Although cannabis is legal throughout the State, access to cannabis varies depending on location in California. Due to differing cannabis laws in California cities, the State has developed cannabis hot spots, or areas where cannabis businesses are plentiful, and deserts where legal cannabis businesses are prohibited or limited.
The Control, Regulate, and Tax Adult Use of Marijuana Act, otherwise known as “Prop 64,” was enacted in California on November 9, 2016. Proposition 64 legalized specified personal use and cultivation of cannabis for adults 21 years of age or older; reduced criminal penalties for specified cannabis-related offenses for adults and juveniles; and authorized resentencing or dismissal and sealing of prior, eligible cannabis-related convictions. The proposition also includes provisions on regulating, licensing, and taxing cannabis businesses and sales.
Prop 64 replaced Proposition 215, known as the Compassionate Use Act of 1996, which set the basis for the Medical Cannabis Market in California for two decades. The regulations, taxes, and framework for licensing under Prop 215 were broad and allowed the market to operate without many restrictions or fees from the State or locality. Counties and cities did not dive into the affairs of these cash-only businesses, as they operated in an uncharted zone of legality.
Cannabis Deserts in California
Since Prop 64 was passed in California in 2018, it has been up to the respective cities and counties to create a set of guidelines for their recreational cannabis markets. In many cases, these guidelines must strike a balance between pioneering a new market that values transparency and testing and preserving the culture and knowledge of the successful medical market. Although the legal cannabis market has made large strides in recent years, the black market continues to thrive in pockets of California. In 2019, it was estimated that there were three times as many black market cannabis sellers as there were licensed cannabis businesses.
The lack of uniformity in cannabis regulations across California has led to legal cannabis hot spots and cannabis deserts. Areas like Palm Springs and San Francisco have robust legal cannabis markets that rapidly replaced existing medical markets. Other areas like Orange County have had little success with the legal market due to increasing black market store fronts and limited recreational licenses given. This past year has seen many of these California cannabis deserts take steps toward increasing licensing and access to cannabis.
Orange County
On November 3, 2020, voters approved the “City of Costa Mesa Retail Cannabis Tax and Regulation” measure, also known as “Measure Q.” This allowed Costa Mesa to become the second city in Orange County to allow recreational cannabis storefronts after the City of Santa Ana. In April 2021, Costa Mesa passed an ordinance that set the guidelines for cannabis sales and delivery in the area. In coordination with this ordinance being passed, the Costa Mesa Police Department shut down fifteen illegal operators to date with plans to decommission the other fourteen known illegal storefronts in the City.
Fresno
Fresno currently has no legal cannabis or medical marijuana dispensaries, but recently held an application round to begin licensing cannabis businesses. The original allowance of up to fourteen dispensaries in Fresno was recently increased to permit 21 cannabis dispensaries. The City is not opening another application round, but will be awarding the licenses to qualified applicants in the initial application round. Even if Fresno licenses all 21 dispensaries, it will still have fewer licensed retailers than other cities of comparable size.
Chula Vista
In November 2020, the first legal cannabis retailer opened in the City of Chula Vista, with eleven more stores expected to open within the next year. Although the City had been a legal cannabis desert, illicit cannabis businesses were common. Chula Vista had been known for harboring illegal storefronts that were popular in the greater San Diego area. Leading up to the opening of legal retailers, the City instituted a series of raids to rid the area of illegal operators. With legal cannabis storefronts now available in Chula Vista, residents now have access to cannabis throughout the City.
Future of California Cannabis Deserts
Many previously considered cannabis deserts have also begun taking steps to increase access to cannabis. Multiple California cities have recently opted to regulate and license cannabis businesses, including Corona, Encinitas, and Burlingame, among others. Due to the recent passage of cannabis legislation and expanding cannabis access, it is likely that California cannabis deserts will become more rare in the near future.
How can Sapphire Risk help?
Tony Gallo and the team at Sapphire Risk Advisory Group has over 30 years of security experience and expertise. We have written hundreds of security plans for California cannabis business applications. Follow us on social media to stay up to date with California cannabis industry updates!
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