It's been dubbed the Marijuanapocalypse of 2018. Six months into the advent of legalized recreational cannabis markets, the industry underwent a seismic shift July 1.
When the state issued its new cannabis regulations late last year, they came with stringent testing requirements that demanding that all cannabis products — whether flowers, concentrates or edibles — undergo high-stakes laboratory testing for pesticides and other contaminants. Products that passed would move on to market. Those that failed would have to be destroyed.
But the regulations came with a grace period that allowed dispensaries to sell products purchased before Jan. 1, and before such testing was required, so long as they labeled the products accordingly, until July 1. But by July 1, dispensaries had to get rid of all that untested weed. Many offered clearance-type fire sales — offering discounts of as much as 80 percent — in an effort to clear their shelves. What wasn't sold has to be destroyed and, according to a report in Wired, some estimated $350 million worth of flowers, edibles and concentrates met their premature demise. The Sacramento area alone saw some 8,000 pounds of cannabis products destroyed, Josh Drayton, a spokesperson for the California Cannabis Industry Association, told Wired.
Locally, it seems the impact was muted.
Humboldt Patient Resource Center General Manager Bryan Willkomm said his inventory manager and staff planned well to make sure it sold out of just about all noncompliant products in advance of July 1. Still, when the deadline came, he said the dispensary had one product — sample oral capsules — that didn't meet new labeling requirements and had to be destroyed.
"That was tragic," he said, adding that the destruction meant both lost revenue and wasted medicine.
The destruction process, he said, is thoroughly regulated by the state — requiring three employees to sign off as checks and balances — and must be recorded on video, which must be retained for seven years. "It's ridiculous," he said. "It's like plutonium."
But moving forward, consumers will see some dramatic changes, at least in the short term. Willkomm said manufacturers and distributors are facing bottlenecks at testing and packaging facilities, causing serious delays in getting products onto dispensary shelves. The Bureau of Cannabis Control lists 31 licensed testing laboratories on its website but only 19 are operational, meaning all legal cannabis in the state must now flow through those 19 laboratories.
"There's a decrease in inventory and supply," he said. "We've got items on order but we're waiting for delivery."
For customers, at least for the immediate future, this likely means fewer choices and higher prices.
"It's more about the breadth of products," he said, "and that's something we pride ourselves on, having diverse products lines priced at diverse levels."
But distributors, seeing a temporary decrease in supply in the face of a constant if not growing demand, are marking up their prices. "Your negotiating powers are really reduced when you only have one or two suppliers available," he said.
This is having the largest impact on medical cannabis patients.
"We've already heard frustrations from patients who expect consistency in their medicine because it is medicine," he said.
Essentially, the last six months have been a soft opening for California's regulated cannabis industry. With the new framework in place, industry experts say it will take some time for markets to equalize and for enough testing laboratories to open to ease the bottleneck and for supply to meet demand.
Carlos Gutierrez, a business development officer for San Diego-based Prime Harvest, told Salon.com there is simply no margin for error for anyone in the industry right now, whether it be a grower or manufacturer trying to get products to market, or a dispensary trying to keep its shelves stocked.
"The 'Wild West' days of California's cannabis market official die July 1," he said, "and any cowboys left will be stranded without a horse."
Thadeus Greenson is the Journal's news editor. Reach him at 442-1400, extension 321, or email@example.com. Follow him on Twitter @thadeusgreenson.