Continued Struggles in the California’s Cannabis Industry

The cannabis industry in California is currently facing significant challenges. Advocates and small cannabis growers are warning that the industry is on the brink of collapse due to the state’s hefty taxes and rising operating and regulatory costs. There have been calls for an overhaul of the marijuana tax system, with demands to eliminate the cultivation tax and repeal the state’s excise tax for social equity retailers.

Additionally, there are concerns about the survival of small-craft businesses in the state. The heavy taxation has made it difficult for these businesses to compete with the illicit market, which offers lower consumer prices and has significantly higher sales compared to the legal market. There’s also a movement among cannabis delivery workers who are planning to go on strike to protest over wages, mileage, and benefits.

These issues highlight the ongoing struggle within the California cannabis industry to balance taxation, and the growth of a legal market against the backdrop of a thriving illegal economy.  Additionally, the small cannabis growers are facing an even more daunting task.  With little capital at hand, they struggle to stay current with regulations. 

Regulations.

The current regulations for cannabis businesses in California are quite comprehensive. Here are some key points:

• Licensing: Businesses must obtain a license from the Department of Cannabis Control (DCC). The licensing process includes submitting various documents and meeting specific requirements.

• Operational Rules: There are detailed rules for running a cannabis business, including security measures, record-keeping, and operational standards.

• Product Regulations: The DCC specifies what can and cannot be made into a cannabis product, what ingredients can be used, and packaging requirements to prevent contamination and inform consumers.

• Testing: All products must pass certain tests before they can be sold, ensuring they are contaminant-free and accurately labeled with THC and CBD content3.

• Enforcement: The DCC has the authority to take enforcement actions if a business is not following the rules.

These regulations are designed to ensure that businesses operate safely, products are safe for consumption, and cannabis is kept away from children. It’s important for anyone involved in the cannabis industry in California to be familiar with these regulations to ensure compliance.

Penalties

The penalties for violating cannabis regulations in California can be quite severe, depending on the nature of the violation. Here are some of the potential consequences:

• Fines: Licensed individuals may face fines of up to $5,000 per violation, while unlicensed individuals can be fined up to $30,000 per violation.

• Order of Abatement: This is an order to correct the violations within a specified timeframe.

• License Suspension: The Department of Cannabis Control (DCC) may suspend a business’s license for a period of time for serious or recurring violations.

• License Revocation: In extreme cases, the DCC may revoke a business’s license entirely.

• Criminal Penalties: For certain offenses, such as selling cannabis to minors or operating a cannabis business without a license, individuals may face criminal charges, which can include fines and imprisonment.

It’s important for businesses to stay informed about the regulations and ensure they are in full compliance to avoid these penalties. The DCC works with licensees to gain voluntary compliance, and often issues a Notice to Comply before taking more serious actions.

Common Violations

The most common violations in the cannabis industry, particularly in the context of regulatory compliance, include:

Traceability: Failure to utilize and maintain a proper seed-to-sale tracking system, which is crucial for ensuring that all cannabis products can be traced from their origin to the final sale.

Security: Not maintaining required security measures, such as alarm and surveillance systems, which are mandatory for cannabis businesses.

Sales to Minors: Selling cannabis to individuals who are underage is a serious violation and strictly prohibited.

Advertising Violations: Making unsubstantiated health claims about cannabis, using imagery that appeals to children, or failing to include required disclaimers and warnings in advertising materials.

Operating Plan Violations: Not adhering to the operating plan submitted with the license application, including deviations from business practices and procedures.

These violations can lead to significant penalties, including fines, suspension of licenses, or even criminal charges. It’s essential for businesses in the cannabis industry to stay informed and comply with all regulations to avoid these common pitfalls.

How to Overcome Difficulties

Evergreen Growers LLC can assist cannabis business operators in thriving within the industry by offering a range of services that align with the regulatory and operational challenges mentioned earlier. Here’s how they can help:

• Business Management: They provide guidance on effective business management, helping operators streamline operations and increase efficiency.

• Cannabis Cultivation: With expertise in cultivation, they can advise on best practices to produce high-quality products while ensuring compliance with regulations.

• Compliance Navigation: Evergreen Growers LLC can help businesses navigate the complex legal landscape, ensuring they stay compliant with state laws and regulations.

• Employee Training: They offer training services to ensure that staff are well-informed about compliance and operational procedures.

• Operational Management: Their team can assist in optimizing systems and procedures within companies to enhance overall performance.

By leveraging Evergreen Growers LLC’s expertise in these areas, cannabis business operators can address the common violations, stay updated on regulations, and implement strategies to prevent non-compliance, ultimately leading to a more successful and sustainable operation in the cannabis industry.

Evergreen Growers LLC

Evergreen Growers LLC offers a variety of services tailored to support businesses in the cannabis industry. Their specific services include:

Cannabis Business Solutions: They provide comprehensive solutions that cover various aspects of the cannabis business, from cultivation and dispensary operations to distribution, manufacturing, and delivery. They also offer risk management services to help businesses navigate the complex regulatory environment.

Cultivation Services: Evergreen Growers LLC specializes in cultivation services, offering expert training, building improvements, compliance management, product procedure solutions, CO2 compliance, and guidance on optimal plant nutrition and pesticide applications.

Consulting Services: Their team of experienced consultants provides expert advice and support for business owners and investors, covering areas such as legal marijuana, risk management, investment advice, medical cannabis cultivation, and long-term business planning.

Investment Opportunities: For those looking to invest, they identify the best cannabis investment opportunities, providing advice on where to allocate resources for maximum return.

These services are designed to help cannabis businesses operate efficiently, comply with regulations, and thrive in the competitive market.

Sources:

1. cannabis.ca.

2. Govcaliforniacannabis.org

3. foosgavinlaw.com

4. cannabis.ca.gov

5. mgmagazine.com

6. EVERGREEN GROWERS LLC | Cannabis Consultants

Last Modified: 4/29/24