California cannabis dispensaries are having blow-out sales in preparation for new state regulations that take effect July 1. The retailers are clearing their shelves of items that do not comply with testing, labeling, packaging, and other requirements. Businesses must destroy any product not in compliance with Bureau of Cannabis Control (BCC) regulations remaining on Sunday. Some shops are already offering discounts as steep as 75 percent on some items.
Cathy Bliss is the marketing director for Mankind Cooperative, a medicinal and recreational dispensary in San Diego. She told High Times that her store has a sale display to clear out non-compliant product. Markdowns started at 35 percent off, and prices will go lower as July 1 approaches. Bliss said that most of the sale merchandise does not comply with new packaging rules. Regulations that are going into effect require child-proof, opaque, and tamper-evident packages. She said that the dispensary identified product to liquidate and began sales early. Plenty of good deals remain, but some of the most popular items have disappeared.
“We knew the regulations would be changing, so we did have some sales on some amazing product for quite awhile, that we’ve now already sold out of.”
Bliss also said that her company even added a new position to prepare for regulation.
“At Mankind, we hired a compliance officer,” said Bliss. “So we had her come in and one of her main jobs was to look at everything we’re doing and look at all the rules and make sure everything is compliant.”
As the BCC updated and clarified regulations, the new compliance officer had to stay abreast of numerous changes. She also helped identify the product that wouldn’t meet the new standards.
“She worked constantly with the BCC because they know that a lot of their rules and regulations either weren’t right or weren’t spelled out well or didn’t work,” said Bliss. “So, there’s a lot of back and forth. They come in and try to see what works and try to work with the shops to make it work in the real world.”
Kevin Reed is the president of San Francisco’s The Green Cross, where blow-out sales started in mid-May. He also said that implementing the updated rules has been a challenge.
“The process of transitioning to the new regulations has been difficult,” Reed said. “From the application process to get our permits, to the many required changes to our packaging, altering how we do our day-to-day operations and ensuring we meet all the requirements, it has been very challenging and costly. Unfortunately, we expect that many small vendors will not be able to sustain themselves in this new market and be forced to go out of business. It’s sad to see this happen, especially since many of them worked to make the cannabis industry what it is today.”
Preparation is Key to Avoiding Losses
Carlos Gutierrez is the business development officer for Prime Harvest. The California cannabis company has cultivation, manufacturing, and retail operations throughout the state, including its dispensary Olive Tree Wellness Center in Ramona. He said that his company has been preparing for the new regulations for months to prevent potential losses.
“Knowing that the implementation of phase 2 testing requirements was coming July 1, we began preparing our inventory accordingly right after 4/20 weekend,” Gutierrez said. “We identified a need for a strategic plan that would allow us to decrease our existing inventory while continuing to offer patients the variety of strains and products they expect. We knew that working toward decreasing existing inventory that could no longer be legally sold starting July 1 was imperative to avoid being stuck with inventory we could not sell.”
To get ready for the new regulations, Olive Tree began purchasing smaller quantities of product from distributors. This meant they had to pay higher prices for the product they bought. But rather than passing the increase on to their customers, the company chose to absorb the temporary increase. They also instituted a customer appreciation deal offering 50 percent off flower purchases to help move product.
Will Pot Shops Have to Destroy Perfectly Good Weed?
Alex Leon works in marketing for cannabis dispensary Golden State Greens in San Diego. He said that the dispensary is discounting mostly pre-packaged goods 50-75 percent off regular prices. But he’s not yet sure if all of the product will sell before the deadline.
“That’s the big question mark,” said Leon. “We hope we sell through it. But if we don’t, we’ll have to follow the regulations, which require us to destroy it.”
Virginia Falces is director of policy and community relations at vertically integrated OutCo Labs in El Cajon. She said the company’s medicinal dispensary Outliers Collective is offering 40 percent off OutCo brand vape cartridges and tinctures. But she added that the company’s multiple licenses give it alternatives for some product.
“Because we are a manufacturer and distributor, our non-compliant flower will be re-used for either pre-rolls or in extraction, which will be compliance tested before it can be sold. Any non-compliant tinctures or cartridges that we have to pull from the shelves will be destroyed. We have been planning for this for some time and expect to have a negligible amount of product destroyed.”