of its cities and counties. In addition, there are three state agencies in California and these agencies are all responsible for the management of the cannabis industry.
The Bureau of Cannabis Control governs testing labs, retail stores and distributors. The Department of Food and Agriculture governs and regulates cannabis cultivators and issues eighteen kinds of licenses to cultivators. The Department of Public Health in the branch of Manufactured Cannabis Safety allows cannabis manufacturers h to apply for their licenses. This shows how fragmented the regulatory body is and for this reason, the landscape is very complex for many businesses to plot a course. The OC Register has reported that only 6,000 cannabis businesses have obtained temporary permits. This symbolizes a small fraction of the cannabis businesses located in the state of California. The same thing is represented for cultivators and growers. By April 2018, there were only 6 percent licenses approved.
The result is that the legal market that caters to consumers is not as saturated in comparison to the state of Oregon, which is another place that has legalized recreational weed. In the state of California, there are fifteen times less retail stores for recreational weed. The future seems challenging because since the legalization of recreational weed in the state of California, the government enacted new safety regulations for additional testing of pesticides, chemicals and foreign materials.
The Black Market
It was in 1996 that the state of California made medical cannabis legal to its residents. However, since then, there is still a black market in the state of California. And so, the dominant black market makes it challenging to compete in the medical cannabis industry. In some cases, the high cost associated with legal cannabis has discouraged many buyers and so they resort to the black market where the price is much lower.
Moreover, most businesses within the legal cannabis industry in the state of California are larger businesses or corporations that have the money to pay for startup fees that include licenses and compliance costs. Medium sized cultivators are only allowed one cannabis license. However, small cultivators have no limits on licenses and so in some cases six companies try to score small cultivator licenses in addition to one medium size cultivation license. And so, instead of encouraging small cultivators by limits to the licenses for large cultivators, the larger corporations find a way to divided themselves up into a bunch of small cultivators to go around the rules and pay less.
It takes a brave person to start a business in the cannabis industry within the state of California due to the high cost associated with it. There are not many banks that will loan money since weed is still thought to be a Schedule 1 drug by the feds. So, you do take a risk. However, the state does facilitate the cannabis industry, even when the feds do not since it has become a source of tax revenue for them. Now that more states have legalized weed, even since the last 2018 midterm election, it is evident or hopeful that things will change in the right direction. And so new entrepreneurs should not be discouraged, but maintain diligence to know the changing laws and be assertive accordingly.