Cannabis regulators may loosen California rules to help struggling industry

SACRAMENTO —  With California’s licensed pot shops still struggling to compete with the illicit market and facing the new challenges of COVID-19, a state panel that advises regulators on cannabis sales recommended Wednesday that several restrictions be relaxed to give legal businesses a better shot.

The state Cannabis Advisory Committee recommended changes that included lifting the $5,000 limit on the amount of pot that can be carried by delivery vans, making it easier for small businesses to sell different products and eventually allowing food and beverages to be served in cannabis lounges. The panel included the proposals in its annual report, which it approved Wednesday.

“The state has faced unprecedented circumstances in 2020: the global COVID-19 pandemic and resulting recession, a record breaking wildfire season, and the nationwide fight for racial justice and equality,” the 17-member panel said in the report.

California voters approved state licensing of growing, distributing and selling cannabis in 2016 when they approved Proposition 64, but the legal market has not lived up to expectations.

State officials originally predicted the initiative would result in 6,000 retail stores selling marijuana for recreational and medical use under state license in California, but currently there are just 715 pot shops and 314 state-approved delivery firms.

The industry has said it has not grown as expected because of high taxes, strict regulations and the fact that 80% of California’s cities do not permit the retail sale of cannabis for recreational use.

When the state issued a stay-at-home order in March to reduce the spread of COVID-19, it deemed cannabis an “essential” industry, which has allowed marijuana shops to stay open but with social distancing requirements that have forced many to move largely to curbside pickup.

The committee, which is made up of representatives of the cannabis industry, law enforcement, public health experts and city and state agencies, held public hearings throughout the year and made 17 recommendations for improving the legal market that will be considered by Gov. Gavin Newsom’s administration.

“The Administration has made clear that we are committed to assessing our framework and making improvements and adjustments when warranted,” said Nicole Elliott, the governor’s senior advisor on cannabis, in a statement Wednesday. “To this end, we will carefully consider any recommendations the Committee sends our way, and we are grateful for their work.”

The panel, which advises the state Bureau of Cannabis Control, said that the decision of many cities not to allow pot shops within their jurisdictions has created cannabis deserts where delivery is in high demand.

Current rules limit delivery vans to carrying no more than $5,000 in product with the aim of minimizing the possibility of robberies. In recommending the limit be lifted, the committee said the industry has complained that the rule “has posed challenges to licensed retail delivery businesses seeking to provide cannabis to areas where legal store-front retail sales are not currently available.”

The recommendation, which does not include a set amount for the new limit, is supported by Lindsay Robinson, executive director of the California Cannabis Industry Assn.

“As we have seen delivery become a preferred method for safe purchase by consumers, we support the recommendation to increase the delivery threshold which will provide safe access to more Californians,” Robinson said in a statement.

The committee also saw value in allowing businesses that are licensed by the state to serve cannabis onsite to also serve food not infused with cannabis and non-alcoholic beverages for consumption, as long as it is allowed by local ordinances.

The change statewide was recommended following the opening of cannabis cafes in West Hollywood and other cities that offer restaurant fare and the opportunity to smoke marijuana in the dining room.

Other recommendations include:

• Expanding authorized activities under microbusiness licenses to include processing of cannabis products, and allowing them to conduct sales at licensed events
  
• Eliminating a requirement that different activities at a microbusiness be separated by walls or barriers
  
• Lifting a restriction that testing laboratories can only test cannabis products
  
• Permitting samples to be provided to retailers
  
• Allowing firms holding multiple cultivation licenses to share propagation and processing areas
  
• Giving more time to report tracking data on products in the event of natural disasters, power outages or other loss of computer connectivity or technology failure

Opponents of pot legalization, including Scott Chipman, vice president of Americans Against Legalizing Marijuana, claimed that the recommendations to the state Bureau of Cannabis Control are skewed to allow more sales instead of protecting public health.

“Recent recommendations continue to chip away at any semblance of protections to the public,” Chipman said. “The BCC has no real incentive to protect the public. It is an agency that serves the pot industry.”

The committee also recommended some expanded testing of pot products and it asked that the president of the University of California convene an expert scientific task force to review scientific literature on the increasingly high potency tetrahydrocannabinol, or THC, content of cannabis, including its potential effect on health and drugged driving.