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A Budding Industry: Cannabis Regulatory Challenges in California

By May 13, 2021 No Comments
While the issue of cannabis sales in California feels like old news in 2021, the industry is still young and changing. With a shifting public opinion and public policy landscape, it can be difficult to determine the best course forward for many cities and cannabis companies.

Seeking Stability

The cannabis industry is full of challenges. Those within the cannabis industry are still seeking stable policy arenas where they feel comfortable expanding their business. At the same time, some California cities and counties are not yet all the way on board with cannabis retail sales. More importantly, residents in communities throughout the state foster concerns around safety.

Currently, only about a third of California’s cities and counties have embraced the cannabis industry so far, leaving a ton of room for growth. This lack of buy-in by local governments has stunted the market’s potential, but this seems likely to change as more and more municipalities take a long look at the potential local benefits of the industry, primarily the additional revenue that permitted cannabis businesses can create.

This evolving attitude comes at a wonderful time, because the three state agencies that oversee cannabis regulation are merging into the Department of Cannabis Control. This merger will make regulatory issues significantly simpler to navigate and provide the state and industry with more consistency when it comes to regulations.

The Department of Cannabis Control was slated to launch in July of 2021, but the pandemic has changed the timeline, and now there is no clear start date established. This new department will bring the state increased enforcement and will seek to clean up the industry.

The emerging Department will have the authority to crack down on the unlicensed cannabis market, which is a consistent problem for most jurisdictions that permit medicinal and recreational sales.

Current licensing agencies

That was one of the biggest challenges we faced when working with the City of Costa Mesa on its 2020 ballot measure, Measure Q, which empowered the City Council to adopt rules permitting retail cannabis uses within the City, including storefronts (dispensaries) and non-storefront uses (deliveries).

Presently, unlicensed companies have been the target of raids, arrests, inspections, citations, and lawsuits from a patchwork of officials at local, state, and federal levels of government. This increased enforcement and streamlined regulations approach should help both cities and the legal cannabis market.

Establishing best practices around important issues like tax rates, security measures and community outreach for the cannabis industry can contribute to the long-term financial health in your city, while remaining mindful of the needs of the community within it.

What Counties and Cities Can Do Now

These best practices are far from straightforward and require mindful attention of state requirements that may assuage community concerns. The State of California requires special safety standards to be in place in order to allow for retail sale, and cities can choose to put additional regulatory measures in place that meet their community’s needs. These measures can help to bolster local support for a financially beneficial industry.

With significant revenue potential and looming federal legalization, cannabis will be part of the future for many cities and counties. Streamlined enforcement should make the industry stronger and even more responsive to regulation. The future for cannabis in California, and the country, certainly seems bright and Cerrell can help cities and counties navigate the issue.

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