CVIndependent

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Last updateTue, 18 Sep 2018 1pm

Cannabis, while legal, is heavily regulated in the state of California—as is cannabis advertising.

According to the state’s Bureau of Cannabis Control code, any advertising done for cannabis must be to an audience that is at least 71.6 percent 21 or older—and this presents several problems.

First, many advertisers don’t know that this rule exists. Second, advertisers often have no way to confirm the ages of the people who see their ads.

“If a cannabis company advertises in a publication or online and cannot verify that (the audiences) meet the age-safety quota set forth by the BCC, the advertiser is at risk of losing their state license,” said Joan Irvine, co-founder and CEO of ResponsiTech, which helps businesses with youth safety and risk mitigation in cannabis advertising.

Because the industry is in flux and is so new, it’s understandable that these regulations are unfamiliar to many—but it’s important that people understand the seriousness of the matter, since the buck literally stops at the feet of the advertiser, and not the ad agency or publication.

So … how can cannabis companies make sure their advertisements are complying with the law? Irvine recommends taking a close look at applications such as Buoyancy Digital, which allows advertisers to use parental controls and other features that ensure they meet the BCC regulations. For example, Buoyancy Digital requires those coming to a website to verify their birth date.

“There is one easy way of checking, but it is a catch-22, because many people are not aware that there is an age gate they must use that uses data so that parents implementing parental-control settings can ensure their children will be blocked from age-inappropriate sites,” Irvine said. “This requires cooperation between the industry and parents, to ensure everyone is protected.”

She recommends cannabis advertisers do their homework and find a qualified ad agency and/or advertise with publications or sources that practice responsible cannabis-ad practices. She also says advertisers should check publications and other media sources to make sure they meet the audience criteria, and verify as much as possible that the audience is 21 and older.

Annette Said, owner of A|S marketing in La Quinta, works with several cannabis clients, and notes that cannabis advertisers face challenges beyond state regulations. Most social media, for example, prohibit the advertising of cannabis, meaning cannabis retailers must come up with work-arounds—by doing branding and promoting third-party brands or a lifestyle.

“Facebook does not allow promotion of cannabis in their search algorithms, but they are slowly opening up as the industry self corrects and rids itself of illegal cannabis business and advertising,” noted Said.

It is important for cannabis advertisers in the Coachella Valley and throughout the state to be aware of all of these rules and regulations—and to never assume anything. Retailers must fully understand where they are advertising, and who their audiences are, to ensure they don’t risk losing their state license.

Robin Goins is a business consultant for DR.G Consulting and works extensively in the cannabis industry in the Coachella Valley. For more information, visit www.drrobingoins.com.

Published in Cannabis in the CV

On July 13, California’s three state cannabis-licensing authorities—the Bureau of Cannabis Control, the California Department of Food and Agriculture, and the California Department of Public Health—announced the publication of proposed “non-emergency” regulations that would replace the rules under which the state’s marijuana industry has been operating.

Voters passed Proposition 64 in November 2016, legalizing the sale and use of recreational cannabis in California as of Jan. 1, 2018—meaning there was only a little more than a year to create an entire state agency, licensing guidelines and regulatory processes.

Given the size of this task—and the size of this state—it’s no surprise that California has gotten off to a bumpy start. High taxes, both on the state and local level, are a major problem. In Washington, Oregon and Colorado, marijuana consumers saw a drop in the price of cannabis for the recreational user as soon as the supply chain was able to catch up to demand—so much so, in fact, that the black and gray markets were largely put out of business.

In California, this has not been the case. Because of both the incredibly high taxes on legal weed and the big production costs California’s state regulations have created, legal marijuana has remained expensive—so the illegal cannabis market has been able to maintain lower prices and, therefore, flourish. Non-licensed retailers have also thrived, providing customers with much lower prices than the licensed competition. (In some parts of the state, I have heard of regulators not realizing that a shop is unlicensed until they asked to see permits.) On the Bureau of Cannabis Control’s own Facebook page, the day the new regulations were announced, people were bragging and/or complaining that they have returned to the black market. 

Medical-marijuana patients are also suffering under these taxes, and many have had to return to the illegal market in order afford the medicine they need to control their very serious medical issues. Small growers who have been in the cannabis industry for decades have suffered and been driven out of business because of the onerous regulations placed on them—and as of July 1, a number of dispensaries were stuck with inventory that was all of a sudden illegal for them to sell, because it did not meet state standards.

Thankfully, it seems like Lori Ajax, the chief of the California Bureau of Cannabis Control (BCC), recognizes that there have been problems, and she seems to be interested in fixing them. The proposed regulations, which can be viewed here, are now open to a 45-day public-comment period. State law stipulates that the non-emergency regulations must be in place by the end of the year.

I find some portions of the new regulations to be very encouraging. I am still in the process of digesting the information that the BCC wants to be able to award research funding. One of my biggest beefs with the medical-cannabis industry is its promotion of cannabis as a cure-all for many ailments, when there are so few peer-reviewed studies regarding the medical benefits of marijuana. This is not necessarily the industry’s fault—federal law has essentially prohibited the use of marijuana for all purposes, including scientific ones—so the state’s possible foray into scientific research funding is a step in the right direction.

The new regulations also get rid of the necessity for establishments to have two sets of licenses; as of now, dispensaries need one for medical marijuana, and one for recreational adult use. With only a few differences in the requirements, it seems unnecessary to require businesses to apply for two types of licenses to sell the same product.

I also find the proposed codification of enforcement to be encouraging. Under the emergency regulations, there was no significant list of grounds for disciplinary action, meaning each licensing authority had the ability to discipline on a case-by-case basis—a system that is open to abuses. The proposed regulations will create a framework for licensing authorities to use when initiating or undertaking enforcement.

Unfortunately, the BCC is proposing to keep in place its requirements around packaging. Retailers would still not be able to package product onsite, and would still be required to place cannabis products in a resealable child-resistant opaque package before customers leave the store. This requirement has always seemed rather ridiculous: If the goal is to protect children, why do we not see these same sorts of requirements around tobacco and liquor? Given California’s push for a greener future, adding a new type of plastic waste feels counterproductive.

While I believe the Legislature still needs to step in to make some legal changes to ensure California’s cannabis industry—particularly small and minority-owned businesses—can thrive, these new regulations are a start.

Any interested party is encouraged to participate in the public-comment process—although consider yourself warned that reading through the proposed rule changes is not an easy process. (The Initial Statement of Reasons from the BCC is 567 pages long!) Comments on the proposed regulations are being accepted in both writing (via email or snail mail) and at public hearings throughout the state, comments cannot be made by phone. The closest hearings will be held in Los Angeles and Riverside (find a list here), so written comments may be a Coachella Valley resident’s best bet. Regarding BCC regulations, comments can be sent to This email address is being protected from spambots. You need JavaScript enabled to view it.; in the subject line, type in the subject of the proposed regulation to which the comments apply. You can make your comment either in the body of the email or as an attached document. Physical mail can be sent to: Lori Ajax, Chief, Bureau of Cannabis Control, P.O. Box 419106, Rancho Cordova, CA, 95741. All information submitted becomes public information—so don’t include anything you want to remain confidential.

Published in Cannabis in the CV

Legalizing marijuana, California voters were told last year, would create a “safe, legal and comprehensive system” allowing adults to consume the drug while keeping it out of the hands of children.

Marijuana would be sold in highly regulated stores, the Proposition 64 campaign promised, and California would gain new tax revenue by bringing the cannabis marketplace “out into the open.”

Voters overwhelmingly bought the message, with 57 percent approving Proposition 64. But as state regulators prepare to begin offering licenses to marijuana businesses on Jan. 1, it turns out that a huge portion of the state’s weed is likely to remain on the black market.

That’s because California grows a lot more pot than its residents consume, and Prop 64 only makes marijuana legal within the state’s borders. It also didn’t give an automatic seal of approval to every cannabis grower: Those who want to sell legally must be licensed by the state and comply with detailed rules that require testing plants, labeling packages and tracking marijuana as it moves from farm to bong.

Exactly how much cannabis circulates in California is unknown, because most marijuana grows—and purchases—have been illegal for so long. But economists hired by the state government estimate that California farms produce about 13.5 million pounds of cannabis each year, while state residents annually consume about 2.5 million pounds. That leaves 11 million pounds of pot that likely flows out of California illegally, according to the economic report commissioned by the California Department of Food and Agriculture, which regulates cannabis farmers. Other analyses have similarly found that roughly 80 percent of California-grown marijuana leaves the state.

Even the 2.5 million pounds of marijuana consumed within California won’t all be purchased through state-sanctioned shops when they open; the economists predict about half of it will probably be sold illegally.

“Those sales opportunities will still be there,” said Hezekiah Allen, executive director of the California Growers Association, which represents more than 1,000 marijuana businesses in the state.

Allen surveyed his members recently and found that 85 percent hope to get a license to sell marijuana legally under Prop 64. But many fear they won’t be able to, because some local governments limit or ban pot businesses, and because prices could drop too low in the regulated market. If they can’t sell weed legally, 40 percent of the respondents to Allen’s survey said they would continue operating the way they always have: on the black market.

Some long-time cannabis growers will likely go out of business, Allen said. But, “at the end of the day, a lot of businesses in general may stay outside of the regulated market.”

That means that despite the passage of Prop 64, California cops will still have plenty of work going after illicit cannabis operations.

“You’re going to see robust enforcement efforts to prevent California from becoming the staging area for drug trafficking nationwide,” said John Lovell, a lobbyist for the California Narcotics Officers Association, which opposed the ballot measure.

A spokesman for the Prop 64 campaign said the measure wasn’t intended to abolish all criminalization of marijuana, but instead to allow opportunities for “operators who want to be responsible and compliant.”

“No one ever promised to completely eliminate the black market—that’s like promising security cameras will completely eliminate shoplifting—but it will be significantly reduced,” spokesman Jason Kinney said by email.

He added that the state’s estimates of marijuana supply and demand are unreliable, because the legal marketplace created by Prop 64 won’t begin to roll out until next year. And he pointed out that some of the tax dollars generated by legal marijuana sales will go toward cracking down on illicit operations.

State officials said they are encouraging marijuana businesses to follow the rules and become part of the regulated system, while also planning how to go after those that remain in the black market.

“We are developing a formal complaint system that will allow anyone to report illegal grows or other concerns, and then we will forward those potential issues to the appropriate (law enforcement) agencies,” said Rebecca Forée, a spokeswoman for the state’s cannabis cultivation licensing office within the Department of Food and Agriculture.

Lori Ajax, chief of the state’s Bureau of Cannabis Control, said her agency is trying to entice marijuana businesses to go legit by crafting rules that aren’t too difficult for them to live by.

“It’s making sure that for those people who want to be in the regulated market … we have made a path for them; we’re not making our regulations so difficult and hard to comply with that you’re discouraging people,” Ajax said.

“First, we’ve got to get those folks in there and … then see what comes after that with enforcement.”

CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics. For more analysis by Laurel Rosenhall, go to calmatters.org/articles/category/california/politics.

Published in Cannabis in the CV