An Industry Divided: Battle Lines Drawn as Older, Newer Cannabis Dispensaries Square Off in LA

A civil war is brewing in the Los Angeles medical marijuana community, and nearly every local cannabis-related business will be forced to choose sides this spring.

It’s an important battle: The very future of the single largest MMJ market in the country hangs in the balance, as does the fate of hundreds of dispensaries and an even larger number of support/ancillary companies.

The outcome will likely lead to a more stable environment for medical cannabis businesses in the long run. But it will also cause some damage in the near-term, pitting medical cannabis businesses against each other and further fracturing an already-divided industry.

At issue are competing ideas on how to clean up and regulate LA’s medical marijuana industry. One idea is to allow all 700-plus dispensaries in the city to continue operating and let new centers open going forward. The other is to force dispensaries that opened after a 2007  moratorium to close but allow the 125 or so centers operating before then to remain open.

The battle lines are pretty clear. As one would expect, newer dispensaries support the first proposal, as it would allow them to stay open. But older dispensaries support the other idea, arguing that a measure calling for strict restrictions is more likely to pass. These dispensaries also would of course gain competitive advantages by seeing hundreds of their rivals close.

This will all come to a head in May, when voters weigh in on the issue. There will likely be three proposals on the ballot. One measure would allow all dispensaries to remain open. The other two would force those that opened after 2007 to close, though one – crafted by the city – calls for increased taxes on MMJ sales and the other – crafted by older dispensaries – does not.

However, a group representing the older dispensaries said this week that it would back off its own initiative and lobby for the city’s similar proposal instead, saying the chances of passage are higher if it teams up with local officials. The group’s measure will still appear on the ballot, though, as it’s too late in the process to remove the proposal.

It’s a wise strategy. In the end, this battle will likely come down to which side is more organized in getting out the word about its ordinance. The early edge clearly goes to the older dispensaries at this point.