Robert Celt
New Member
California's new medical marijuana regulations could double the cost of pot and crash the legal system, says the founder of the state's largest dispensary, Harborside Health Center, Stephen DeAngelo. The rules needlessly complicate the state's supply chain to enrich union distributors at the expense of cancer-stricken patients, DeAngelo argues below.
Last session, California's legislature finally did what the voters instructed them to do when they passed Proposition 215 almost twenty years ago: regulate the cultivation and distribution of medical cannabis.
Unfortunately, the bill that was ultimately passed in a last-minute midnight session – the Medical Marijuana Regulation and Safety Act (MMRSA) – contains serious flaws. If those flaws are not corrected, the retail price of medical cannabis will double or triple –and California's legal cannabis industry could collapse, along with all the public health and safety benefits, jobs and tax revenue it provides.
A more complicated, expensive supply chain
The key issue is a completely novel, experimental regulatory approach: the introduction of a mandatory distributor level into the supply chain. Today, growers bring their cannabis directly to a dispensary, an extract maker, or a manufacturer–one step in the supply chain. The extract maker or manufacturer, if one is used, will then bring the finished product to the dispensary–two steps in the supply chain. Some products have a slightly longer supply chain, passing from grower to extractor to manufacturer to dispensary–three steps in the supply chain.
I have spoken directly with distribution companies, and they plan to charge a 15%-35% fee to manage each step. Assuming a median distributor fee of 25% per step, this would equate to a minimum 50% increase in the retail price of raw cannabis flowers that require one step (retailers must keystone – double – their total wholesale cost to have a viable margin). This increase will be multiplied for manufactured products that require distributors to manage more than one step in the supply chain (extracts, edibles, beverages, vape pens, skin patches, tinctures etc.). A product that requires three steps could triple in price–and demand for these more sophisticated products is surging.
In the short term, this price increase will immediately and unfairly impact patients, many of whom are already suffering severe financial distress due to their illnesses. In the medium term, substantial and widespread retail price increases will encourage patients to return to the lower prices of the unregulated market, which will decrease tax revenue and employment. In the slightly longer term, the kind of price increases that can be reasonably projected threaten to sink the entire regulated system, in exactly the same way an excessive cannabis tax almost did in Washington State–patients will turn to the illicit market before they endure 50%-200% price increases.
The mandatory distributor requirement has been promoted as a protection for small growers, but the overwhelming majority of those growers are opposed to it. The requirement will block them from directly accessing the market via farm-to-table, farmer's market, bud 'n breakfast, and weed ranch business models. They will become dependent on a limited number of distributors to ensure their products find buyers and are allocated favorable shelf space, and those distributors will favor larger growers who can afford to invest in branding and marketing, and have the ability to fill larger orders.
In fact, the mandatory distributor idea did not spring from any inherent need of the medical cannabis community–it was cooked up by special interests including the alcohol lobby and the Teamsters, who wielded their political influence with California's legislature and executive branch to get it passed in the dead of night. It's a power play by forces from outside the cannabis community that have never lifted a finger to help medical marijuana patients suffering under these unjust laws.
They're attempting to parachute in and extract something like half the value of the state's entire medical cannabis supply, even if it means doubling the cost of this vital medicine to patients, just so they can go from rich to even richer. The worst part is that these players, who are operating out of blind greed, don't understand that since there's a parallel, unregulated underground market for cannabis, their avarice is going to collapse the very market they're trying to hone in on.
The proper role of government is to create a level playing field for competition, not to pick winners and losers in the market place. The distributor requirement will prevent the free market from doing its job of sorting out the most effective and efficient business models and organizations, and distort the organic development of the legal cannabis industry. Patients will pay with extremely high prices; employees and tax revenues will suffer from sales shifting to the unregulated market; and the entire system might well collapse–as state directed command economies are prone to do.
It's not too late to fix MMRSA. If you care about medical cannabis and the patients who use it, please contact your elected representatives today.
News Moderator: Robert Celt 420 MAGAZINE ®
Full Article: New Pot Rules Will Double Prices, Crash California System
Author: Smell The Truth Staff
Contact: SF Gate
Photo Credit: David Downs
Website: SF Gate
Last session, California's legislature finally did what the voters instructed them to do when they passed Proposition 215 almost twenty years ago: regulate the cultivation and distribution of medical cannabis.
Unfortunately, the bill that was ultimately passed in a last-minute midnight session – the Medical Marijuana Regulation and Safety Act (MMRSA) – contains serious flaws. If those flaws are not corrected, the retail price of medical cannabis will double or triple –and California's legal cannabis industry could collapse, along with all the public health and safety benefits, jobs and tax revenue it provides.
A more complicated, expensive supply chain
The key issue is a completely novel, experimental regulatory approach: the introduction of a mandatory distributor level into the supply chain. Today, growers bring their cannabis directly to a dispensary, an extract maker, or a manufacturer–one step in the supply chain. The extract maker or manufacturer, if one is used, will then bring the finished product to the dispensary–two steps in the supply chain. Some products have a slightly longer supply chain, passing from grower to extractor to manufacturer to dispensary–three steps in the supply chain.
I have spoken directly with distribution companies, and they plan to charge a 15%-35% fee to manage each step. Assuming a median distributor fee of 25% per step, this would equate to a minimum 50% increase in the retail price of raw cannabis flowers that require one step (retailers must keystone – double – their total wholesale cost to have a viable margin). This increase will be multiplied for manufactured products that require distributors to manage more than one step in the supply chain (extracts, edibles, beverages, vape pens, skin patches, tinctures etc.). A product that requires three steps could triple in price–and demand for these more sophisticated products is surging.
In the short term, this price increase will immediately and unfairly impact patients, many of whom are already suffering severe financial distress due to their illnesses. In the medium term, substantial and widespread retail price increases will encourage patients to return to the lower prices of the unregulated market, which will decrease tax revenue and employment. In the slightly longer term, the kind of price increases that can be reasonably projected threaten to sink the entire regulated system, in exactly the same way an excessive cannabis tax almost did in Washington State–patients will turn to the illicit market before they endure 50%-200% price increases.
The mandatory distributor requirement has been promoted as a protection for small growers, but the overwhelming majority of those growers are opposed to it. The requirement will block them from directly accessing the market via farm-to-table, farmer's market, bud 'n breakfast, and weed ranch business models. They will become dependent on a limited number of distributors to ensure their products find buyers and are allocated favorable shelf space, and those distributors will favor larger growers who can afford to invest in branding and marketing, and have the ability to fill larger orders.
In fact, the mandatory distributor idea did not spring from any inherent need of the medical cannabis community–it was cooked up by special interests including the alcohol lobby and the Teamsters, who wielded their political influence with California's legislature and executive branch to get it passed in the dead of night. It's a power play by forces from outside the cannabis community that have never lifted a finger to help medical marijuana patients suffering under these unjust laws.
They're attempting to parachute in and extract something like half the value of the state's entire medical cannabis supply, even if it means doubling the cost of this vital medicine to patients, just so they can go from rich to even richer. The worst part is that these players, who are operating out of blind greed, don't understand that since there's a parallel, unregulated underground market for cannabis, their avarice is going to collapse the very market they're trying to hone in on.
The proper role of government is to create a level playing field for competition, not to pick winners and losers in the market place. The distributor requirement will prevent the free market from doing its job of sorting out the most effective and efficient business models and organizations, and distort the organic development of the legal cannabis industry. Patients will pay with extremely high prices; employees and tax revenues will suffer from sales shifting to the unregulated market; and the entire system might well collapse–as state directed command economies are prone to do.
It's not too late to fix MMRSA. If you care about medical cannabis and the patients who use it, please contact your elected representatives today.
News Moderator: Robert Celt 420 MAGAZINE ®
Full Article: New Pot Rules Will Double Prices, Crash California System
Author: Smell The Truth Staff
Contact: SF Gate
Photo Credit: David Downs
Website: SF Gate
