“We are at a tipping point. Do we support the expansion of the regulated market or the illicit market?” Kenny Morrison, president of the California Cannabis Manufacturers Association
Five years after Californians voted to legalize cannabis and create the world’s biggest regulated marijuana market, many owners of cannabis businesses say they’ve reached a breaking point. On the one hand, California’s licensed cannabis industry is delivering more tax money to the state than forecasters projected in 2016. Normalization of the industry also continues, with the first state-sanctioned cannabis competition coming in 2022. And new laws will kick in that are intended to help some cannabis entrepreneurs and medical marijuana patients. But even as the legal industry is growing, California’s illicit cannabis market remains at least twice as large as the regulated one. As a result, licensed cannabis operators — who are undercut by illicit operators — are threatening to withhold tax payments if regulators don’t come up with a fix. Corporations also continue to gobble up smaller marijuana businesses, as the window to change cannabis laws on a federal level while Democrats control Congress inches shut. Here are five things to watch for in California’s cannabis industry in 2022. Of the 30 or so cannabis bills proposed in California in 2021, nearly a dozen were signed into law. Most take effect Jan.1, including a bill that will allow cannabis drinks to be sold in glass bottles and another that lets the state fine people up to $30,000 for aiding and abetting illlicit marijuana businesses. One bill approved in 2021 sets up a regulatory framework for products made from industrial hemp, a type of cannabis plant that’s bred to have essentially no THC, which is the main psychoactive compound in marijuana. Products with hemp-derived compounds such as CBD — which doesn’t make consumers high but has shown promise in helping to ease inflammation, anxiety and other ailments — have been sold in gas stations and grocery stores for years. But the sector has remained a legal gray area, with uneven state and federal regulation sometimes posing problems for businesses that were, say, adding CBD to coffee drinks. Under Assembly Bill 45, compounds such as CBD can be sold as dietary supplements or as ingredients in foods, drinks, cosmetics and pet foods outside licensed marijuana shops if they come from industrial hemp producers registered with the state. The Department of Cannabis Control also has a July 1 deadline to issue a report on how to allow for such products to be sold in licensed cannabis shops. The same law also ends a ban on smokeable hemp, which can deliver doses of CBD and other non-intoxicating compounds found in cannabis. Gov. Gavin Newsom signed the bill in October, which meant California hemp farmers immediately were allowed to start selling to the more than 40 states that haven’t banned their products. And smokeable hemp sales will be legal for in California, for residents 21 and older, once regulators set up a tax in the coming year. Newsom also signed a bill that will require some health care facilities to let terminally ill patients use medicinal cannabis.
