The legalization of cannabis in California brought with it many changes in the industry including higher taxes, updated rules and regulations, new mandatory three-stage product testing, and plenty of confusion as to what is and is not allowed in the industry.

California’s Bureau of Cannabis Control is now heading up the organization of the state’s cannabis market by regulating and monitoring the production and sale of cannabis products. The Bureau is also responsible for licensing retailers, distributors, testing labs, microbusinesses, and temporary cannabis events. This means that they are also in charge, along with the DOI-CEU and its other constituents, of figuring out what to do about manufacturers and retailers who continue to operate without licenses and refuse to conform to the modern laws and regulations of 2019.

In San Diego alone, there are still hundreds of delivery-only dispensaries, and dozens of storefronts alike operating illegally, so what exactly are the differences between licensed and unlicensed shops? Lets discuss two important areas!

TESTING

Licensed retail cannabis storefronts in San Diego may only sell products which have passed through the three stages of BCC required testing.

Stage One includes Cannabinoid Testing, Moisture Content Testing, Category II Residual Solvents and Processing Chemicals Testing, Category I Residual Pesticides Testing, Microbial Impurities Testing (A. fumigatus, A. flavus, A. niger, A. terreus), Microbial Impurities Testing (Escherichia coli and Salmonella spp.), Homogeneity Testing of Edible Cannabis Products. To summarize, this stage of tests is mainly to determine exact levels of cannabinoids (THC, CBD, CBN, etc.) as well as to make sure there are no known harmful molds or other microbial contaminants in the products.

Stage Two includes Category I Residual Solvents and Processing Chemicals Testing, Category II Residual Pesticides Testing, and Foreign Material Testing. To summarize, these tests help to determine whether harmful and poisonous pesticides or additives were used in the process of producing the cannabis products.

Stage Three includes Terpenoids Testing, Mycotoxins Testing, Heavy Metals Testing, and Water Activity Testing of Solid or Semi-Solid Edibles. This stage is crucial regarding vape cartridges, as testing laboratories around the state are reporting the finding of toxic metals in some cartridges, which are then rejected and sent back to the manufacturer.

These standards of testing are extremely important to ensure that cannabis consumers are getting the safest possible products. Since unlicensed dispensaries do not follow all of the processes required by those which are licensed, the products you purchase from them could contain pesticides, molds, and other harmful contaminants which can damage the brain and body.

Additionally, stage I of testing is instrumental to finding out the true cannabinoid percentages of the products you’re consuming. Advertised percentages of cannabis products from unlicensed shops are nearly always inaccurate, because they aren’t required to test per batch of products. In other words, if an unlicensed shop says their Banana OG is testing at 30% THC, there’s really no way to tell if that’s true because there’s no way to show accountability. Licensed shops must be provided with certificates of analysis proving full testing has been completed on each batch of products which comes into the store.

TAXES

Licensed shops in San Diego are now required to collect a 27.75% total tax on all products in the store, including paraphernalia and accessories. Broken down, 15% goes to the California excise tax, 7.75% goes to the state sales tax, and San Diego takes a city tax of 5%. Although nobody likes to pay more for things, other states have shown us what sort of positive impact cannabis taxes can have on the economy!

For example, in Aurora, CO over $1,500,000 in cannabis tax revenue has been invested directly into combatting homelessness by providing shelters, meals, an basic essentials. In Pueblo County, CO local marijuana taxes have paid for over $600,000 student scholarships for the past three years. Colorado as a state voted on amendment 64, which allocated the first $40,000,000 collected in excise taxes directly towards the BEST (Building Excellent Schools Today) program.

Washington has focused most of their tax dollars on public health. Financial assistance has partly been aimed at substance abuse programs, and mainly allocated towards paying the state’s share of Medicaid, which provides health insurance to roughly 1.8 million low-income residents of the state. They are also in the process of creating a plan to divide portions of cannabis tax towards k-12 schools, in an effort to hire more faculty and provide supplies for classrooms!

Here in California, Governor Jerry Brown estimated that in 2018 California would bring in an estimated $645 million in cannabis tax revenues, when actually we fell short earning nearly half that at $345 million. So why is that? A large chunk of that has to do with unlicensed storefronts absorbing much of the local cannabis business due to their low prices and tax free visits. If they aren’t paying taxes, all of the money goes into the pockets of the owners rather than being redistributed into state and county funding.

Another key element to the missing revenue is the lack of licenses being distributed for potentially lucrative businesses and events like smoke lounges and festivals. Some cities around California have locations where cannabis users can go to safely and comfortably consume, which is huge for out of state visitors. Tourists and visitors come from other states to San Diego to vacation and experience cannabis while they visit, but if they purchase something to smoke, finding a legal place to smoke it can be difficult. Public consumption is still illegal, most hotels forbid smoking (especially weed), if you smoke in your vehicle you risk a ticket or worse. San Diego city officials have discussed plans to offer designated places to consume, but haven’t released any official notice of permission as of yet.

In the end we can agree the start for recreational cannabis in California has been a bit rough, but what truly matters to most is getting clean, safe products to enjoy! Cannabis still has so much to offer the community economically, socially, and medicinally, and we’ve only just begun.