In a focused effort to eradicate unlicensed and non-compliant entities operating in the recreational marijuana industry, California regulators made a bold statement, suspending 394 cannabis business permits for retailers, distributors, delivery services, and microbusinesses. According to a report from the Associated Press, that’s about five percent of the state’s legal cannabis supply chain, gone — at least temporarily. Affected companies must cease all sales until their license is reinstated.
A Marijuana Business Daily report revealed that the license suspensions affected 63 retailers, 61 delivery services, 47 microbusinesses, 185 distributors, and 29 transport-only distributors. The California Bureau of Cannabis Control’s spokesman Alex Traverso noted that the suspensions are a result of noncompliance with seed-to-sale requirements — and, according to Traverso, the businesses had plenty of time to comply. “These were just the stragglers,” Traverso said. “It turned out to be a couple extra months that we gave them. It’s just a matter of getting a password, getting a log-in, and doing the training.” He also noted that the requirements would only take a few hours to complete.
California has almost 7,400 licensed cannabis businesses, and the California Bureau of Cannabis Control (CBCC) also oversees over 2,600 companies in possession of provisional or annual licenses. In a comparison of duties, California’s Department of Public Health monitors 932 manufacturers, and the state’s Department of Food and Agriculture oversees 3,830 farmers.
The CBCC requires businesses to upload business inventory data into Metrc, a Florida-based software program used to assist state regulators in tracking marijuana inventory moving around the state from a single seed up to the material generated from that seed to the point of sale. Businesses that wanted to transition from temporary licenses (which expired over the summer) to a provisional license and then, finally, to a permanent annual permit were required to participate in the Metrc-tracked seed-to-sale mandates.
California has pulled some strategic power plays as it attempts to crack down on illegal marijuana operations. In recent months, California law enforcement has destroyed almost a million cannabis plants from close to 400 grows in the state. The combined federal, state, and local law enforcement effort, known as CAMP (Campaign Against Marijuana Planting Program), has served more than 120 search warrants, seized almost 170 weapons, and close to $30 million in cannabis-related cash, products and arms.
According to a United Cannabis Business Association report from September, there are approximately 2,835 unlicensed marijuana companies in the state of California. Law enforcement said that some operate under the likeness of legitimate hemp production when, in fact, they are growing THC cannabis.
Critics say that the state is partially to blame, with a legal marketplace plagued by lower-than-predicted sales due to high taxes, making the illicit market a more affordable option for cannabis consumers. Josh Drayton, of the California Cannabis Industry Association, said that California’s crackdown makes the black market stronger, adding that regulators and the cannabis industry should be focusing efforts on consumer access and affordability.
