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Los Angeles Clears the Way for Recreational Cannabis…

California is an economic giant. If the Golden State were its own country, it would have the sixth-largest GDP in the world, ahead of France.

That financial muscle is why many in the cannabis industry have been paying close attention to how California is cleaning up its legal cannabis industry, following the state’s legalization of recreational cannabis this past November.

California has had a patchwork of regulations for medical marijuana over the past 20 years (it legalized medicinal cannabis in 1996), and there have been concerns about how its larger cities could regulate legal cannabis companies while also attempting to get rid of their black market cannabis elements – who reportedly account for 60-to-80 percent of the illegal marijuana consumed in the U.S.

One big piece of that puzzle apparently fell into place on March 7. That’s when voters in Los Angeles overwhelmingly passed Measure M, a ballot that brings in new regulatory and taxing standards for both recreational and medical marijuana businesses in the city.

Measure M establishes a 10 percent retail sales tax on recreational cannabis and a five percent tax on medical marijuana. In addition it taxes growers and other legal marijuana companies.

It also gives the Los Angeles City Council the power to regulate the licensing of different types of cannabis businesses, as well as to determine the number of dispensaries allowed in the city. The Council reportedly plans to have a wide-ranging cannabis regulatory plan in place by the end of September.

“It shows that cannabis consumers can be responsible citizens and the cannabis industry can be a responsible industry, that this isn’t just a movement that’s driven by fringe elements,” says Lance Rogers, a partner with Greenspoon Marder.

Rogers manages his firm’s cannabis law practice in California. He tells Blunt Network that Measure M also underscores that stake-holders in California’s legal cannabis industry “understand that it needs to be responsibly controlled and regulated. It also shows that citizens don’t have a problem paying tax on both recreational and medical cannabis.”

Meanwhile, cannabis advocates in L.A. are not only stoked about Measure M’s passage but are also predicting big things.

“This is a pivotal moment in the history of medical marijuana and it will be for recreational as well,” Virgil Grant, President of the Southern California Coalition, an L.A.-based marijuana advocacy group, told Southern California Public Radio.

“This is huge for the country,” he added. “Everybody is sitting back, looking at what move the number one cannabis producing state and city is going to do. And we’re gonna deliver.”

Others observers have similar expectations for the L.A. cannabis market. This past December Forbes Magazine predicted that Los Angeles will soon overtake Denver as America’s marijuana capital. It quoted Adam Bierman, CEO of the Los Angeles-based cannabis investment firm MedMen Capital, who estimated that LA’s medical marijuana market alone is already near $1 billion – or close to the total for all the medical and recreational cannabis sales made in the state of Colorado in 2016.

Forbes also quoted Bierman as predicting the passage of Measure M and the opening-up of the recreational market in Los Angeles; a move that would bring a fresh influx of capital into the region “as investors begin to smell money in the emerging market.”

The Los Angeles Times noted in a pre-election editorial that Measure M lacks a lot of regulatory details. But that ambiguity, it said, was a good thing.

“Nobody can predict all the issues that will arise in the new marijuana marketplace” it continued. “That’s why the best part of Measure M is that it gives city leaders the flexibility to tweak, repeal or add new regulations as needed, rather than having to go back to the voters.”

For his part Lance Rogers expects that Measure M, with its stricter regulatory requirements, will thin out many of Los Angeles’ current dispensaries and lead to more consolidation.

“I think we’ll probably see the number drop,” he says, “and I think we might see some acquisitions or purchases of those dispensaries, because now it’s a more secure investment. And then I think we’ll see additional dispensaries become licensed by the city after that first wave of priority licensing goes through.”

And Rogers notes that Los Angeles, as a mega-city in a cannabis-friendly state, as well as being home to the U.S. entertainment industry, is well-positioned to become the “epicenter of the national cannabis industry.”