Almost 1,000 California Cannabis Businesses Could Be Forced To Close

Almost 1,000 California cannabis businesses could be forced to close after receiving warnings from state regulators. The state’s Bureau of Cannabis Control (BCC) has sent cease and desist letters or emails to 954 firms as of April 4, according to media reports. That number is up from the more than 500 threats of action from the BCC reported just over a month ago.

California’s legal marijuana economy began on January 1 of this year after voters passed Prop 64 in 2016. The state subsequently formed the BCC to regulate all cannabis businesses in the state. All commercial cannabis companies must obtain a license from the state in order to operate legally.

Warnings Sent to Firms Up and Down the Golden State

Most of the warnings sent by the BCC, nearly 400, went to firms in the Los Angeles area. Of the entities with a listed address, 64 percent were from the LA metropolitan area. Almost 100 more went to the San Francisco Bay Area.

Alex Traverso is a spokesman for the BCC. He told local media that the bureau sent most of the warnings to cannabis retailers and delivery services. He also said the letters and subsequent follow-up seem to be effective.

“There’s been a pretty decent amount of activity surrounding the letters,” Traverso said. “Not just the letter, but us following up on the letter to make sure they got the letter and to look at next steps.”

“It’s slow going, but so far, we’re relatively encouraged by the number of people who received the letter and said, `OK, I’m going to get my application in,”‘ he added.

But it’s possible the state may already be getting ahead of itself. The BCC has sent at least some of the letters to firms that already have licenses. Others are currently navigating the regulatory process.

Zach Pitts owns a cannabis delivery service in LA called Goddess Delivers and is the president of the California Cannabis Delivery Alliance. His company received one of the warnings from the BCC. He told reporters that a lengthy application process means that firms trying to comply are feeling the squeeze.

“It is this issue we’re running up against,” Pitts said, “where there are a lot of people in the process of getting licensed and then there are a lot of people who, through no fault of their own, licensing is just delayed. It’s been pretty much constant delays for L.A. delivery services.”

Final Hit: Almost 1,000 California Cannabis Businesses Could Be Forced To Close

Traverso of the BCC said the bureau is hopeful that most companies that received warnings will comply.

“We’re hopeful that those people are moving in the right direction and getting their ducks in a row and hopefully getting their state license,” he said.

But he also acknowledged that some firms will need more forceful action in order to get the message. The BCC has not yet decided how and when to begin more stringent enforcement.

“We know we need to get out there and make that next step,” said Traverso. “Because that’s the way people are going to say, `The state’s going to crack down if you don’t get a license.”‘