California: how did the first month of legal cannabis go?

The California legalized cannabis a little over a month ago. The US state has still not sunk into the underworld, and the industry is rather surprised at how well the regulation is going, even if there are still many areas for improvement.

«Boy, that escalated quickly»

While the first few days were marked by a certain amount of excitement at seeing a new market open up, and numerous queues outside dispensaries, things have since calmed down. Cannabusinesses that managed to get their license before the legal market opened are doing their utmost to comply with the new rules, while others struggle to reach the Grail.

«Overall, we're pleasantly surprised, and everything's going relatively smoothly,» confirms Alex Traverso, communications manager for California's Bureau of Cannabis Control (BCC).

Around 2,000 licenses had been distributed by the end of January, to distribution and testing (800 licenses), cultivation (700) and processing (455) companies.

Compulsory license

However, many small players have been left out in the cold. The main stumbling block remains the allocation of local licenses, which are required in order to apply for a state license. Today, all licenses are temporary, and must be renewed 4 months after being awarded, with the possibility of being transformed into an annual license, this time for a fee.

Some industry operators try to continue working without a license. BCC teams regularly monitor establishments suspected of cheating, or those that fail to comply with the rules, for example by selling packaging that is not child-resistant. But no repressive action has yet been taken. Instead, BCC agents are trying to correct the situation and explain how to get on the right side of regulation.

Demand outstrips supply

The legal dispensaries saw in the early days of regulation an increase in visits - up to 1,500 people a day at California's largest dispensary, Oakland's Harborside Health Center - and in the average shopping basket.

«We've noticed that for the most part, medical patients had stocked up before January 1 and haven't yet returned to the adult-use market. But we're seeing quite a few people who are «new consumers», who don't have much, if any, experience with cannabis,» explains Steve DeAngelo, owner of Harborside. He also notes that these new customers are buying smaller quantities of cannabis, and less sophisticated products, including dried flowers rather than concentrates.

The state has also seen shortages of’edibles, These cannabis-infused foods and dishes were in high demand, and not all edibles producers managed to obtain their licenses in time.

Another headache for dispensaries is the taxation of sales, which must be done on a case-by-case basis. The tax rate depends on whether the customer is a medical or recreational user, and on the product.

The fact remains that demand now outstrips supply, and product prices will continue to rise until the number of licenses issued balances out. A temporary situation that will mainly benefit dispensaries and the Californian state.