There are still many cannabis businesses in California operating out of the so called gray market. They were given a grace period after California state voters approved Prop. 64 which permitted a commercial cannabis market and resulted in the formation of the Bureau of Cannabis Control (BCC), but that grace period is coming to an end. Nearly 1,000 cease and desist letters were sent to gray market cannabis companies by the BCC, some by email others by actual mailed letters.
Cooperatives functioning out of the gray market from the law that was created in the 90’s have been the main source of marijuana for cannabis consumers in California for a long time outside the black market, but the law intended the cooperatives to be non-profits. Once the state accepted that it was embracing the recreational use of cannabis, Prop. 64 was approved by voters in 2016 to create a regulated commercial cannabis market. Companies have been clamoring to receive licenses under the new structure, but over the last two and half decades the amount of cooperatives and illegal marijuana farms flourished and there is no way for the state to license all of them.
Alex Traverso is a spokesman for the BCC. He told local media that the bureau sent most of the warnings to cannabis retailers and delivery services. He also said the letters and subsequent follow-up seem to be effective.
“There’s been a pretty decent amount of activity surrounding the letters,” Traverso said. “Not just the letter, but us following up on the letter to make sure they got the letter and to look at next steps. It’s slow going, but so far, we’re relatively encouraged by the number of people who received the letter and said, `OK, I’m going to get my application in,”‘ he added.
Some cannabis companies that received letters have in fact applied and received licenses, but seem to be pretty understanding about the confusion. One such delivery service commented.
“It is this issue we’re running up against,” Pitts said, “where there are a lot of people in the process of getting licensed and then there are a lot of people who, through no fault of their own, licensing is just delayed. It’s been pretty much constant delays for L.A. delivery services.”
“We’re hopeful that those people are moving in the right direction and getting their ducks in a row and hopefully getting their state license,” he said.
The latest cannabis news from California is that the transition will happen swiftly from the gray market into the highly regulated commercial sales of cannabis. What do you think the cannabis market in California will ultimately look like?