Marijuana Business Magazine April 2019

Marijuana Business Magazine | April 2019 36 I n March 2017, Los Angeles voters overwhelmingly approved Proposi- tion M, a ballot measure intended to kick-start the legal marijuana industry in the world’s biggest local cannabis market. Two years later, hundreds of entre- preneurs are still waiting for their opportunity to get into the game. Donnie Anderson, co-founder of the California Minority Alliance (CMA), is one of them. As of February, Anderson had paid more than $100,000 for rent on a storefront property where he wants to run a cannabis shop. But at that point, he was still waiting on a business license from the city. Which means he hadn’t been able to legally sell a single gram of flower. Anderson has simply had to watch his bank account dwindle, by $6,000 each month, while he remains unable to legally sell cannabis. “A year and five months, I’ve been paying rent,” Anderson said. “I spent about $165,000 on the building, just getting all my stuff, and that didn’t have anything to do with the rent. So, understand my pain: It’s like I’ve been at the dentist every day getting teeth removed.” As of Feb. 20, the Los Angeles Department of Cannabis Regulation had issued 185 permits to certain leg- acy retailers who had been operating dispensaries since at least 2007, had taken in 571 applications for existing nonretail supply-chain companies, such as growers, and granted approval to just 45 of those. Getting Priced Out Everyone else has been forced to wait, which has meant a lot of local business operators are being priced out of the L.A. market, said Adam Spiker, executive director of the Southern California Coalition (SCC), a cannabis trade group. “Dozens and dozens and dozens” have been stifled by lengthy delays, to the point where they’ve either run out of cash and given up or left L.A. for a different city or county that would give them a permit, Spiker said. Of the SCC’s roughly 300members, Spiker said, about 15% already have business permits of some sort, another 30%or so are waiting on Phase 2 licenses (which just started rolling out in January 2019), and the rest are wait- ing on Phase 3—a licensing window for the general public that had not as of mid-March been scheduled by L.A.’s Department of Cannabis Regulation. “Folks who have been in the industry in L.A. are getting their asses handed to them financially,” Spiker said. “Some of them are going to be able to make it, but a lot of them won’t, because of the delays and because of the lack of enforcement and the uncertainty of the rest of the licenses they need to survive.” Spiker said marijuana businesses hoping to survive in the L.A. market need to budget for up to 18 months of “not making a nickel,” in part because of the wait for licenses but also because the city hasn’t done much yet to eradicate illegal, unli- censed shops that have abounded in L.A. for years. Those same illegal shops are still undercutting legal operators on prices—and, thus, stealing a likely majority of market share in the city. Wait ... Or Leave? “If you can come out of the other end of this—because eventually, enforce- ment will happen and this thing will stabilize—the question is: Can you wait that process out? The only way you can do that is with capital,”Spiker said. The CMA’s Anderson said he knows of at least 20 business operators who have left the City of Angels—including five who migrated to Oklahoma, where they were able to land business permits. “Oklahoma,” Anderson empha- sized, stressing the last two syllables, obviously grappling with the idea that any business owner would find a Bible Belt state more hospitable to a can- nabis company than the Left Coast metropolis of Los Angeles. What the situation is leading up to is a probable cannabis industry in L.A. that is owned and run by outsiders, instead of the people who spent years fighting for the right to engage legally in the marijuana trade. “In Los Angeles—and, I think, in the state—yes, that’s happening,” said Josh Drayton, communications director for the California Cannabis Industry Association. Foreign Interest “I’m getting so many emails from South Africa, the U.K., Germany, Ongoing Chaos in L.A. Trends & Hot Topics | John Schroyer