Cannabis prohibition ends in California as retail sales begin

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More than 100 years of cannabis prohibition has come to an end in California.

This morning before dawn, a retail store in the city of Oakland sold one of the first legal bags of cannabis in California’s modern history — kicking off commercial marijuana legalization in the world’s eight largest economy.

Former federal attorney Henry Wykowski bought one gram of Neville’s Purple from Harborside in Oakland, CA. for $20.01 after Harborside founder and longtime cannabis activist Stephen DeAngelo proclaimed, “we’ve been waiting a long time for this.”

Cheers erupted from the dispensary staff as hundreds stood in line outside the club, waiting to shop and celebrate the novel occasion.

A similar party commenced a few miles north of Harborside at Berkeley Patients Group in Berkeley, where mayor Jesse Arreguin performed a ribbon cutting prior to sales beginning at 6 a.m. there.

Most folks who want or need cannabis already know how to get it in California, which has had medical marijuana for 21 years. But for many, Jan. 1, 2018 signifies a milestone akin to the end of alcohol prohibition Dec. 5, 1933.

The first customer in line was Jeff Deakin and his wife Mary from Walnut Creek, CA. The Deakins showed up at 6 p.m. Sunday to wait in line 12 hours “to be the first in line at Harborside. It’s the first time in California history you can buy it recreationally.”

Harborside’s first customer Jeff Deakin, middle, Stephen DeAngelo (right) shakes cultivator Swami Chatitanya’s hand. | Photo by David Downs

“I think there’s a mixture of pride and relief,” said Alex Traverso, communications director for the state’s regulatory agency, the Bureau of Cannabis Control, which worked through the holiday weekend approving retail licensees.

“So much work went into being ready for this historic day, and our staff has really worked tirelessly for nearly two years getting us to this point. It’s really been an incredible journey.”

Activist and California NORML director Dale Gieringer postponed a winter vacation by one day to see legal sales commence. “This marks the welcome end of a century of prohibition —104 years to be accurate.  It’s wonderful that people aren’t being imprisoned for marijuana the way they used to be.”

Around five dozen medical dispensaries statewide are expected to be open today to all adults 21 or over who can show valid identification like a driver’s license. Licensed stores will be open today in Oakland, Berkeley, San Jose, Santa Cruz, San Diego, as well as West Hollywood, and several rural cities like Ukiah and Shasta Lake.

Most of those stores will begin sales at 9 a.m. and long lines are expected at many outlets. Licensed dispensaries are offering free gift bags worth hundreds of dollars to the first several hundred people in line. Others are providing free food, drinks and music, and performing ceremonial first sales to symbolic customers. For example, the KindPeoples shop in Santa Cruz will make its first sale to UC Santa Cruz professor emeritus Craig Reinarman.

Illustration by Conor Buckley

By contrast, major cities San Francisco and Los Angeles — as well as the vast majority of the 500-plus cities and counties in California — will not host legal recreational cannabis sales on Jan. 1. New Year’s Day is the voter-mandated deadline for state regulators to begin issuing commercial licenses to the marijuana industry, but local cities and counties have no such deadline. San Francisco could host its first adult use sales by Jan. 6, while Los Angeles’ timetable remains unclear.

Only stores with both local and state licenses to sell recreational cannabis may do so, and unlicensed sellers face civil fines, disqualification from state licensing, and criminal penalties as well.

“The expectation was always there that this was going to be a phased-in process,” said Traverso. “We anticipate more and more locations coming online shortly after Jan. 1.”

The 60 or so outlets open “is as good as I expected,” said Gieringer. “To paraphrase the Chinese saying, a market of 1,000 licensees begins with a single store.”

Medical marijuana dispensaries continue to operate as normal on Jan. 1 — they have a little under a year to come into compliance with new medical marijuana regulations. California might have such 1,000 dispensaries, and a doctor’s note will still be required to enter them after Jan. 1.

Harborside founder Stephen DeAngelo cuts the ribbon on legal sales. | Photo by David Downs

SLOW ROLL-OUT

The lack of cannabis sales in the state’s biggest and most progressive cities is disappointing to some. San Francisco cultivator Eric Battuelo — director of Butterbrand — said, “it actually is a big deal. San Francisco has been a progressive leader in this movement, starting back in 1996 with Proposition 215. So to not be participating on day one hurts. I personally find it akin to a relative not making it home for the holidays. You know you will see them again, but it truly hurts.”

Los Angeles never managed to regulate its medical dispensaries, and remains behind the curve on adult-use sales, noted Gieringer. “Los Angeles has always been a model of governmental dysfunction with regards to marijuana. However, it’s disappointing that San Francisco bobbled the ball. Still, there’s plenty of time for the rest of the state to catch up.”

Longtime activist and Oakland dispensary operator Debby Goldsberry obtained state licensing for Magnolia Wellness just days before the launch. She said most jurisdictions have blocked cannabis commerce and those that allow retailers burden them with unprecedented levels of red tape.

“The problem is the bans across the state. These will only go away if citizens take action to change them. … The other big problem is the permitting process itself,” she said. “San Francisco has no excuse for being a week late to the table; it makes no sense for them to lag behind when the voters there so clearly support this.”

TAXES HIGH

Another salient issue with the launch is the new 15 percent state taxes on retail cannabis, plus a host of other new costs. GreenState estimates cannabis could cost at least $8 more for the typical $50 bag of cannabis flowers.

Goldsberry said, “I expect the increase to be between $10 and $12 dollars per $50 bag of cannabis. … At some point, we will have to change the state laws to lower the excise taxes, but that is likely a few years in the future. ”

Daniel Yi — vice president of southern California dispensary chain MedMen seemed resigned to the new levies. “Tax is one of the costs of doing business legally. You pay taxes at restaurants on the food you order, you pay taxes on alcohol, you pay taxes on pretty much everything you buy legally. Drug dealers don’t pay taxes.”

Morgan Fox at the drug law reform group, Marijuana Policy Project, expects prices to go up before they come down again. “As we have learned from other states that have legalized marijuana, such as Washington, the price of marijuana seems to initially increase after legalization and then decreases and remains lower soon thereafter.”

The new high taxes will drive folks to the black market, where prices are cheaper, said Gieringer.

“Between the new taxes and regulations, we expect a strong demand for cannabis from unregulated, untaxed ‘personal use’ suppliers. A vigorous black market can be expected in any case, given that California exports most of its crop out of state.”

BEGINNING — NOT END

The Jan. 1 commercial sales launch should be seen as the beginning of a process, rather than the conclusion of one, experts said. Though California has had medical cannabis for 21 years, lawmakers voted to regulated the trade in 2015.

Fox said, “The state waited until last year to regulate its medical marijuana industry, so state government has little experience with this process. ”

“This is a process, not an event,” said Yi. “We feel fully confident that the licensing process will settle down soon.”

Longtime activist Amanda Reiman quipped:

“Rome wasn’t built in a day.”

“Implementing a regulatory system as intricate as the one the BCC created, in a state as large and heterogenous as this one is going to take time. Counties are still playing with their alcohol regulations, so this is just the beginning of a long period of adjustment, progress and evolution of attitudes,” she said.

Voters passed legalization Proposition 64 in 2016, immediately legalizing the possession of up to one ounce by adults 21 and older, as well as cultivation and gifting. Commercial regulations and licenses began rolling out in late 2017 and will continue for years. The state has earmarked more than $100 million to hire regulators for the newly created Bureau of Cannabis Control. Tax revenue from legal marijuana could total $1 billion per year, plus $250 million in court savings, according to estimates from the state’s Legislative Analyst’s Office.

History Made

California led the world in legalizing medical marijuana in 1996, and today, 29 states have legal access to the botanical drug. Eights state including Washington DC have legalized cannabis for adults 21 and older. Dozens of attempts at legalizing cannabis in California have been made since the ’60s.

Today, activists are celebrating an achievement that is simultaneously unthinkable and long overdue, they said.

Jolen Forman, staff attorney for the Drug Policy Alliance, which helped pass Proposition 64 said, “Despite having the largest medical marijuana economy in the world, California had no state system to regulate and control marijuana. This means there were no protections for consumers, workers, youth, or the environment. Now the harms of marijuana criminalization begin to come to an end. This is a moment of celebration for California.”

Los Angeles area cannabis licensing and criminal defense attorney Allison Margolin said “This launch marks the beginning of the end of the war on drugs. … Maybe we can start to heal the problems that have plagued our country since its inception.”

Hezekiah Allen, director of the California Growers Association, described a day of reflection for many. “From radical, anti-war, back-to-the-landers raising homeschooled, barefoot kids that grew a multi billion-dollar marketplace … What a long strange trip it has been. I’m looking forward to seeing where we go from here.”

Others noted the work left undone.

“We have finally come half-way,” said Gieringer. “While marijuana is now legal under state law, it remains 100% illegal federally.”

Goldberry said, “It feels like a 30-year goal has been reached, but that there is so much more work to do that there is not a moment to rest.”

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