Earlier in June, the MGO | ELLO Alliance sponsored the “Cannabis in California: A Fireside Chat” event, a discussion of the state of the cannabis industry in Los Angeles and California. Led by Johnny Sayegh from Grassposts.com, the occasion brought together two of the most influential figures in the regulatory scene: Cat Packer, Executive Director and General Manager of the Los Angeles Department of Cannabis Regulation; and Lori Ajax, Chief of the California Bureau of Cannabis Control. The event was also attended by a wide range of California cannabis business owners, operators and advocates who made their excitement and concerns known in a lively Q&A that followed the chat.

Insider Updates on the State of the Cannabis Industry in California

Both Ajax and Packer were engaging interviewees as they alternated comments on the remarkable progress the state-wide industry has achieved in the last six months. Packer opened the discussion with a brief history of compliance efforts in Los Angeles, remarking on the fact that in late 2017, hers was a “department of three,” and that while there have been issues and disruptions, they’ve also accomplished a lot in creating and implementing regulatory guidelines, essentially from scratch. She also described the next phases of licensing in Los Angeles, which will be rolled out in the coming months.

Ajax provided a similar summation of events to date and earned a round of applause when describing updates to the Readopted Emergency Regulations, which included the addition of a third category that combined A- (adult-use) and M- (medicinal) license types. She also stated that the “Proposed Final Regulations” would be rolling out in “two to three weeks” and will be up for public comment in the 45-day window that follows.

When asked what the biggest hurdles facing the industry are, Ajax noted that difficulties and delays in issuing licenses are a primary challenge ahead and more resources will be marshalled to ease that process. Ajax also noted that the detail and complexity of tax and regulatory requirements are imposing and are understandably difficult for licensed businesses seeking to comply. She opined that difficulties exist for both regulators and business operators, adding: “I really do feel that we are in this together and it is really just a matter of perseverance and learning.”

When asked to comment and provide an update on Los Angeles’ Social Equity Program, Packer first explained the reasoning behind the program, “to acknowledge and address the harms that communities have experienced from the disproportionate enforcement of drug control policies.” She went on to discuss plans for support and technical assistance for individuals who qualify for the program, but also noted that no funding is currently earmarked for the program and as a result, implementation has been difficult.

The Audience Voices Praise and Concern

The Q&A that followed present a diverse sampling of a number of issues that are top-of-mind for those in and around the cannabis industry. A common frustration was voiced by leaders of licensed, compliant cannabis businesses who are in competition with “rogue” unlicensed or illegal businesses still in operation.

Concerns listed included the fact that the rogue businesses aren’t paying taxes and are able to undercut the prices at licensed businesses; and simmering anger that some business owners had visits from regulatory officials confirming compliance, while unlicensed businesses “across the street” did not receive the same scrutiny.

Ajax stated that the BCC has been “working those cases” and offered the release of the cease-and-desist letters earlier this year as evidence. She added that the first phase of launching the regulatory program has been focused on education. And the next phase will be “enforcement” and the BCC will soon be “making examples” of violators. She concluded that information from the operators and advocates will be helpful in dealing with rogue operations and asked that the audience not hesitate to point out violators having a negative impact on their businesses.

Seeking Assistance for Compassionate Care

During the Q&A, a final heartfelt plea was offered by the operator of a not-for-profit who was struggling to continue operations under the weight of licensing fees and tax payments. She made the point that not everyone in the cannabis industry sought to “capitalize on the Green Rush” and that for many, providing medicine to patients in need is their motivating factor, not increasing profits. Fighting through tears, she asked Ajax and Packer what they were going to do for “the little guys, the small operators” serving patients struggling to pay their bills and who can’t afford a 40% tax on their medicine. She described telling patients she can no longer donate medicine to them because it is considered tax evasion. She concluded with a comparison of how tobacco and alcohol take lives, give people cancer and put people in rehab, whereas cannabis saves lives and seems to be regulated more harshly. “What can you do to help us?” she asked, “we are begging for anything you can provide.”

Her plea was greeted by an impassioned round of applause signifying the crowd’s agreement that medicinal care remains a priority for the industry. Packer responded by offering her thanks for elevating the discussion and asked the audience to make their voices heard at the political level and let legislators know at rules meetings and City Council meetings that a Compassion Program is a priority. She added that a proposal would be on the November ballot in Los Angeles that would reduce local adult-use taxes from 10% to 8% and medical taxes from 5% to 3%.

Ajax offered that current regulations do not provide a mechanism for, or consider, the needs of compassionate care programs and acknowledged that many are struggling or have been forced to shut down. She offered that help is in the works, evidenced by SB-829, currently under review, which seeks to create a “Compassionate Care” license category for M-license holders. Ajax implored the audience to continue to push the BCC and legislators to fix the situation, adding that “no one here wants the medical market to go away and lose the ability to serve the patients who helped make all of this happen.”

Final Thoughts

The overall sentiment of the event was positive and optimistic. Despite a number of (heartily) voiced issues concerning the industry, it seemed that all attendees valued the progress made and recognized the hard work from Packer and Ajax that made it all possible. Both the speakers were open, honest and forthcoming about the difficulties they face and the impact it has on the industry. In the end, Ajax’s comment that “we are all in this together” rang true and while there is more work to be done, the cannabis industry in California is on the right path.