Post Apocolypse Aftermath: How Is California Adapting to New Cannabis Regulations?
Looking at any cannabis industry blog or publication, you might think that the California cannabis industry is currently in shambles.
New regulations went into law on July 1, forcing retailers to purge non-compliant product from their shelves. This included concentrates, topicals, vaporizer cartridges and edible products that did not meet the new packaging or labeling standards.
Related: Beware the 'Weed Apocalypse'
Consumers were delighted to take part in the "Green Saturday" sales but the industry was in a state of panic. Many retailers were forced to close for days, or even weeks, while waiting for new, compliant inventory to arrive. Manufacturers faced delays in receiving their new packaging or passing laboratory testing standards. Some claimed the industry would never recover from these new standards -- significantly more stringent than regulations placed on agriculture and food products.
Was the Hysteria Warranted?
But what really happened when a lawless environment was finally graced with regulation? As the data is beginning to show, sales are not only climbing but California’s journey is just beginning as it steps into its role as the cannabis capital of the world.
Even while brands and retailers are still scrambling to navigate these new rules, the sales statistics signal the maturation and eagerness of the legal market to adapt to these new regulations.
Our wholesale platform captured some telling data points from the first few weeks of post-compliance sales in California.
Wholesale Cannabis Orders Are Spiking
Those concerned about the future of California cannabis can put their worries aside, as dispensaries are already spending more than ever -- yes, even with dozens of infused-product brands out of stock indefinitely.
During the second full week of July 2018, retailers spent 59 percent more on products from the prior week and a whopping 196 percent increase from what was spent the week leading up to the July 1 regulations. Based on orders so far in July, retailers are expected to spend triple the amount they spent in June.
The volume of orders is also quickly increasing to meet retailers’ high customer demands. Cart size, or the average amount ordered per retailer, increased 22 percent from the week of June 18 to the week of July 9.
Compliance Is Converting to Sales
Unbeknownst to many, California is still home to a thriving underground cannabis market -- a natural consequence of dozens of city- and county-wide bans throughout the state. Still, it’s never been more vital for cannabis operators to know exactly who they are dealing with when it comes to high-value wholesale transactions.
Companies that updated their product images with a "Compliant" badge on the LeafLink platform grew their business 201 percent in July, compared to 46 percent for brands without the badge. It just goes to show that the typical modern cannabis business owner is alert, informed and cautious when it comes to getting in step with tight regulations.
It’s worth adding that complying with these new regulations is not just a matter of ethics, consumer health, and safety; it is a legal requirement that comes with heavy fines and penalties for operators if they fall out of line.
Though the process is costly and time-consuming, compliance will continue to be an inevitable part of doing business -- and making profits -- in cannabis.