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Who Will Survive the License Game? - May 17, 2018 - SF Weekly
SF Weekly

Who Will Survive the License Game?

Wait — haven’t we done this before?

If the subject of cannabis licensing seems familiar, that’s because since Proposition 64 went into effect at the start of 2018, it’s been a popular topic of conversation. All the licenses that existing medical dispensaries, manufacturers, and growers possessed before Jan. 1 were suddenly no longer sufficient, and the battle for the market heated up as newly-minted recreational dispensaries, manufacturers, and growers competed for the paperwork necessary for the sale of cannabis.

Despite the voters’ support, California wasn’t ready for legalization, which led to the decision to issue temporary licenses — all of which are set to expire on July 1. For the Bay Area’s own Legion of Bloom, a cannabis company that specializes in flower, resin, and vape cartridges, it means another run through a circus of bureaucracy to ensure it can continue selling to dispensaries across the state. According to co-founder Troy Meadows, things are even tougher this time around.

“The temporary licenses were definitely a bit less intensive,” he says. “With the annual licenses, they’re a much more in-depth, vetted process. California wants a lot more specific information about the business itself, and then ultimately, I know that there are several different places that it all has to go and get checked off.”

While the Legion of Bloom, comparatively speaking, isn’t one of the larger players in the industry, it does still have the resources necessary to task select staff and a legal team to help usher their applications along.

For smaller businesses in the field, such dedicated focus to adhering to licensing and compliance needs is simply impossible. Meadows believes most companies have seen the writing on the wall since Prop. 64 became law in 2018 — and those that haven’t are in trouble.

“If you don’t really have it together by now, it’s going to be hard to stay on the map,” he says. “I know some businesses who definitely decided that the model didn’t work for where they were at and that they should just cut their losses. We’ve seen it happen with some of the partners that we work with, especially on the retail side.”

Beyond the tedious but not entirely baffling process of getting an annual license approved, July 1 also marks the start of the implementation of Metrc — the system selected by California to serve as the state’s official track-and-trace program. An immensely complex network, Metrc will provide accountability of every cutting of cannabis, from seed to sale. Each step of the process comes with its own specifications, meaning that every facet of the cannabis production chain will need to invest significant resources and time into making sure it’s compliant.

Furthermore, Meadows also notes that given some companies will inevitably have to operate on extensions of their temporary licenses while others are granted their annual permits, only the latter group will have access to Metrc.

“Organizations that have their annual licenses and have access to Metrc will need to manage a filing system in which they submit handwritten track-and-trace reports from the entities that they work with that only have temporary licenses,” he explains. “It’s going to get cumbersome, for sure. It’s a lot to ask.”

At the same time, the Legion of Bloom has also reduced prices to ensure the higher costs created by compounded state, local, and excise taxes keep them competitive. Meadows says improvements to the company’s infrastructure have afforded them the ability to lower prices but also expresses concern that the current tax system in place may prevent the cannabis providers who truly care for the product from being able to survive in the industry long-term.

“Our state is known for providing the best boutique products in general,” Meadows explains, “whether it’s the wine that you’re drinking, the food that you’re eating, or the cannabis you’re smoking. We’re trying to curate this farm-to-table responsibility that California has embraced, but if we tax the little guys out of existence, we come back to making cannabis a commodity thing. It really starts to muddle down what cannabis really is and the power of the plant itself.”

At present, the Legion of Bloom’s plans remain the same — to ensure they’re still standing when the dust of regulation finally settles. For Meadows, that end may finally be approaching.

“The hoops feel like they’re getting larger,” he says. “I feel like the funnel is getting wider, and that’s definitely a good thing.”

Zack Ruskin covers news, culture, and music for SF Weekly.

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