California's legal weed market faces tough regulation without a state-owned wholesale cannabis monopoly

1 of 2 2 of 2

The chief of the California Bureau of Cannabis Control says it's not easy regulating the state's nascent legal weed market.

"I think there are always going to be some tough challenges," Lori Ajax told the Straight by phone in advance of a Monday (September 16) speaking engagement in Vancouver, "and things don't go always as planned."

The recreational use of cannabis became legal after Californians approved Proposition 64—the Adult Use of Marijuana Act—in a statewide referendum in November 2016. 

Ajax, the state's first weed czar, was previously chief deputy director of the California Department of Alcoholic Beverage Control. So she's no stranger to regulating products that should be kept out of the hands of children.

"We've got some strict regulations on packaging," she said. "Anything from flower to any manufactured product has to be in child-resistant packaging."

Ajax added that California has also taken a "pretty strict stance on edibles and manufactured products to make sure that kids weren't getting a hold of it accidentally".

Edible products must be in opaque packaging with a universal symbol warning of cannabis content. That's so parents won't inadvertently give any of it to their kids.

And under no circumstances, she said, can edibles be made to appear like candy or be packaged to appear like candy.

Ajax added that advertising can only take place when a marketer can demonstrate that 71.6 percent of the population that's being reached is past its 21st birthday. Packaging must be resealable for products with multiple uses.

"You can have all the regulations in the world," she conceded, "but you have to follow it up with compliance inspections and make sure our distributors do the quality control."

This is the universal symbol used in California to warn if a product contains cannabis.

California aims to shut down illegal market

Everyone in the supply chain is licensed, including growers, distributors, and retailers.

"We don't even allow transportation of cannabis unless you have a licence," Ajax said.

The distributor is the linchpin—ensuring that products are independently tested and the packaging is compliant before it can be shipped to retailers.

It's possible for a cultivator to also have a distribution and retailing licence, allowing for vertical integration. But Ajax insisted that lab testing must be done by an independent third party.

Unlike in most Canadian provinces including British Columbia, there's no government monopoly controlling the wholesale trade in cannabis in California.

According to Ajax, it's important to send a message to licensed participants that the state is serious about cracking down on the illegal market.

"If they're going to go through all the hoops that we're putting in front of them—and we're not attacking that illegal market—then we're not going to be successful," she said. "It's a big priority for us to get people licensed or they're going to get shut down, basically."

Like Canada, California had a legal medicinal cannabis sector before recreational cannabis was legalized.

So how does California prevent the recreational sector from overwhelming the medicinal area, which can leave patients without access to the products they require?

"In California, we can't issue a licence unless the local jurisdiction approves it," Ajax replied. "They can either approve folks to do medical or adult use or both."

In other words, a retail licence can be designated for certain uses.

In addition, the California Department of Public Health allows products for the medical market to have a higher concentration of tetrahydrocannabinol (THC) than those permitted for adult recreational use.

Medical products also aren't subjected to the sales tax if a consumer has a medical marijuana card, according to Ajax.

She also said there's a bill before the California legislature to allow for donations from cultivators or manufacturers for medicinal cannabis patients or the patient's primary caregiver, if specified requirements are met.

"We're also doing a...study that is due on January 1, 2020, to determine a feasibility of establishing a nonprofit licence that would be something like that in the compassion-care arena," Ajax added.

Lori Ajax will speak at the International Cannabis Business Conference, which takes place on September 15 and 16 at the Westin Bayshore Hotel. For more information, visit the website.

Discuss