California is a strange deal where medical cannabis is concerned. Proposition 215 is over 18 years old, and was an extraordinary law that spawned the modern cannabis revolution. It was simple and to the point, and allowed for the proliferation of the cannabis market we see today. It laid the foundation for people to not to be treated as criminals for their choice to use cannabis as a medicine.
In 2003 the Californian State Legislature begrudgingly passes SB420, which laid out some basic framework for how the medical cannabis program here works. It set some boundaries in place, some of which have been challenged and overturned in the CA Supreme Court. This law established the current “collective” and “cooperative” loose framework that currently governs the entire billion dollar cannabis industry in the State. To make a long story short every cannabis business in California is classified as a cooperative or collective, all assumingly operating as not-for-profit businesses. It is nuts. I wrote more in depth about it in a piece entitled, “What the hell is a medical cannabis collective anyway?”
There is NO State licensing for any type of cannabis businesses. The ONLY licensing in the State are for cannabis dispensaries, and those are all licensed by local authority. The evolution of cannabis laws stems from a groundbreaking ordinance passed in the City of Oakland in 2005 that first regulated cannabis dispensaries, as the City was overrun with weed stores and felt the need to bring them under control. It was an interesting time as the industry took a very “every man for themselves” attitude and groups began to position themselves to be one of the lucky four out of dozens to receive the first licensing for a cannabis business in the state. Because dispensaries are retail businesses open to the public they garnered a lot of attention, and were the focal point of regulation by cities and towns looking to control the situation.
Cities and counties watched as Oakland licensed cannabis businesses. Shortly after liberal strongholds of San Francisco and Berkeley followed suit, passing regulatory ordinance for cannabis dispensaries that were operating in their town. At the same time you saw jurisdictions rushing to ban these types of businesses as they began to spring up around the state. In Los Angeles you saw the epitome of a shit show as hundreds of businesses opened up with no regulation; and the city still struggles to this day to find order in the chaos.
Dispensary laws have evolved throughout the state in many different ways, with regulations varying from municipality to municipality. There is no rhyme or reason to the laws and no uniformity of implementation.
But here is the real kicker…. there are NO real laws governing the production of cannabis and cannabis products. People who provide cannabis medicines to dispensaries have ZERO protections through licensing anywhere in the state. It is as if the cannabis is supposed to magically just appear.
Cannabis is a hot button topic, and most places have passed either dispensary regulations or prohibition laws out of necessity. They have not come willingly to the table on most occasions to address the issue. None have really had the courage to confront the issue of cannabis production. Some have tried and failed, like Oakland’s famed four huge grows program that is blamed for the Federal crackdown of 2011; and Mendocino’s attempt at a zip tie program that allowed for 99 plant collective gardens, which was also attacked by the Feds and shut down. But there is no license to grow weed, to make hash, or to produce edibles and other finished products anywhere in the state. Producers of medicine like myself are largely left to fend for ourselves. We are forced to operate under the radar and do our best to remain undetected in our communities. It is very much a don’t ask, don’t tell situation.
What has resulted is a lot of power given to the retail sector of the market….. the weed stores. They have become the gatekeepers in the industry and have gained a lot of political advantage due to their ability to be out in the open under the protection of their licensing. This has given them the ability to play kingmaker and use their power to control vast parts of the industry. They currently have this advantage due to an unlevel playing field that greatly favors their business model; but you can be sure it will not stay this way forever.
Think of your normal marketplace for any commodity. In the normal world retailers are usually just facilitators of goods. Very few dominant retailers control their markets. You have Best Buy in electronics. Staples in the office sector. Macy’s in the fashion sector. Wal-Mart is an obvious powerhouse. But in general, most retailers are regional outfits that serve certain communities and provide an outlet for desired goods. In most markets the companies that produce the goods hold a lot of power.
For instance… take booze. A liquor store cannot exist if it does not have Budweiser and Jack Daniels on the shelf. Sure… major retailers like BevMo can command better pricing through large volume purchasing, but for the most part in that industry producers of beer dominate the landscape. You never see a “Jim’s Liquor Store” Nascar. You see a Budweiser one. The companies who produce high demand products dictate the marketplace. Small batch producers of beer with less demand have to compete more rigorously for their place in the market, but the craft brew and small batch wine industries continues to explode, garnering more and more of the market from traditional behemoths like Anheuser-Busch. The point is that the average booze store does not have a hell of a lot of power.
Or could you imagine an electronics store without Sony products? Impossible. No Playstation? Please.
The development of world class products that consumers want is what drives the market. Innovation creates demand, and demand forces retailers to carry certain products. Every store that has electronics for sale has to offer Playstation, or they sacrifice a large base of potential customers. The larger the store the better the pricing they can get, which is where retailers can control the market. But believe Sony would get by without Best Buy, yet best Buy could never survive without Sony. The demand for their products is too high. People seek them out because they make great products. Have you played a PS4 lately? Holy shit that is a lot of fun.
The cannabis market in California is currently flipped upside down. Due to political necessity the dispensaries have been afforded with licensing and legitimacy. I know a lot of good people who operate dispensaries that understand how lucky they are. They have also risked a lot to get their businesses open and to maintain success in an extremely murky environment. There is no doubt that dispensaries have paved the way for medical cannabis in California through being on the front lines of an often heated debate. They have been the public face of this industry for a long time now, and often under the most scrutiny. But they also are the ONLY groups who have actual licensing to operate their cannabis business under clear regulatory framework.
Producers of medicine are forced to self-regulate and hope for the best. There is no real safety provided through having legal guidelines that govern a business. It is crazy if you actually sit back and think about it. With all the billions of dollars in weed grown, hash made, edibles produced, and don’t forget the lube, it is nuts to think this all happens under the undefined premise that we are all a bunch of collectives. This collective makes the weed. This collective produces finished products from the weed. This other collective distributes it to another collective that sells it. It is mind boggling. On most days I am not sure how we made it this far. It is both beautiful in its lack of definition and mind numbing all at the same time. But the bottom line is that the entire production sector has no licensing to legitimize their efforts.
So here is the rub…. A lot of the conversation being had about the upcoming ballot initiative being developed for 2016 is aimed at protecting the interests of people who have licensed businesses. These groups believe they deserve a two year window after legalization where only they can compete in the marketplace. They want to adopt the same principle that we saw happen in Colorado where only medical licensed businesses could operate for the first two years. You know how that worked out there? Recreational weed prices have stayed relatively inflated and most of these businesses who got the head start have sold out to the highest bidder and no longer even operate the businesses.
The distinctly unlevel playing field has done nothing to help the end user realize higher quality or better value. It has simply enabled a select few to manipulate the market and has given way to unsavory business practices where competitors work to undermine one another. It has been anything but a free market. Now that the two year mark was passed at the end of last year we will see more businesses compete for market share, and an increase supply will result in lower prices and higher quality offerings. It will be good for everyone who smokes weed.
If the influential dispensaries have their way, we will see a repeat of this mistake here in California. But because they are the only one’s who will be licensed, they will also attempt to control the production sector through increased vertical integration, while locking out many growers and manufacturers of cannabis products. It would be a swift kick in the nuts to people who have risked everything to provide high quality medicines through the collective scheme over the years with no real protection. It will give further advantage to the lucky few who happen to open in areas that have decided to allow for their use, while shunning those in less tolerant parts of the state. It will pigeonhole a lot of the industry into a very few pockets, and will create a more defined oligopoly than we see right now. It is unacceptable.
In all reality, fuck your weed store.
If you truly love cannabis and freedom the only obvious answer is a truly level playing field. No one deserves an advantage cemented into a law through barriers for others. Your advantage is that you have been operating in the marketplace for a number of years. You do not deserve special treatment. What you deserve is the right to exist and compete in an open and free market where you provide great products and services at a good value, and customers go to you because you are the best. Not because you are their only option due to restrictive licensing and permitting schemes.
You are not going to use your good fortune to lock us out of the market. Miss me on that shit. If you are so great then consumers will reward you with their business. But the days of the retailers having a stranglehold on this industry are coming to an end. People who produce great weed and desirable products will command their share of the market, and begin to dictate what supply and demand is. Your subpar weed for too much money will no longer even be on the menu. You will either have to step your game up or get trampled by better offerings at greater values. It is free market principles that will decide who succeeds and who fails.
It is funny to see those who have claimed to fight for prohibition for many years now begin to circle the wagons and lobby for prohibitive barriers in the process to protect their interests. What is even sadder is that they do not have the courage and confidence to believe they can be successful in a truly free market. But it is the only answer. We cannot continue to believe that further limitation will somehow protect our romantic views of what the industry should look like. What the industry should look like is yet to be determined, and strangling that process through delays and restrictions is not going to work.
I hope that the individuals crafting any language here in California or other states consider the realities, and do not cater to these well-funded interests from within our industry. Everyone deserves the right to compete for the exploding weed market. No one deserves the right to segment and control certain parts of the market just because they have been standing around the longest and happened to be at the right place at the right time.
What will benefit the cannabis user and create the real legalization principles we have all fought so diligently for is an absolute free market. At some point we must look beyond our small world and understand how large a global cannabis market is, and allow the industry to begin to meet those demands through innovation and competition. Anything less is just uncivilized.
Now is not the time for us to become the prohibitionists. I believe in myself and my products, and know I can compete with anyone. I am not scared of the future. I welcome it with open arms and you should too.