As of the first of the new year, California decided to legalize cannabis for recreational use. This measure has been extremely important for the history and the future of the marijuana industry, but high demands may make the market even larger than many anticipated.
With many Californians eager to purchase legal weed, suppliers are working day and night to ensure that the shelves will remain fully stocked. Although supply does not seem to be a large pressing issue in the market, distribution of the product remains a logistical challenge. Moving pot from place to place is something that many underestimated as to how difficult it would be. These distributors in the state have been working tirelessly to keep track of cannabis and get it from farm to shelf. Because of the strict and stringent laws regarding the tracking of cannabis production, distribution of the product can become a difficult task.
One of the main issues with the Californian market is the fact that many believe there are not enough companies that are licensed and ready to begin transporting marijuana. Some have stated that the extremely high demand in the market will cause a shortage, but two months into the industry, that does not seem likely. CEO Terry Blevins of a security firm that deals with cannabis related companies, stated that “there’s going to be a huge bottleneck in the distribution network in California at some point.” With billions of dollars flooding into the industry, Blevins states that he doesn’t “believe there are enough businesses to handle it.” Many would state that this is a large positive of the industry, and that it will help contribute to growth, but other companies are rushing to ensure that they can meet these high demands.
A pressing issue in the market remains with the legislative side of things. Attorney General Jeff Sessions has vowed to ensure that marijuana will remain illegal, but the states in the U.S. are happy to combat this. Some entrepreneurs have stated that the position of Sessions being so high up in government will be cause for growers and sellers to become worried about their products, but this effect has not been felt throughout the market. A new series of laws has come out form the state which means that commercial pot activity will not be allowed. Although this makes demand from smaller businesses much larger, it can make it slightly difficult for them to meet the supply when they can’t go to the larger companies.
The CEO of Flow Kana, Michael Steinmetz, whose company distributes cannabis products from small, outdoor farmers stated recently that while many retailers have been working to stock up on products “I do think we are going to see a big reduction in supply.” If there is an issue with supply, it may cause the state to remove some of the strict legislation on larger companies entering the market.
Pot in California has long been a market that has been kept under the radar, with arrangements between growers and sellers driving the market. The new system has the goal of allowing only those with distributor licenses to do the distributing. The past history of the market “was all trust and handshakes” according to dispensary owner Jerred Kiloh. “Growers would drive it down in their Toyota Tacoma.” Although many would like to keep the industry in the same place that it has been, the new legislation will likely only improve the situation in the future as cannabis continues to see increased demand. As the market on marijuana continues to grow, issues like the aforementioned one will continue to test how well the new regulation works.
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