Understanding the marijuana business in California

Understanding the marijuana business in California

The marijuana business is one of the growing sectors in the state of California. There are still a lot of challenges that need to be tackled and solved before you can have a fully legal infrastructure however the legalization of the drug at least opened a controlled and regulated way of doing marijuana business in California. The legalization of drugs in 2016 and its implementation in 2018 meant that there have been several legal dispensaries in the state that have begun their operations and are now providing legal routes for purchasing and selling marijuana. 

The challenges for the marijuana business

The companies have to be licensed by local agencies for testing, growing, or selling marijuana within each of the constituencies or jurisdiction. The counties and cities might only license some or none of the activities. The deliveries made by the state-licensed firms can’t be barred by the local jurisdictions according to the BCC regulation 5416. There is still a continued operation of the illegal activity and therefore heavy taxation is a significant issue for the licensed operators. These operators are worried about the lack of necessary enforcement against illegal activities. The legal market also includes the cost of mandatory testing. The authorities constantly send out warnings that the illegal market might contain chemical residues or pesticides and mold.

Apart from being licensed by the local agencies, the industry comes under three different categories of regulatory agencies. Retailers, testing labs, and distributors are regulated by the Bureau of Cannabis Control. The cultivators come under the department of food & agriculture while the public health department deals with the manufacturers of products. 

The challenges for the marijuana business

Despite the legalization of the California marijuana business, there are still a large number of illegal suppliers and sellers that continue to ply their business in the state. This is evident from the fact that stores in 80% of the municipalities in California were banned from the illegal sale of the drug. According to one of the surveys conducted recently, there are about 2835 delivery services and dispensaries which are unlicensed. The legal sellers and retailers say they are at a great disadvantage since the legal operation of the marijuana business requires additional costs due to the costs of start-up permits and other taxes. There is also resentment against effective enforcement and action against the unlicensed operators. 

In 2018 there were approximately 2000 non-profit dispensaries for the legal medical usage of marijuana. However, the rising prices resulting due to government regulations increased the operating costs and forced about 65% of the dispensaries to fold up. According to another study that was conducted recently there are approximately 187 dispensaries who got temporary approval from the city for operating their business in the region of Los Angeles. However, there was an ordinance in recent years that restricted the use of storefront marketing through signs and billboards as it was attracting young people to an increased usage of cannabis and marijuana. 

Recently the governor passed an order which classified the marijuana medical business to be under essential business.

Tom Henry
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