Supply Chain Changes

[dropcap class=”kp-dropcap”]A[/dropcap]s we enter into California’s new regulated industry, cultivators and distributors that retailers once depended on for decades may no longer be eligible for licensure, at least not under the same circumstances as before the implementation of Medicinal and Adult-Use Cannabis Regulation Safety Act.

Through the supply chain, some businesses report that they are having trouble connecting the dots between cultivators, manufacturers, distributors and dispensaries. The Bureau of Cannabis Control lays out the state regulations that govern these businesses.

In the Los Angeles area, dispensary owners could soon face inevitable disruption, because trusted suppliers have yet be granted a state or local license, due to a variety of reasons. Corey, of Long Beach-based One Love Beach Club, told CULTURE that he hasn’t seen much disruption in the local cannabis community as of late March. “Most of our suppliers that I’m aware of have been going after only manufacturing licenses,” he said. Corey told us that the general consensus among dispensaries in Long Beach has been “that they are good through July.” July 1 is when California’s Bureau of Cannabis Control grace period ends, and when more product testing, labeling and regulation requirements become mandatory.

One Love Beach Club recently received one of Long Beach’s 32 (maximum) dispensary licenses. The dispensary reopened on the Broadway business corridor after a battle that lasted over five years. It’s currently medical-only, but the dispensary is working toward selling recreational cannabis as well, once the city’s moratorium on recreational sales expires.

Both medical and recreational dispensaries could be affected by ongoing regulatory changes. The California Growers Association, which represents multigenerational California cultivators, has been concerned about the negative effects of the changes.

Part of the problem includes new distributors who are charging more money per pound to cover the cost of new cultivation taxes. Cultivators, on the other hand, have not all been able to get approved for licenses under the new system. According to a recent report by the California Growers Association, in a state of some 40 million people, only 534 cultivators have been licensed as recreational producers—and that’s an impossible task. California, during the medical-only years, was home to around 68,000 cultivators.

“It is entirely possible licensed retailers will struggle to find legal, licensed cannabis products to sell in the next few months. This pinch will be felt most in urban areas where demand and competition is fiercest.”

Big Moon Sky, a licensed online dispensary that delivers to California residents, analyzed 100 of the most populated areas in California to determine whether they had access to a recreational dispensary, but found that only half of California’s most populated areas have access. “It is entirely possible licensed retailers will struggle to find legal, licensed cannabis products to sell in the next few months,” Zach Crafton, CEO of Big Moon Sky told CULTURE. “This pinch will be felt most in urban areas where demand and competition is fiercest.”

So far, the weight of new regulations hasn’t impacted Big Moon Sky negatively. “We are seeing Big Moon Sky orders increasing at a tremendous rate as consumers are struggling to find licensed, tested cannabis products from their local dispensary,” Crafton added.

For some of us, these burdens come as no surprise. The difficulties of entering a new regulated economy are real, but hold similarities to the struggles faced by cannabis businesses and consumers in other states that have shifted from medical to recreational cannabis sales, or from an unregulated market to one that is regulated.