Supply Chain Problem May Bottleneck CA Retail Marijuana Industry

(Winter 2017) As of January 1, 2018, California will allow retail sales of recreational marijuana. In preparation, this past fall the City of San Diego began accepting applications from business people interested in starting marijuana production sites; it will choose up to 40 of these candidates. As with legislation already set up for retail marijuana shops, mandates are in place for production centers. They must be in industrial areas and are barred from being closer than 1,000 feet from daycares, schools and parks. The new companies must also obtain a conditional use permit — which could take up to a year to receive — and then later a license from the Bureau of Cannabis Control.

Here is where things hit a snag: California law does not permit retailers to obtain products from unlicensed suppliers. This complicates legal product sourcing because, even though medical marijuana statutes have been in place for 20 years, not many of the state’s cities and counties have implemented laws for the retail marijuana supply chain, and they do not face a deadline for doing so. Although wheels are in motion, San Diego’s local marijuana supply chain would not be set to provide licensed dispensaries with goods in 2018. Other areas, such as Los Angeles, San Francisco and San Jose, are in similar (if not worse) situations as they continue to wrestle with legislation and logistics. To further complicate issues, some areas in the state have outlawed the recreational use of the drug. Coupled with high demand, these factors could become a black-market breeding ground that would detract from legal retailers once the supply chain is in place.

Voters in California originally approved Proposition 64 to legalize recreational marijuana in 2016, which also immediately allowed individuals age 21 or older to possess and grow small amounts of the drug legally.

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