State regulators recently suspended some 400 Californian marijuana business licenses, for failure to participate in compulsory tracking and tracing system trainings, and weeks later, approximately four per cent of the state’s permits still remain in limbo.
While a vast number of permits remain suspended, the total number has fallen. State licensing data shows that of those 407 permits initially put on hold, 277 are yet to have their status returned to “active.”
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A Bureau for Cannabis Control spokesperson explained that those 277 suspended licenses are made up of businesses either not compliant in using the state’s required tracking system, or out of operation all together.
With this in mind, industry officials don’t expect this batch of suspended permits to cause disruption to the state’s legal cannabis supply chain, as it appears a great number belong to companies who have either cancelled their business ventures all together, or aren’t actively operating anyway. And for those who are operating, it’s easy to get cannabis business permits reinstated quickly.
Current suspensions breakout:
- 164 distributors (16 being transport only)
- 41 delivery services
- 34 microbusinesses
- 28 retailers
- 8 manufacturers
- 2 cultivators
Josh Drayton, communications director for the California Cannabis Industry Association (CCIA), confirmed that in at least twenty-five per cent of cases where permits had been suspended, it was a very swift reinstatement, taking only a half day to return to “active” status.
But industry insiders note that also takes into account a portion businesses not yet operational. When looking at the remaining suspensions, the majority seem to either be getting set up, or cancelled business ventures.
Drayton explained that these permit suspensions will not majorly impact California’s legal marijuana supply chain long-term. But he did note this undertaking demonstrates just how onerous the state’s regulations are for legal cannabis companies.
“There are still quite a few barriers for folks, and right now, with capital investment drying up, it’s going to be difficult for some of these folks to ever get operational, because those investment dollars are just no longer there, the way they were a year ago,” Drayton said.
Regarding the other 277 permit suspensions, Drayton noted many had probably gone unused. This, he said, further indicates just how challenging it is to traverse the cannabis industry in California, and equally so, just how difficult it is for companies to be profitable.
As an example, many farmers and retail shop owners applied for distribution permits last year, believing they could easily sell their own cannabis produce. But with all the regulations, ongoing costs and taxes involved, have since realized it does not make business sense for them to continue down that route.
System Glitches Also Possibly to Blame
One suspended permit belongs to President of the trade group United Cannabis Business Association, Jerred Kiloh, for a Napa retail marijuana shop. He believes his license was suspended in error, so he informed the BCC of the clerical mishap. Kiloh explained he had met all of the state’s requirements and is fully credited for the Metric tracking and tracing system for an additional marijuana shop, called the Higher Path, in Los Angeles.
One obvious outcome from this occurrence, is that with such a large number of unused permits, or cancelled business ventures, business owners are finding it difficult to navigate the state’s regulations, or to make their businesses viable.
With regard to industry impact, insiders seem to believe these license suspensions will have little long-term effect on California’s legal cannabis supply chain. And, for the cannabis companies who have had their business licenses suspended, for the most part, they can have them reinstated pretty quickly once they complete the mandatory tracking system trainings.
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Bureau for Cannabis Control