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Interstate cannabis commerce bill introduced in California

by Travis C | Mar 23, 2022 | Blog, Business, Cannabis Business, Cannabis Law, Cannabis Law and Compliance, Cannabis News, Culture, Growing, Industry News, Legalization

California interstate cannabis commerce bill introduced

California has always been at the forefront of cannabis legalization. As one of the first states to legalize medical and recreational cannabis, other states looked to California for the outline of legal cannabis.

But despite its progressive policies regarding cannabis, California has not been able to develop and maintain a strong legal cannabis industry. This is for a wide range of reasons, from strict and expansive regulations to exorbitant application and licensing fees. Not to mention the massive illicit market that still operates within the state, in part due to the current barriers to entry into the legal market.

Some would argue that the solution to California’s cannabis industry woes is to simplify the application process, lessen the cost of licensing and give cultivators and retail owners the resources they need to stay within regulation. However the state is taking a different approach to profiting off an industry with an oversupply of cannabis.

SB1326 has been introduced to approve interstate commercial transactions for cannabis products. This means that if passed, California would be able to import and export cannabis products from other legal cannabis states. For example a state that recently legalized cannabis but does not yet have enough supply to meet demand could import products from California to fill the gaps.

If this bill sounds familiar, it may be because Oregon passed something similar in 2019. However since they were the only state with a law allowing export of cannabis, and no states have a law allowing imports, the law is basically moot.

The interstate cannabis commerce bill wouldn’t just be restricted to recreational cannabis either. California also has one of the country’s oldest medical cannabis programs and would be able to provide medical cannabis to neighboring states as well.

Even with the largest illicit market of cannabis production in the country, California’s legal recreational market is still oversupplied. The hope with SB 1326 is that some of that supply can be sent to other states to make the industry more profitable for those participating legally.

Critics of the bill have shown concern however over wording that could remove the opt-out clause currently in place in the state.

Most states with legal cannabis programs will have opt-out clauses that permit municipalities to opt-out of legal cannabis business in their localities. Those criticizing SB 1326 believe that the new bill will overshadow the opt-out clause, but lawmakers believe that it will actually give the municipalities more options than the opt-out clause itself provides.

The interstate cannabis commerce bill also places restrictions on who can enter the new market if it passes.

“The bill would prohibit an entity with a commercial cannabis license issued under the laws of another state from engaging in commercial cannabis activity within the boundaries of this state without a state license, or within a local jurisdiction without a license, permit, or other authorization issued by the local jurisdiction,” the bill’s text reads.

This line should reassure smaller towns and local businesses that multi-state operators won’t be able to just storm in and take over. And at this time, officials in the cannabis industry want to focus on leveling out the supply in California before they begin accepting any imports.

Cannabis Supply Chain Shortages Becoming More Prevalent

by The Real Dirt | Dec 13, 2021 | Blog, Business, Cannabis Business, Cannabis News, Industry News, Legalization

Getting basic materials like ceramics, stainless steel and computer chips from China has gotten so difficult that its about to hit one of the few industries that has so far been insulated from supply-chain woes: U.S. cannabis.

Rolling power outages in China have affected about six out of the 13 components that go into vape hardware made by the Blinc Group, according to Chief Executive Officer Arnaud Dumas de Rauly. There are also widespread problems with shipping. All of this may start affecting the price of cannabis vapes, but on top of all of this, Lunar New Year is coming. With it, disruptions and delays are expected to intensify as workers take long holidays, Dumas de Rauly said.

“I believe this issue will go on at least until the end of May,” Dumas de Rauly told me. “It’s not just vape devices. The raw materials for the equipment that fills them with cannabis, the LEDs for the grow houses — all of it comes from China.” The company has noticed shortages of chip sets, which are used in most technology devices, including those for vaping marijuana.

The cannabis industry has so far been shielded from supply-chain woes because most of it is hyper-local. Since it’s a Schedule I substance, companies risk legal imbroglios unless they grow and process it in the state where it will be sold. But state-specific supply chains can only protect the industry for so long.

4Front Ventures, a company with operations in California, Illinois, Massachusetts, Michigan and Washington, hasn’t seen shortages of raw materials yet, but is already suffering from shipping delays from items such as vape cartridges and specialty packaging, including tin boxes.

“We’re trying to order ahead — we’re not paying more, but we’re paying up front, also we’ve begun to source domestic pools of inventory,” said Josh Krane, the company’s vice president of operations for California. This November, he made orders and paid deposits for goods that he won’t need until April, May or even June, he told me.

So far, both 4Front and Blinc say they’ve managed to avoid passing costs on to consumers by finding alternate suppliers and prepaying far in advance for orders. Whether consumers see an impact will hinge on the multistate operators and dispensaries that sell the end products. Thanks to market dynamics, however, many of them have some wiggle room.