It’s been a year since cannabis became legal in California, and it’s been a changing and arduous year for the industry. As of last week, the Office of Administrative Law (OAL) has officially approved state regulations for cannabis businesses across the supply chain from cultivation to retail. These new regulations take effect immediately, and this will hopefully mean that the industry can now move ahead as many hoped it would a year ago.
Entrepreneurs in the industry cite new ways to invest, better testing and the continued explosion of CBD products as some of the biggest trends. Still, the industry is fundamentally selling a product that is federally illegal, so the biggest question on everyone’s mind is whether cannabis will be taken off the Schedule 1 drug list. This basically means they’re now listed as drugs with no currently accepted medical use and a high potential for abuse.
With regulations in place and both big and small players focusing on the future, what can everyone expect for 2019? The California cannabis industry should be looking at strong and exciting progress this year, and the state government is looking forward to higher tax revenues than were generated in 2018. With so many unanswered questions for everyone from growers to retailers, the black market was still flourishing last year, and the state’s income was not what they had anticipated, falling some $60 million behind budget projections.
Product testing has been forefront in the slow start for the California cannabis industry. Regulations are finally in place as well as advances in laboratory testing and data analytics to provide consistency in what consumers are purchasing either for medical or recreational purposes. This should allow companies to move ahead with establishing compliance for all products with more assurance that what they’re doing will be acceptable in the long term.
2018 saw an explosion of CBD products, available not only in licensed dispensaries, but also in other retail outlets throughout the state. Many of these products are still not legal in every state in the US, but the acceptance of CBD has opened the doors to expanded usage in 2019.
Like many fledging industries, the business of cannabis started as a grassroots effort. However, the real success of everything from growing to product manufacturing to retailing will go to those entities that can evolve with the changing landscape. For some, that will mean exploding sales and profits, for others it may mean lucrative acquisitions, and to those who have too short a shoestring, they may be replaced by new entrepreneurs throwing their hats in the ring. Regardless of the individual company, 2019 should be an interesting year for the industry.