Legal pot set to bring new gold rush to California
Longtime grass- growers worry about corporate influence as law takes effect
A new gold rush is sweeping California as the state launches legal marijuana sales Monday, bringing the powerful and largely underground economy finally into public view.
Marijuana has long been one of California’s most important cash crops. Now, tens of thousands of entrepreneurs are rushing to carve out a slice of a market that has grassgrowing cannabis evangelists colliding with out- of- state suits eager to make a buck.
And there’s a lot to be made: The state’s existing marijuana black market isworth $ 13.5 billion, according to cannabis financial analysis firm GreenWave Advisors, while the legal market could be worth $ 5.1 billion in 2018.
“You’re taking an industry that was completely underground and making it the most regulated product of all time,” said Jessica Lilga, who runs amedical cannabis distribution service in Oakland, Calif., and hopes
to expand into recreational pot. “It’s just insane.”
Legalization through voter approval of Proposition 64, which created a systemfor legally growing and selling cannabis, also raises concerns about whether kids will start using more marijuana thanks to increased visibility and whether the state is creating a new Big Tobacco industry that puts profits ahead of public health.
While five other states already offered legal marijuana sales, the Golden State’s sheer size is expected to reshape the pot industry worldwide, potentially driving down prices for consumers while generating hundreds of millions of dollars in taxes. It also holds the promise of wiping out criminal records for some people with previous cannabis convictions and helping longtime illegal drug dealers go legal by getting them licensed.
Eight states and the District of Columbia have legalized marijuana, but only Colorado, Oregon, Nevada, Alaska and Washington had functioning marketplaces in 2017. Massachusetts and Maine expect to begin sales sometime later this year. Marijuana remains illegal at the federal level, but the Trump administration has made no high- profile moves against any state where pot is openly sold to adults.
That has store owners scrambling to erect billboards near Los Angeles International Airport and flooding bars with street marketers. Med Men is wrapping 30 trucks with advertisements for its four existing high- end dispensaries.
“You’re seeing a lot more sophisticated people from other industries starting to move into the space,” said B. J. Carretta, Med Men’s chief marketing officer. “If traffic doubles in January, it can’t be amateur hour.”
Many longtime cannabis farmers have been struggling with whether to go legal.
Matt Karnes of GreenWave Advisors estimates at least half of all the cannabis grown in California is shipped illegally across state lines and sold at two or even three times the price it would fetch if sold locally as medical marijuana.
“What we are going to see is not only a legal shift but a cultural shift,” said Michael Steinmetz, the CEO of cannabis distribution company Flow Kana.
Steinmetz bought an abandoned vineyard and winery in Mendocino County to serve as a centralized marijuanaprocessing center for small growers. He envisions dozens of farmers pooling their crops to be trimmed, packaged and distributed as a premium umbrella brand.
“Commodity cannabis is going to be a race to the bottom. Wewant to be more like wine and less like wheat,” he said.
California is creating a network of privately owned but tightly regulated pot shops that will offer shoppers a wide variety of products, from the smokeable “flower” most people are familiar with to cannabis- infused foods called edibles and increasingly popular marijuana extracts used for vaping. The state requires quality testing and will regulate the kinds of pesticides and other chemicals used in growing.
“Consumers at large haven’t seen that,” Steinmetz said. “In the black market, you buy whatever the dealer has, and you want him out of your house as soon as possible.”
Silicon Valley billionaires heavily backed legalization. Some industry experts say they believe venture capitalists hope to commoditize cannabis production and create a legitimate cash crop.
“We’re going to have more Budweiser than craft brewers,” Lilga said.
Former California attorney general Bill Lockyer, who was in office as medical marijuana became widespread in California, said he thinks the new recreational pot regulations are far better than the state’s original medical marijuana rules — so much that he’s co- founding a marijuana distribution company with colleagues drawn from the brewing and alcohol- distribution fields.
“This is the right thing for California, and we’re trying to do it in a legal and smart way,” he said. “If it winds up helping pay for my kids’ college education, I won’t complain about that.”