Doing a weed start-up? Wait in line

An illustration of a California highway sign depicting cannabis legalization.(Image: Rex Wholster

Though recreational marijuana has been legal in the state since January, good luck trying to open a marijuana business in much of the state.

The state gives local jurisdictions the power to decide what type and how much cannabis businesses to allow. While big cities like San Francisco and San Jose allowed commercial activity right away, many other communities have banned it or are still debating how much to let in.

“It’s really hurting people who are legitimately trying to enter a regulated market.” — David Quintana

The Central Valley, for example, has mostly chosen to ban commercial activity. Kern County voters just rejected two measures that would have legalized marijuana dispensaries there. However, while Fresno still doesn’t allow cannabis businesses, voters did approve a cannabis license business tax in the last election.

“The average Californian needs to drive 60 miles to get to a dispensary,” said Alex Traverso, a spokesman for the state Bureau of Cannabis Control. “Things are starting to happen but it’s been a slower process than we would have hoped.”

The situation is confusing to many Californians, who assume pot is fully legal everywhere.

David Quintana, a lobbyist for the California Cannabis Manufacturers Association, says the legalization of recreational weed has felt like the Peanuts comic strip where Lucy pulled the football away right as Charlie Brown was going to kick it.

The lack of local ordinances is creating a huge backlog of products that can’t be distributed, Quintana said. “It’s really hurting people who are legitimately trying to enter a regulated market,” he said.

“There are people who think getting licenses and paying taxes is for suckers.”Kenny Morrison

Quintana pointed out that just because a local jurisdiction bans commercial cannabis activity doesn’t mean the residents have stopped using cannabis. “They have to get it from somewhere and they get it from someone unregulated,” he said.

Kenny Morrison, the president of the manufacturers’ association, said the state has made it very difficult for the businesses to enter the regulated market and provided no incentive to do so. He believes there are five times more unregulated businesses in the than those following the rules. “There are people who think getting licenses and paying taxes is for suckers,” he said.

He said more needs to be done to bring businesses into the legal market.  “It’s not the state’s fault,” said Morrison, the chief executive officer of VCC Brands, which makes cannabis-infused drinks, baked goods and candy. “It starts with local control. Without those localities playing ball with the state, the entire notion of legalization is very poorly executed.”

Kristi Palmer, who co-founded Kiva Confections, an Oakland-based edible cannabis company, said licensing has been slow even in Los Angeles.

Out of 374 annual license applications received, the Manufactured Cannabis Safety Branch has approved just three so far.

There are hundreds of distributors still waiting to get their license approved. This makes it difficult for her businesses because state law says licensed businesses can only work with other licensed businesses.

While she wishes the process would move more quickly, she understands why the smaller local governments are taking a long time to figure out cannabis regulations. They have to consider such issues as building codes, fire and health safety. “It’s kind of a heavy lift,” she said – especially for small communities with few staff members. “It puts a fair amount of strain on resources to implement a cannabis program.”

Once businesses get local approvals, they do still need to get state permits. The state has three agencies that approve the businesses – the Bureau of Cannabis Control, which handles retailers;  the food and agricultural department’s CalCannabis Cultivation Licenses division, which oversees growers and the California public health department’s Manufactured Cannabis Safety Branch, which oversees manufacturers.

Out of 374 annual license applications received, the Manufactured Cannabis Safety Branch has approved just three so far, according to the state public health department. Some applications have been held up because of the lack of local authorizations or because the applications are incomplete or the applicant has a criminal background.

The Bureau of Cannabis Control just approved its first 12 annual licenses earlier this month. Almost 4,000 applications have been submitted and 1,200 temporary licenses have been issued.

Traverso, the spokesman for the bureau, said the bureau works as hard as it can to approve licenses that have all the required information as quickly as possible.

“We want the industry to be as successful as anybody,” he said. “It’s not an issue on our end.”

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