Pubdate: Wed, 23 Sep 2015
Source: East Bay Express (CA)
Column: Legalization Nation
Copyright: 2015 East Bay Express
Author: David Downs


The California medical cannabis industry has spent decades fighting 
"The Man." Now, former outlaws must rapidly evolve to work with him.

This week or next, California Governor Jerry Brown likely will sign 
into law three bills to regulate the world's oldest and largest 
commercial medical cannabis economy. And during the next few years 
California's $2.3 billion medi-pot industry will be transformed by 
official state licensing, legal profit-taking, and regulatory 
oversight, including mandatory weed-testing.

"Overall, this a pretty good bill," said Sean Luce, president of the 
California Cannabis Industry Association. "It's not going to destroy 
medical marijuana in California. It'll cost more money and effort to 
be compliant. But it's certainly doable."

The new rules also promise to create winners and losers. Let's look at a few.



Nothing changes for patients, really. A doctor will still be able to 
recommend cannabis for them, and patients will still be able grow 
their own (assuming local laws allow it). They will also still be 
able to have a caregiver grow it for them. Dispensaries will remain 
open. In a few years, all medical cannabis for sale will be 
lab-tested for mold, pesticides, and potency. And extracts will 
become cleaner, and licensed manufacturers will make butane hash oil 
in certified facilities, instead of blowing up garages.

Regulated Dispensaries

California has hundreds of dispensaries with local permits that will 
have an early advantage under the state's new dual local-state 
licensing system.

Small Farmers in the Emerald Triangle

Regulations are a big win for small farms in counties that want pot 
agriculture. The state has unlimited amounts of small-scale farming 
licenses to hand out, but will limit large-scale farm licenses and 
also cap the total acreage licensed to one person.

Industry, Investors, and Lobbyists

The state's medical cannabis industry will be for-profit for the 
first time. Profits will unleash investors who want to provide 
capital in exchange for future revenues. "We'll see a lot more 
investment made into this industry," said Luce.

Profits likely will also be plowed into advocacy. In 2015, money 
equals political speech, and the voice of cannabis will grow 
immeasurably louder. "All the other industries can build a warchest 
and contribute to candidates," said cannabis attorney Khurshid Khoja. 
"Why should that be any different for us?

Licensed Distributors

Regulations mandate a licensed cannabis courier sector. It'll likely 
belong to those with clean records and experience in distribution of 
a regulated substances - like alcohol.


Legislation sponsor Assemblymember Rob Bonta's biggest donors are 
unions, and the new rules are very labor-friendly. Any California pot 
company with twenty or more employees must have a "labor neutrality 
agreement" with the United Food and Commercial Workers Union. UFCW 
director Jim Araby could not name one other industry subject to such a mandate.

Enthusiastic Rule-Followers

It's ironic: the outlaws who grew weed and agitated for its 
legalization are among the least likely to go legal, because it will 
involve FBI background checks; filling out lengthy forms; paying 
licensing fees and taxes; pulling water permits; and even attending 
city council and regulatory meetings.

"The Wild West mentality is not going to survive in this industry," 
said Khoja. "The business culture is going to change. It'll be more 
transparent, regulated, and tax-paying. That means being involved in 
the process. It's time we take our place in the system alongside 
other industry."


Some Caregivers; Collectives

The rules will cap the number of patients a caregiver can have at 
five. Anything higher runs into commercial marijuana licensing rules. 
California also will phase out collectives and cooperatives one year 
after the first commercial licenses are issued - around 2017.

Pot Speakeasies in Ban Towns

The new regulations rest atop a 2013 California Supreme Court 
decision, which ruled that cities and counties can ban almost any 
medical marijuana activity. And when a city later chooses to permit 
dispensaries, scofflaws may be last in line for local permits.

"If you're opening up in defiance of local rules, it's maybe not a 
good, long-term business strategy," said Khoja. "There is going to be 
a premium on participating in the local government process."

Big Farmers in Butte

Some conservative counties with mega-farms, such as Butte, will 
likely never permit commercial cultivation. Fees and taxes from the 
industry will be used to target outlaws.

Vertically Integrated Stores

The new rules prevent a storefront from also owning farms, a courier 
fleet, and extraction and testing labs. This ban on "vertical 
integration" will be a major industry target for cleanup legislation 
next year. Harborside Health Center's Stephen DeAngelo said last week 
that banning vertical integration increases costs.
- ---
MAP posted-by: Jay Bergstrom