CA pot faces bureaucratic, corporate future

by James Poulos | April 14, 2016 3:29 pm

With legal recreational marijuana potentially around the corner in November, California’s public and private sector has scrambled to keep up. In both cases, observers have suggested, the likely result will be increased centralization of what was once a scattered, underground industry.

Although the legislature in Sacramento has labored to stay on top of California’s shifting cultural and legal sands when it comes to marijuana, even at the highest levels, growing pains have been apparent.

Lori Ajax, chief of the Bureau of Medical Marijuana Regulation, “has two years to set up California’s first system to license, regulate and tax medical marijuana,” as the Los Angeles Times observed[1]; but she has already had to prepare for adopting a much broader role if state voters approve a ballot initiative that would legalize the recreational use of the drug as well.

Broad new powers

In February, Gov. Jerry Brown appointed Ajax, a Republican and the first person to hold the position — a job paying $150,636 a year and requiring state Senate approval, the Associated Press noted[2].

“Some of the key features of the medical marijuana framework the Legislature approved — such as limiting how many licenses an individual person or business can hold — were modeled after California’s alcohol license laws,” the AP added. “Ajax was chief deputy director of the California Department of Alcoholic Beverage Control, where she has worked as an investigator and administrator since 1995.”

But if voters do approve legalized pot, they will have handed Ajax increased powers. “The measure,” reported the Times, “includes a provision that would transform Ajax’s office into a Bureau of Marijuana Control that would also be responsible for regulating non-medical cannabis, significantly expanding Ajax’s responsibilities. Ajax’s office has been loaned $10 million by the state to set up a 25-person bureau that can begin issuing licenses on Jan. 1, 2018.”

Remaking an economy

A yes vote had analysts braced for changes that would reverberate throughout the California economy, far beyond the direct market for marijuana, accessories, and snack foods. For years, regulators and officials have already witnessed turf wars between conservationists and growers, whose crop demands substantial amounts of water.

If pot goes legal, indoor growing will be poised for a tremendous expansion. “Warehouses for cultivation are expected to be in high demand,” the LA Weekly noted[3]. Jason Thomas, CEO of a Colorado firm that provides pot-related commercial real estate services, told the Weekly that the rate for warehouse space in Denver nearly doubled since 2013.

“Three years ago, just as Colorado was implementing adult use, warehouse vacancy rates sat at 6 percent and rent was $5 a square foot. Many warehouses were underutilized and set to be replaced with condos. That is, until Colorado’s pot boom. Now the vacancy rate is 3 percent, and warehouse rent is $13 to $18 a square foot — if you can even find a place zoned for pot cultivation.”

A cultural crossroads

In California, the Weekly added, cities authorizing marijuana cultivation have seen a run on applications and parcels of land. Desert cities like Adelanto and Desert Hot Springs, the New York Times reported[4], “have raced to be first to permit commercial marijuana cultivation,” with some long-time industry figures worrying “corporate money will squeeze out not only the small-time growers, but also the hippie values that have been an essential part of marijuana’s place in California culture.”

Not all of the state’s old heads have sounded the alarm, however. Tommy Chong, who has “long been synonymous with California’s outlaw stoner culture,” has begun negotiating through representatives with an Adelanto company that would crank out his “Chong’s Choice” brand of weed for the mass market, according to the Times. “If conglomerates come in, my answer is: God bless ’em — it saves me the hassle,” he told the paper.

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