100 000 000 $ for californias cannabis industry – smoke, mirrors and big numbers

California has just approved 100 Million $ to help the struggeling local cannabis industry

Looking back, every decade is characterized by its trends and this is not different in a culture as versatile as cannabis. While hash from areas of the Middle East that had advanced to legendary status, such as the afghan hindu kush and Lebanon, as well as hand-rubbed charras from India and nepalese temple balls, were still in high demand among european hash connoisseurs in the 1970s This changed in the following decades more into an increased demand for moroccan dry sift hash.

Then the focus of the press and the increasing number of consumers shifted from processed, imported cannabis products to the import of dutch genetics for home growing and ultimately to radically cheap outdoor flowers from Albania and rural to urban indoor plantations. Unfortunately, the size was mostly disproportionate to the lack of knowledge and efforts regarding cultivation, storage and processing. The classification as professional plantations was only made by law enforcement and certainly did not coincide with the high expectations of an experienced grower towards professionality.

“Zurprize in a mylar” – way too many glossy packs

In the past ten years, so-called cali strains have been increasingly offered, traded and celebrated with an unprecedented collecting craze. While at the beginning there were isolated small, personally imported quantities of the coveted, colorful bags, you could quickly get your mylar bag, hopefully originally sealed, without even having to ask for it in the smallest towns for the appropriate money. The flowers and extracts offered set new standards for many in terms of the resin content, the terpene profile offered and the blossom-white appearance of the ash, which the usual commercial cannabis can no longer stand up to.
But the first association many central europeans have with the term “cali weed” is the much higher price, the reason is often not entirely understandable and offers a new opportunity for even bolder scams. The influence of these counterfeit goods on the european and asian cannabis markets, should not be part of this consideration and is therefore ignored for a better understanding.

Quite a few smokers completely renounced their old sources simply out of build up discontent of the poor quality and compensated the increased costs per gram with an adapted, lower consumption. Others, however, only now began to consume more regularly due to the more pleasant taste and reliable effect.

Therefore, the headline might shock many people, who were already convinced that with their collection of cookie seal stickers, they had renovated entire streets and schools or at least supported the local producers and dispensaries from Venice Beach to San Francisco financially. How can the cannabis bred and grown there, be so popular and at the same time cannabis economy is even in the big cities and world-wide known epicentres of the culture more and more in economic danger.

Wird die nächste Generation in einer besseren Zukunft aufwachsen?
Will the next generation grow up into a better tomorrow?

The long way after legalization into a legal state

The main reason that licensing is running so slowly is that most cities and counies do not employ enough staff in the relevant authorities to adequately examine the existing local companies. Companies that have the necessary capital, can afford to hire private experts and proactively submit the required forms when handing in the application, while most companies submit the application with the motive of saving a high position on the waiting list of the completely overloaded state test authorities of the respective administrative district.

This round, melodious sum could already make many skeptical, as it does not look like the result of a negotiation of the usual agricultural subsidies, which are often determined relative to sales and expected tax revenues as a share of a larger budget.

Unfortunately, it was chosen for one purpose in the first place. To sound good, to be easy to remember and to express sheer size. It is supposed to be a signal that California is now sending out into the world. We got it: Cannabis from California has become a global brand, we welcome this development, want to develop the current economic policy further on and see great potential for the future.

In the heated debate about which upcoming steps can strengthen companies most sustainably and to what extent the money is subsequently reinvested, it is only from a distance and from the point of view of the rest of the world, which is still plagued by prohibition, that the current developments even by conservative media houses have not been discussed as a question of health, crime fighting or drug policy, but rather be treated as a purely economic debate.

The admirable thing about this news is that California recognizes its brand and demands the economy accordingly, while in Germany, even the most exemplary cannabis companies, such as hanfnah in Lahr, the winner of the Entrepreneur Award Baden-Württemberg, are harassed and hindered in their growth.

The round sum may sound a little larger than its effect will actually be

And this is not only due to the decreasing value of the US-Dollar. According to California Governor Gavin Newsom, the money is primarily to be used enabling companies with non-permanent business licenses to take on the extremely costly process of obtaining permission to operate a permanently licensed dispensary or production facility.

The invested tax money flows back into the municipalities, but is redistributed in the process.
The fact that the licensing behind forest fires, corruption and the incessant prosecution at the federal level is only one of the problems that the companies that are to be helped are confronted with this must not be lost in mutual pats on the back and amazement at the beautiful, round sum.

Police units in many communities have a tradition of enriching themselves with goods confiscated from raids in order to counter budget cuts, for example in the context of the current demand for “defund the police” and the first pertinent resolutions, with targeted actions.
If instead of an armed cartel, a cannabis company with an expired or questionable license is in the crosshairs, the profits from the confiscation of new cars, state-of-the-art technology and pre-packaged, tradable goods are associated with a significantly lower risk and effort of police use . It is to be hoped that the subsidies will make such measures obsolete in the future and will finally result in a rethinking of the police and the judiciary, as well as an end to this morally highly reprehensible approach.

Focus on the tip of the iceberg – The really big market remains uncertain and invisible

California has long since established itself as the largest cannabis market in the world and has retained its pole position to this day. The entire economic performance of the federal state alone makes it one of the most profitable economic areas in the world and, according to a survey by the World Econonic Forum, is currently in sixth place ahead of India and France and behind Great Britain and Germany.

But when even the world market leader is doing so badly, the only conclusion is that the critical flaws must lie in the system itself. The fact that cannabis products are still incredibly successful as an economic asset certainly does not need to be explained again at this point. Skeptics from outside the industry will be aware of this fact at the latest on the basis of the reports on records on the stock market, which were set by cannabis companies, such as, at times in the business section of many newspapers.

Which aspects will shape the future of cannabis production?

Sustainability threatens to be ignored again

The 100 million that have now been reinvested in the country’s top-selling agricultural product, which is known to have been recognized as the “new billion dollar crop” by Popular Mechanics Magazine  “new billion dollar crop” as early as 1938, can be assessed much better when compared to the billion in tax revenue the the billion in tax revenue that was reached after about two years after legalization in January 2018. In the wake of the pandemic and the devastating forest fires, the total income could still grow at an unchanged rate to $ 1.4 billion. According to Proposition 64, which was successfully resolved in 2016, these were invested in the elimination of environmental damage caused by illegal plantations in addition to educational projects and social housing.

In this context, the actual damage caused by the plants of a guerrilla grow is less often referred to, but above all the improper disposal of waste by the workers, the clearing of protected wild areas and, last but not least, the destruction as part of the police measures when the plantation is discovered. Manufacturing companies continue to tend to dispose of their commercial waste away from the locations of the unlicensed production facilities in order not to attract unnecessary attention, which could be drawn, for example, from repeated, appropriate recycling of the corresponding packaging materials.

Although these measures are intended to benefit nature conservation, environmental groups such as Defenders of Wildlife are right to criticize that they take effect too late. Only retrospectively and corrective rather than preventive. From their point of view, the renewed postponement of the deadline, as well as the announced investments, are nothing but a short-sighted tactic that postpones a complete re-regulation of licensing, while companies that continue to operate illegally, waste resources and dispose of them wildly are not opposed with the long-required determination. These aspects came up primarily when the Californian Senator Anna Caballero submitted the proposal to issue provisional licenses with a term of six years in the future, in order to avoid bureaucracy and, above all, the processing of a long overdue debate and instead choose the path of least resistance.

After the license is before the license

According to widespread fear, even this help comes too late, since many companies that decide to apply for the subsidies are very likely to be too slow to train and hire new test staff, either until 01.01.2022 or until the fourth deadline, on July 1st, 2022. It is unlikely, that a full tax audit, will have been granted, let alone the desireable license for the year that will probably have ended by then.

Companies that continue to apply for an extension of the temporary license, as was the case with 82% of the reported companies according to a federal survey in April, will continue to grow and produce during this time, with new products to determine the direction of the market and thereby themselves generate an advantage over future state-funded companies. The companies that operate without a license also benefit from this compulsory break, chosen by necessity, for a large number of up-and-coming regional competitors. Many of these companies, which currently either want to directly establish products on the market themselves or are merely suppliers to manufacturing companies that are also still struggling for their place in this changeable industry, could therefore find themselves in the predicament of either running out of resources to have to resort to the black market or to turn to the established producers and thus subordinate oneself to the competition for the time being in terms of pricing policy, working methods and product design, which could consolidate the already lacking dynamism of the market.

Does the money get to where it is needed most?

As usual, this cash hits the strongest muscle of the industrial organism: On the one hand, there are companies that have escaped illegality into a more or less regulated market in recent years and already have established product lines were able to position themselves firmly in the market in order to be able to concentrate on saving with state help in the licensing of their subcontractors for specific parts of the market. On the other hand, these companies come exclusively from the well-known boom regions on the same Cali cannabis map and another opportunity was missed to offer smaller communities an additional incentive to start licensing for the first time. Especially since the process itself has not been simplified and democratized as hoped.

While $ 22 million has already been budgeted for the expansion of the necessary administrative apparatus in Los Angeles, it will mainly support places whose names are already inextricably linked to the production of world-class cannabis. First and foremost Long Beach, San Francisco and Oakland.

Furthermore, a distorted image of California persists from a distance. The fully legalized, most populous state, in which in your mind’s eye, between the old hippies in the Golden Gate Park of San Francisco, via the young trimmer on Murder Mountain in Humboldt County in the north, a continuous cloud of smoke and a blanket of hemp leaves of Yosemite National Park, to the metropolises of Los Angeles and San Diego on the border with Mexico.

In the sober factual situation, only a third of the counties and municipalities have made it possible for commercial cannabis companies to open dispensaries, farms and production facilities there.

black market still has, even in a rough estimate, four times the volume of the legal market for commercial cannabis products. Many companies have fallen victim to fraud in the burocracy of their licensing process and are now faced with the choice of discontinuing their business or of being legally prosecuted at the risk of continuing to manage what they have already built up, their customer base and their mother plants to maintain constant care, to maintain cooperation and to participate as comprehensively as possible in innovations on the market.

After a painfully long wait, relocation of company spots and the sad habit of raids and harassment by the DEA, the US Drug Enforcement Administration, they are finally in the best place at the best time to contribute their part to the status of the world market leader and to get back a share of the resulting growth of the industry for it in the foreseeable future.

Such toxic perceptions of their own culture quickly consolidates, including the myth of the survival of the best and the image of the relentless grower and selfless entrepreneur who is expected to work as a socio-political activist alongside his job. As if everyone with a clear mind, a vision and decades down this career path, doesn’t see the slightest reason to stop now. All of this is done in the once silent and now louder and more desperate hope that the licensing process will be made more accessible in order to get fair opportunities to participate in building the world’s top-selling cannabis industry.

Finally we can summarize:

California will support corporate projects that want to switch from temporary, to permanent licenses in order to promote stronger brands from their own state. This is no coincidence, as the local cannabis market appears to be superior to any international competition in many aspects. Small companies were supposed to be supported with the money, but now they have to expect the greatest complications and have to face disproportionately higher risks on their way to legality, six years after winning the battle for Proposition 64, due to the failure on the state and federal level.

The 100 million, which at first seemed to look like an oversized stream of money, now seem to have shrunk to almost to the image of a coffe cup against a forest fire. Outside the big cities, they are probably not enough ressources left to set up a sufficient number of authorities at the next critical point in summer 2022.

We hope that the state of California, in addition to its fixation on economic aspects, will now also focus its political efforts and on sustainability. In addition to the deficits in the environmental protection regulations, economic and cultural sustainability is also to be considered, which enables a fair distribution of the market shares among actually equal competitors, in which neither party can create particular advantages by circumventing individual rules.

(1) Article by conservative news outlet FOX reporting about cannabis without judgement