Summary of California’s Cannabis Distribution Plans

California cannabis distribution summary

California recreational marijuana sales kick off in 2018. California is the sixth largest economy in the world and already home to a medical marijuana industry that grosses $2.7 billion, Politico Magazine reports. That number is expected grow to around $15 billion after recreational sales begin. What happens in California’s cannabis market could have ramifications for future states looking to experiment with cannabis legalization. Cannabis distribution was and perhaps still is the most polarizing issue California faced on the eve of legalization.

In Washington and Colorado, cannabis producers sell directly to retailers. This allows processors/producers to negotiate with retailers on their own terms. When Californian citizens voted in Proposition 64, the Medical Marijuana Regulation and Safety Act (MMRSA,) to regulate their medical marijuana industry, it opened the door for cannabis distribution to be a major market force, The CannaLaw blog reports.

Washington and Colorado’s recreational markets don’t have structured cannabis distribution, the MMRSA makes producers and processors use a distribution company as a middle man between them and a retailer. This model is loosely based off the alcohol industry’s current three-tiered distribution method; that was implemented after prohibition to big-alcohol from advocating over-consumption through marketing.

Under this model, distributors are solely responsible for setting up deals between retailers and producers. It does this by negotiating prices and providing brand selection between the two, The CannaLaw Blog reports.A cannabis distribution model was adopted because it was the only way law enforcement would get behind legalization in California. Executive Director of California’s Grower Association (CGA,) Hezekiah Allen agreed to this model as a way of compromising the legal sale of a federally illegal substance, the Los Angeles Times reports.

Allen believes this system will ultimately be a positive gate keeper of cannabis culture. Critics say this model could let distributors control the flow of product by pushing out small farms that can’t afford expensive distribution services. The Teamsters Union supports a distribution model, as does the Marijuana Policy Project, a Libertarian-leaning advocacy group, Seattle Weekly reports.

Another reason alcohol based distribution was adopted? A former alcohol executive lobbied for just that. Ted Simpkins was a Senior Manager at Southern Wine and Spirits, America’s largest alcohol distributor. After he retired, he set his eyes on California’s blooming recreational industry. He started a cannabis distribution company called River Wellness or River collective, Politco Magazine reports. RVR invested over $130,000 into lobbying for alcohol based cannabis distribution. RVR and the CGA use the same Sacramento based lobbying firm.

California legislators have changed how cannabis distribution will take place. In August, the MMRSA was repealed in favor of the Medicinal and Adult Use Cannabis Regulation and Safety Act (MAURSA.) This completely changes the cannabis distributers role. These new roles limit distributors to transportation and quality assurance practices only. They become another gate keeper for packing quality and testing practices. Producers and retailers are still free to deal with each other directly over product pricing, but licensees must go through a distributor to get products form one licensee to another. Cannabis distributors will charge for their services, but looks to be out of the market share like their counterparts in the alcohol industry.

Read The Full Politico Magazine Article About California’s Cannabis Distribution Debate

Check The CannaLaw Blog’s Report On California’s Distribution Debate

GreenRush Cannabis is a WA i502 producer-processor located in the scenic Snohomish Valley. We produce a clean, sophisticated crop that has become a preferred brand for a number of top shops in Washington state known for our consistent terpene flavor, high quality, and deep impact.

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