Adult-Use Cannabis Is Legal but Very, Very Regulated.
So, the voters in your state have approved the sale of legalized adult-use marijuana.
Cool. It’s time to add legalized cannabis to your list of things to buy. And if you are an entrepreneur with an interest in the cannabis business, opportunity is knocking.
But, as T.S. Elliot once noted, between the idea and the reality falls the shadow. And in this case, the shadow is represented by whole buildings full of government employees trying to figure out exactly how regulated marijuana sales are going to work.
They have a tough job. It’s led to all manner of side issues coming to light, from drones to pot lounges.
Nevada stumbles out of the gate.
The atmosphere under the Trump Administration is a bit more hostile now than when Colorado, Oregon and Washington jumped ahead with adult-use marijuana sales. Everything states do is under a microscope. For California, Massachusetts and Maine, all of which are expected to start adult-use sales in 2018, the factors to consider are enormous.
Nevada famously jumped ahead with sales starting in July. But the rollout has been riddled with problems. They include an inadequate distribution system, to the point where the state’s governor had to declare a state of emergency because not enough legally-sourced marijuana was available to meet demand.
Both Nevada and the city of Denver have wrestled with a common problem. Once tourists buy marijuana in these places, there is no legal place for them to consume it outside of a private home. Both areas are trying to write laws that allow licensing for “pot lounges” where people may use cannabis, sort of like pubs for marijuana users.
A host of issues.
Some issues revolving around legalized marijuana sales can be considered boilerplate at this point. For example, only a set number of licenses can be issued. Criteria must be established to qualify for a license. So do the applicable fees to start a marijuana-related business and tax rates on sales.
City and county governments in all legalized states also can decide whether they want to allow or ban sales, creating a hodgepodge of different regulations across the state.
Perhaps most importantly, states must also comply with the framework for marijuana sales set out by the Cole Memo issued by the Justice Department under the Obama Administration. The memo essentially guarantees no federal government interference with states legalizing marijuana as long as they comply with certain perimeters.
These include keeping marijuana from minors, ensuring marijuana grown in legal states does not make its way into adjacent states where it is illegal and keeping marijuana profits out of the hands of criminal enterprises. Attorney General Jeff Sessions is already questioning whether states such as Colorado and Washington have adhered to these guidelines.
But there are other issues that come to light in California, where the state Bureau of Cannabis Control (BCC) is attempting to write regulations on adult-use sales.
Many people are gearing up for the day just around the corner when products can be delivered directly to their homes via drone. But don’t expect that with cannabis. The BCC, preparing for the future, has already recommended banning the use of drones for marijuana delivery.
Here’s an area where the number of issues become overwhelming. The BCC board highlighted almost 20 environmental issues around the cultivation, distribution and sale of adult-use marijuana. They include the following.
- Air quality
- Water quality
- Land use and planning
- Tribal culture resources
- Impact on utilities and service systems
And so on. Whoever gets into the cannabis business in California will have many, many governmental hoops to jump through related to environmental impact alone.
Speaking of permitting, once you get into the details of regulating adult-use marijuana sales a host of agencies become involved. The BCC offers a long list of agencies that will use the guidelines the BCC produces to make decisions on permits for marijuana-related grow houses, dispensaries and other businesses. They include the following state departments. Take a deep breath.
- Department of Food and Agriculture
- Department of Public Health
- Department of Pesticide Regulation
- State Water Resources Control Board
- Department of Fish and Wildlife
- Regional Water Quality Control Boards’
- State Office of Historic Preservation
- Air Resources Board Bureau of Cannabis Control
- Department of Forestry and Fire Protection
- Department of Industrial Relations
- Division of Occupational Safety and Health
- State Lands Commission
- California Coastal Commission
- Bay Conservation and Development Commission
- Environmental Protection Agency
That’s just a handful of the areas that need to be considered.
For entrepreneurs looking to get into the marijuana business in California, a lot of reading and research will be required.
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