California Cannabis Business Opportunities – What to look forward to in 2021

When it comes to the American Cannabis industry, one can’t help but be optimistic and bullish about what lies ahead. Investors and business owners in the U.S. and abroad are focused on the recent shift in control of the Senate from the socially conservative Republicans to the progressive and generally cannabis-friendly Democrats. What is often overlooked in the national furor of pending Federal and new State legalization, however, is an even bigger opportunity developing at the local level that will have major implications for operators and investors: California.

California, the 6th largest economy in the world, legalized back in January of 2018 but has struggled since its launch to meet its lofty expectations This is in spite of the fact that the State has seen annualized sales rates of more than $4 billion according to New Cannabis Ventures. The two main reasons most people think this already established and lucrative market have yet to meet its potential are (1) moratoriums against local cannabis licensing in well over half of local jurisdictions and (2) an enduring black market. While the State has continued to make major headway on dealing with its black-market issues until recently it has made little progress in dealing with the former. That is now changing.

Some of the major positive trends expected in 2021’s California cannabis market are:

  • Expanded license opportunities around the state;
  • Pricing pressures stabilizing between operators and property owners as more real property inventory becomes available to cannabis licensees;
  • Refined product innovation as the industry matures, with California continuing to lead the way in cannabis industry innovation; and
  • Newly legalized banking and finance services under AB 1525.

Expanded License Opportunities around the State

We have seen more and more cities open due to local initiative to begin to tax and/or regulate commercial cannabis businesses in 2020.
Some new market cities include:
Banning

  • Status: The city adopted an ordinance in July 2020 allowing cannabis distribution business. The ordinance with go into effect in the beginning of 2021.
  • Population: 31,253
  • Licenses: Distribution

Encinitas

  • Status: Measure H passed, setting the zoning for cannabis businesses within the City.
  • Population: 62,904
  • Licenses: Cultivation, Manufacturing, Distribution, and Storefront Retail

Fullerton

  • The city passed a cannabis business ordinance on November 17, 2020, that went into effect on December 17, 2020. The City council will draft the details for the license application process for 2021.
  • Population: 139,640
  • Licenses: Indoor Cultivation, Manufacturing, Retail, Distribution, and Microbusinesses.

La Habra

  • Status: Measure W passed authorizing four cannabis delivery businesses with a gross receipt tax of up to 6%.
  • Population: 62,183
  • Licenses: Delivery

Ventura County

  • Status: Measure O was approved by voters, allowing cultivation and distribution in unincorporated Ventura County.
  • Population: 846,006
  • Cultivation and Distribution.

Many other cities not highlighted above but should be closely watched also include:
The city of Artesia, City of Benicia, City of Calabasas, City of Chico, City of Corona, City of Costa Mesa, City of Grass Valley, City of Hawthorn, City of Laguna Woods, City of Lemon Grove, City of Madera, Redwood city, City of Sausalito, City of San Bruna, City of Sonora, City of Vacaville, and the City of Ventura.

Regulations change frequently, and new markets continue to emerge. While the majority of the state’s licensing opportunities are listed below, this list is not exhaustive. If you have specific questions about California markets, contact us and sign-up for our listserv of updates.

Last week the Bureau of Cannabis Control announced a significant change in their advertising regulations. Section 5040(b)(3), which only prohibited advertising within a 15-mile radius of the California border on an interstate or state highway that crosses the California border has been rescinded. This means that licensees are now restricted from placing any cannabis advertising on billboards alongside interstate or state highways that cross the state line.

This drastic change in advertising was due to the January 11, 2021 final ruling from the San Luis Obispo County Superior Court in the case of Farmer vs. Bureau of Cannabis Control (Bureau) & Lori Ajax. Here the court ruled the Bureau exceeded its authority regarding highway advertisements and ruled Section 5040(b)(3) as invalid because Prop 64 (approved by voters in 2016 and codified in the Business & Professions Code) contained language prohibiting cannabis advertisements on interstate highways or other highways that cross the state border.

A bill (AB273) was recently introduced to further restrict cannabis billboard advertisements by prohibiting any advertising devices “visible from an interstate highway or on a state highway within CA”—essentially attempting to remove the border requirement and potentially creating ambiguities on what is considered “visible.”

Stay tuned for more developments on this topic.

In a series of three different panels featuring industry leaders, the Global Go Conference discussed the future of psychedelics, patenting and intellectual property issues, and the risk/reward factors involved in investment.

Watch the panels here.

Read more here.

About Global Go 
Global Go provides sophisticated consulting services to the global cannabis and hemp industry.  In tandem with strategic allies around the world, Global Go serves clients throughout the world from offices in Bogota, Chicago, Denver, Johannesburg, London, Los Angeles, Mexico City, New York, Nicosia, Palm Springs, Phoenix, São Paulo, Silicon Valley, Toronto, and Zurich. Powered by a team of cannabis industry pioneers and world-class consultants, Global Go helps leading cannabis funds and companies assess and enter new markets; acquire assets; raise capital; launch new product lines; improve SOPs; comply with regulations; implement technology and security systems; find talent; diagnose and execute solutions to growth obstacles; and apply for cannabis licenses (with a 99% success rate on over 150 cannabis license applications across the United States).  Learn more at https://globalgo.consulting.