The early lines at newly-licensed California cannabis retail outlets are just a preview of the vast economic opportunities available in the Golden State. However, in California, which led our recent cannabis revolution by voting to legalize medical use back in 1996, not everything will be rainbows and sunshine as regulatory hurdles remain. Attorney General Jeff Sessions’ decision to rescind Obama’s Cole Memo makes compliance with state and local regulations even more important as violations can be an excuse for federal prosecutions.

Newsweek describes some of the issues facing the industry:

Even though California has officially legalized, not every city is selling, and there are many questions about day-to-day use left unanswered. Cities had to decide on their own restrictions for the drug—operating hours for dispensaries, security measures, how close dispensaries could be to schools or public areas, for example. Most people can only smoke in the privacy of their own homes under the new law, and not in public parks or in public buildings, and there’s lingering confusion about how police officers will enforce restrictions on driving under the influence.

Fox describes the status of the state’s cannabis tracking system:

But recreational cannabis sales began this week without the computer system in use for pot businesses. Instead, they are being asked to document sales and transfers of pot manually, using paper invoices or shipping manifests. That raises the potential that an unknown amount of weed will continue slipping into the illicit market, as it has for years.

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The state Department of Food and Agriculture, which is overseeing the tracking system, said in a statement it was “implemented” Tuesday. However, it conceded that growers and sellers are not required to use it yet and training on how to input data will be necessary before it becomes mandatory, apparently later in the year.

Debby Goldsberry, Executive Director of Magnolia Wellness, has firsthand experience complying with the initial California regulations placed upon retail outlets, securing a state license to start serving all adults over 21 on New Year’s Day. Goldsberry, the author of Starting and Running a Marijuana Business, is a longtime activist with more than 25 years of industry experience. I have long looked up to Ms. Goldsberry for her pioneering accomplishments and I’m proud to call her a friend. Debby will be leading a panel on cannabis compliance at the upcoming International Cannabis Business Conference in San Francisco on February 1st and 2nd, and she took some time to answer a few questions I had about her experience thus far with legalization regulations in the Golden State:

“What has it been like complying with the initial licensing requirements for Magnolia?”
Debby Goldsberry: It has been costly, time-consuming, and ridiculously burdensome to meet the requirements of the new regulations. We are rightly concerned that the supply of cannabis available to dispensaries will dry up fast, as most of our suppliers are going out of business on January 1. It’s a shocking new reality for us all.
“What do you think will be most challenging for your business, or other businesses in general, when it comes to complying with California’s upcoming regulations?
Goldsberry: We expect to be competing with the underground cannabis market all throughout 2018. Due to the difficulty in getting permits and cost of complying with the new regulations, cannabis will be cheaper and more available through unlicensed providers.
“What are some changes that you would like to see to ease the regulatory burden placed on businesses?”
Goldsberry: Lowered excise taxes is the most important need, beside an equity process to help small businesses get permitted.
“How are you planning on dealing with compliance issues after January 1st? Will you handle it, or will you have to hire a full-time staffer, or train a staffer to have compliance as part of his or her job description?”
Goldsberry: Each and every staff member at Magnolia will have a role in compliance, from security to sales. Our finance and inventory management team will bear the brunt of responsibility for compliance, along with myself, Magnolia’s Executive Director, and our GM, Katie Rabinowitz. Katie and I are supervising the entire compliance plan, making new standard operating procedures and making sure they are implemented.
As we all fight to end cannabis prohibition, the success of California’s experience will be extremely important. To succeed in California, all businesses will need to work hard to comply with state and local regulations while effectively lobbying to ensure that the regulations adapt to the needs of the industry, patients, and consumers. With activists and entrepreneurs with Debby Goldsberry helping lead the way, I’m confident that the future of California cannabis is extremely bright, in spite of the best efforts of Jeff Sessions.