Marijuana Business Magazine

The launch of the adult-use cannabis industry in January will transform Cali- fornia into the world’s largest recrea- tional cannabis market, one that could generate more than $4 billion in annual retail sales within a few years, according to Marijuana Business Daily projections. That would roughly equal the sales tally that the nation’s entire legal cannabis industry rang up in 2016. Those eye-popping sales figure don’t even account for California’s $1 billion- plus medical marijuana market. It, too, is the largest in the world. And it’s set to benefit from a new statewide regula- tory framework that takes effect in January.The new rules are intended to bring legal clarity to thousands of MMJ businesses across the state that for years have been operating in a gray market. California, in short, is poised to reclaim its title as marijuana capital of the world. It lost those bragging rights after Colorado and Washington state legalized recreational cannabis in 2012. Much is at stake. "Forty million people are about to have access to state-regulated cannabis,” said Adrian Sedlin, CEO of California-based cultivator Canndescent. “If California does it right, the future of cannabis is secure in the United States. If California gets it wrong, the tide of the last 10 years of progress will be swept away." It won’t be an easy market to navigate. The devastating wildfires that engulfed significant portions of Northern California burned dozens of marijuana farms, adding yet another wrinkle to the state’s rollout of its newly regulated cannabis market. In short, marijuana entrepreneurs angling to do business in California’s huge marijuana industry should be prepared for turmoil along the way – perhaps more than is typical in a new market. Many existing MMJ companies, for example, may not qualify for a license under the state’s new regulatory system. Regulations also will vary from locality to locality. Some municipalities – think Desert Hot Springs – are rolling out the welcome mat for marijuana businesses. But others, such as Fresno, are adopting a chillier attitude. Still, California will usher in enor- mous opportunities for marijuana entre- preneurs inside and outside its borders. On the rec side, there will be no statewide limits on the number of culti- vators and retailers. Marijuana Business Daily estimates the number of instate consumers could easily top 4 million. On the medical side, MMJ busi- nesses no longer will have to operate as nonprofits. Instead, they can be run as for-profit ventures. Participating in California’s new mari- juana markets will require endless hours of planning and loads of legwork. Our California package will help you get ready. In the following pages we look at: • The industry sectors and locales that offer the most opportunities • How to prepare for the rollout of recreational cannabis • What out-of-state players need to know to participate • The transition from an unregulated to a regulated medical cannabis market • The movers and shakers who will shape California’s marijuana industry • The potential opportunities for Canadian marijuana businesses – Roger Fillion November / December 2017 • Marijuana Business Magazine • 91 EXECUTIVE SUMMARY California is set to reclaim its title as marijuana capital of the world. Businesses that want to tap these markets must consider the following: • Opportunities will span the spectrum: retail, manufacturing, infused products and concentrates, testing labs and ancillary firms. But some regions will be better for certain types of businesses given local rules, population density and growing climate. • Although California will enact statewide regulations for medical and recreational businesses, the state will still be a patchwork of laws and rules at the local level. • California medical marijuana businesses that want to survive the transition to a regulated market must pay close attention to recordkeeping, inventory tracking and branding. They also must be nimble operationally to adjust to new rules. • While there are no legislative or legal obstacles to out-of-state marijuana businesses at the state level, hurdles exist locally in terms of regulations, real estate and culture. • California MMJ businesses hoping to start recreational sales must prepare for a surge in demand, potential supply issues, changing regulations and other bumps. • Canadian companies looking to enter the market must take into account stock exchange rules as well as different business, regulatory and market dynamics than at home. Connor Nolan, left, and Kayla Adkins trim marijuana plants at Canndescent's Desert Hot Springs facility. Photo by Tom Kelsey