According to a 2018 report by Arcview and BDS Analytics, California is the largest cannabis market in not only North America but the entire world. The state, which legalized recreational marijuana in November 2016 and medical cannabis in 1996, realized cannabis sales worth $4.4 billion in 2020, even amid the coronavirus pandemic.
Despite the size of its legal cannabis market, a large percentage are using provisional licenses, and sales from the illicit market still make up a significant chunk of cannabis sales in the state. California has now set aside $100 million to help cannabis sellers get licenses and hopefully, draw some sellers from the illicit market by making the process easier.
The state legislature of California earmarked these funds in June to help sellers transition from provisional licenses to annual licenses. A majority (82%) of the cannabis companies in California have provisional licenses, and the licensing process has kept many of them, especially the smaller ones, from obtaining annual licenses.
James Steigerwald, the chief marketing officer at Los Angeles-based marijuana delivery service Nug Avenue and an industry expert, says the licensing process can be quite costly, difficult and time-consuming, causing many people to avoid the complicated process altogether. Companies that want to upgrade their provisional licenses are required to study any potential negative effects their business may have on the environment and explain how they would find ways to mitigate these effects.
While larger companies with significant funding can feasibly pull this off, small to moderately sized firms, which make up the majority of the players in America’s state-legal cannabis industry, will have a much harder time. As such, the $100 million will be dispersed to cities and counties, allowing them to fund programs that support cannabis players that are looking to upgrade their temporary licenses to permanent ones. The funds will be allocated to 17 communities in total, which will use them to look for and hire additional staff to assist license applicants and process the paperwork required for the process.
So not only will the cash help businesses that would have otherwise been unable to obtain permanent licenses on their own, but it will also provide new employment opportunities. Recipients of this funding will include Los Angeles, San Francisco, Oakland, Long Beach, Adelanto, Desert Hot Springs and Commerce, with Los Angeles receiving the largest share. Steigerwald hopes that as his Los Angeles-based company expands and requires additional licensing, the process will be a lot easier.
The proactive approach taken by the authorities in California may explain why there are so many thriving cannabis companies, such as American Cannabis Partners, within the California state borders.
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