From 1996 to December 2017, a substantial cannabis supply chain developed within the state of California.
The state of California has a well-developed cannabis supply chain, mostly through a collection of medical marijuana patients, off the grid growers, and small business owners.
The creation of this supply chain did not happen easily. Many business owners succumbed to police raids, court battles, and millions of dollars in fines.
Despite this, those who were adamant that they could succeed within the cannabis business excelled through determination and resilience.
Mr. Michael Ray, the founder and CEO of Bloom Farms, an Oakland-based vape cartridge producer, stated that when he began in the industry in 2010, the possibility of going to jail was “not out of the question.” He said,
“all it took was roughly $20,000 to start a medical cannabis business. But That was back then; and of coarse a willingness to possibly go to jail.”
Ray’s statement continued, these days, the cost to start a solid marijuana company in California is about $1 million. “Maybe more,” he said. “Lot of Legal. A lot of red tape.”
He went on to say that in these times, there are more hurdles. There are numerous money influxes from existing business owners that are investing in larger scale growth and different brands. In addition, there large cash influxes from investors and out-of-state companies. And there is also the possibility of industrial agriculture or pharmaceutical companies pushing entry into the market further down the road.
Merge all these hurdles together with the competition within the new cannabis market and one would find that it is as risky as a game today, as it was years ago. Even though legalization is blazing ahead, it’s at the point where imprisonment has been removed, but bankruptcy has stepped in.
Despite, the recent establishment of the legal marijuana market…
Many small farmers are starting to remember the “good ole days”. One Humboldt County grower stated,
“I’m going to miss it. Those were fun times,”
He continued by saying he remembered the days when he did business solely via illegal trade. He has now transferred over to the fully adjusted legal system and has to face the compliance to water right laws, pesticide testing, dispensing, advertising and much more.
Many like this small grower are burdened with the new regulations and restrictions
They are even leaving the industry, based on various reasons. The Bay Area founder of Auntie Dolores, Julianna Carella has thrown in the towel in 2017 to focus solely on hemp-based CBD products for pets. Carella stated,
“The (profit) margins are so slim that there’s no way to make it work with the new regulations, because it looks like they’re going to drastically drive up the cost of production,”
Carella went on to state that the uncertainty of the marijuana business is as unpredictable now as it was a decade ago. Ten years in an unstable business market is an accomplishment.
Many concerns surround California’s emergency industry regulations
The vice president of scientific operations at Steep Hill Labs’, Reggie Gaudino, stated in November 2017, that the regulations are not solid.
For instance, growers are state-required to produce samples for testing, but no specified protocol has been put in place to execute the gathering of the samples. Gaudino stated
“how does a sampler go out to a cultivator who might have 20 or 30 different strains and go through 50 pounds for each batch to bring back to the lab?”
He also explained that the task would be a huge amount of work, staff would have to be hired and trained to be sample pickers, also, what procedure would then be utilized to destroy test samples. Gaudino explained that he would then have to dispose of approximately 12.5 tons of cannabis each month.
He wonders if the regulators are considering these factors before implementing the regulations. In addition to all of this, when California’s regulations are finalized, many things may change again. At this point, retailers are only allowed to sell a product that has passed muster by labs like Steep Hill. But, California has very few Steep Hill like labs.
Many are in for a major upset
The operator of Sacramento-based SevenLeaves, Tyler Kearns, stated his indoor farming is phasing out. SevenLeaves as a company has spent thousands of dollars to implement these changes to ensure that they are in compliance with the upcoming industry changes.
Erez Gudes, the founder of Humboldt County vape cartridge stated,
“We just know it’s going to be a big train wreck to start 2018.”