California legalization fail: Why the commercial launch is such a dud

Apothecarium Marina
The Apothecarium, a new medical cannabis dispensary in the Marina neighborhood of San Francisco, will not serve recreational patients until at least Jan. 5.

On January 1, 2018, California becomes the world’s largest legal market for recreational marijuana. Officially this means stores will be allowed to sell legal marijuana throughout the state and anyone 21 and over will be able to buy it.  However, the reality is much more complicated. More than 90 percent of cities and counties won’t host legal marijuana sales on day one. Many might never host them. Why?

Cities and counties in the driver’s seat

For more than a decade, California cities and counties have been creating their own rules for the cannabis industry. The immediate availability of fully legal marijuana in an area depends on how the local government has treated the issue for a decade or more. Live in a town like Marin that bans medical marijuana dispensaries and delivery services? Don’t hold your breath for recreational stores. Live in a medium-sized city with a history of licensed dispensaries like Berkeley? You could be ready to roll.

In Oakland, for example, where regulated medical dispensaries first appeared in 2004, the huge dispensary Harborside will start selling fully legal pot at 6 a.m. New Years Day. Ditto for the cities of Berkeley, San Jose, San Diego and San Jose.

But Los Angeles never got its medical regulations together, and the city will only begin to accept applications for dispensaries on January 3. And the stores themselves won’t receive licenses for weeks. It could be weeks or months before stores are open in San Francisco due to red tape and politics.

Why did it take so long?

California released regulations for the industry in November; these cover everything from transporting product to testing for pesticides and other contaminants. However, given the size of the market and the complications involved with some of the rules, the first six months will be considered a transition period.

Lori Ajax, the state’s top cannabis regulator, has said that, during this time, the state’s focus will be on helping businesses become compliant, rather than on cracking down on those that aren’t in line with the myriad lasws. The state has created a web site cannabizfile, promoted by comedian Cheech Marin, to help cannabis businesses go legit.

Like California, Nevada, Maine and Massachusetts all voted to legalize recreational cannabis in 2016, but each is managing the rollout according to its own timeline. Nevada began recreational sales this summer on top of the medical regulations it had already implemented. Massachusetts and Maine have taken longer as they wrestle with this new issue.

In 1996, California was the first state to legalize medical use. In the two decades since, the state’s loosely regulated gray cannabis market has grown entrenched. California’s transition to a fully legal market will take longer than other states in part because of its size and because there are so many gray market businesses seeking to transition to the legal market.

But compared with those eastern states, California is more familiar with cannabis. For example, Californians have long been able to obtain a doctor’s recommendation online. This year, North America’s legal cannabis market is expected to top $10 billion according to ArcView market research. Even with just medical available, California is the largest market accounting for roughly 20 percent of the total.

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