Cannabis Compliance Costly for California's Pot Retailers

New marijuana testing regulations went into effect in California on July 1, forcing cannabis dispensary owners across the state to discard of untold amounts of pot.  According to the  Associated Press, the new regulations require cannabis retailers to dispose of any products not tested for pesticides, potency and microbiological contaminants, causing what many referred to as pot “fire sale” on June 30, where retailers sold products that did not meet the state’s testing standards at a very discounted rate.

Fearing the impact on businesses and consumers, the United Cannabis Business Association sent California Governor Jerry Brown a letter requesting that he postpone the new law while the nearly 150 cannabis businesses had time to prepare. The Association argued “that businesses could face nearly $400 million in losses if those unsold supplies are destroyed” according to reports from the Associated Press. They were unsuccessful at swaying the Governor and that may have to do with the fact that businesses have had six months to comply with the testing regulation.

"Forcing the industry into compliance ... will further cripple the already struggling regulated market," the letter from the United Cannabis Business Association said.

However, as the Los Angeles Times reports, cannabis retailers in California have known about the law for months now, and have been slow to submit their product for testing. And now they worry that the new regulations will create a bottleneck, causing marijuana shortages throughout the summer. Cannabis retailers across California claim that too few testing labs may create havoc in the state, though whether or not that is true remains unclear.

In fact, at first, cannabis businesses were told that the testing regulation would launch in January when recreational marijuana sales began in California, with testing labs preparing for the new law back in the fall of 2017. Greg Magdoff, CEO of the San Diego based marijuana testing lab PharmLabs, explained to the Los Angeles Times they prepared for testing in the fall by increasing hirings, among other things.

“We really thought testing was going to begin in January,” he said in an interview with the Los Angeles Times. “We hired drivers up and down the state because we were told that we had to have our own employees pick up the samples.

“We’re ramping up again. It’s long nights and weekends. There’s a lot of stress,” Magdoff added.

In the beginning, the state issued temporary licenses to businesses, giving themselves time to put compliance controls in place while still allowing dispensaries to operate. The California Bureau of Cannabis Control, the agency that regulates the cannabis industry, is not sympathetic to complaints about the testing laws.  

The agency’s spokesperson, Alex Traverso, told the Associated Press that, "[w]e issued our emergency regulations back in November, and at that time we were pretty clear about the fact that there would be a six-month transition period for retailers to use up their existing supply. We felt that was a sufficient amount of time to deplete stock on hand and adapt to California's new rules."

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