What’s Coming in 2018 for California’s Legalized Cannabis Industry

Consumers and businesses now have a look ahead into what it will be like in California next year, when the state’s legalized cannabis industry takes the next giant step forward. The industry is expected to have a value in the neighborhood of $7 billion, making it one of the biggest commercial industries in the state, but you shouldn’t expect everything to be in place right during that first minute of January 1st, 2018. Anyone who has been hoping to usher in the New Year by enjoying some recreational cannabis at the stroke of midnight, might be well advised to have a fallback plan ready.

Legalized Cannabis Industry

Will you be able to buy Cannabis on January 1st?

In most California cities, cannabis will not be available for sale on the first day of January. State officials have probably not been as prompt as they could have been, and it was only recently that regulations were even issued regarding legalization. A representative from the California Bureau of License Control confirms that licenses will be issued as of January 1st, but that doesn’t mean that sales will be possible on that date.

The fact is that before a grower or retail outlet can even apply for a state license, it must have a local permit, meaning from the city of residence – and cities are still struggling to get ready for the changeover. There are also varying legal views for local governments, and some of these will not allow legalized cannabis activity of any kind, for instance all of Kern County. Two local areas that do expect to be ready are the city of San Diego and Palm Springs, so if you’re looking for a place to be early in January, one of those two might be a good choice.

Off to a Slow Start 

Expect most areas of the state to get off to a fairly slow start in the legalized cannabis business. The state understands that everything will not be in place on Day 1, and has therefore indicated a willingness to tolerate some degree of non-compliance with listed regulations, while various entities work toward compliance, and toward establishing their businesses on a sound footing. For instance, businesses which have applied for licenses but have not yet received them, will not be prohibited from conducting business in the interim.

It is expected that distribution components will not be fully implemented until well into 2018, because all the logistics of getting cannabis from field to testing lab to retail outlet have simply not been worked out yet. In fact, it is very likely that bottlenecks will occur until there is time to evaluate the entire statewide distribution network, and relieve areas of high stress.

A Big Question

One of the biggest questions related to legalization is what will happen to the booming black market for cannabis, when sales become legal in 2018. State officials are optimistic that most of the black market growers and sellers will join in on the legalized industry, but others aren’t so sure. One big hangup to this would be the potential rate of taxation. If the state taxes cannabis sales at a very high rate – and some are talking about 45% – that could be enough to turn off black market entrepreneurs, and cause them to eschew legalization in favor of their own, more lucrative operations.