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Sacramento Announces 10 Finalists For New Cannabis Shop Permits

Sacramento’s growing marijuana industry is about to get even bigger.

On Thursday, city leaders announced the finalists for ten new pot shop permits. The demand for these licenses is huge and big money is at stake.

Maisha Bahati just learned she is among the ten budding business people selected for the City of Sacramento’s new cannabis permits.

“It was insane. We were so excited, we had gone out and bought champagne last night just in case,” Bahati said.

More than 100 people applied for the coveted licenses, which would allow them to open a marijuana storefront dispensary.

“They gross anywhere from 4 to 8 million dollars a year,” said Davina Smith, the Sacramento City Cannabis Director.

Sacramento currently only allows 30 cannabis shops – and none are black-owned. These ten new licenses are an effort to diversify the marketplace. Applicants were judged not only on their business plans but on their personal stories.

“The drug war impacted me in some profound ways,” said Malaki Seku Amen, a cannabis business applicant.

He says his father was a casualty of marijuana criminalization.

“He was working to prevent the violence caused by the drug war and he was shot and killed,” Seku Amen said.

And others who were selected have been on the wrong side of the law in the past. But these ten lucky finalists still have a lot of work to do.

“They’re celebrating tonight but the work starts tomorrow because they have to go through every step of the permitting process that anyone else would,” Smith said, and later added, “people could be opening in six months. It could take others two years.”

Many hope the new infusion of income will benefit Sacramento’s economically disadvantaged neighborhoods.

“We’re going to pull from our community, we’re going to hire women, it’s just going to be a diverse business, something that’s different from what’s out there now,” Seku Amen said.

Sacramento places a 4% tax on all cannabis products sold in the city. That’s expected to generate about 17 million dollars this year.

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Cannabis entrepreneurs plan manufacturing, distribution, incubator space in North Sac

After becoming among the first Black women in the Sacramento region to run their own cannabis businesses, Maisha Bahati and Miko Banks are looking to extend opportunities to others looking to get into the local industry.

Bahati, the CEO of cannabis delivery business Crystal Nugs, and Banks, owner of cultivation business Resziin Farms, are combining their efforts to start a new incubator space.

The two are collaborating on a new 8,000-square-foot facility in North Sacramento, which would include an incubator for cannabis startups, a cultivation facility and a new manufacturing and distribution facility called Urban City Flowers. Bahati said they’ve secured a 10-year lease for the space. She declined to disclose the address, citing security concerns.

“It would be the first Black-, woman- and equity-owned manufacturing and distribution facility in Sacramento,” Bahati said.

Crystal Nugs will be a partner in the delivery side of the facility, Bahati said, and Resziin Farms will expand its cultivation operations at the site.

In the years immediately following recreational cannabis legalization in California in 2016, Sacramento’s cannabis industry initially became crowded with well-capitalized groups buying up real estate for cultivation, while some local dispensary chains consolidated and grew rapidly. Amid the competition, Banks and Bahati are looking to help more minority-owned businesses find a foothold.

“In this industry you have to have this vertically integrated system,” Bahati said. “The competition is big, and that’s what we’re doing to be more competitive and more self-sustaining in this industry.”

The city of Sacramento has launched efforts to help residents from communities impacted by the war on drugs enter into the relatively young legal cannabis industry, but prospective business owners still face challenges. Both Bahati and Banks graduated from the city’s cannabis equity program, but observed that business owners face barriers when it comes to finding an affordable space to launch their business.

Providing space is just one way to help young businesses get started, Banks said. She said the new facility will have room for up to 12 startups, spanning manufacturing, delivery, cultivation or distribution.

“I’m just offering the infrastructure so people can come in and utilize the space,” Banks said. “That’s how you create generational wealth.”

The two women are funding the project from their current cannabis operations and other businesses. Bahati also owns a fashion line, and Banks has operated a local towing business for the last five years. The two are also seeking interest-free loans that are offered through the city’s equity program, Bahati said.

Banks estimated that the Resziin Farms project will cost $1.8 million in total and could open within a year and a half. Bahati estimated that Urban City Flowers will cost $500,000 to start up and will be ready to launch by September or October.

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Local organization hopes for transparency as Sacramento prepares to issue retail cannabis dispensary permits

SACRAMENTO, Calif. (KTXL) — As the city of Sacramento accepts applications for 10 retail cannabis dispensary permits, one local organization is asking for more transparency during the selection process.

The Cannabis Opportunity Reinvestment and Equity program was established in Sacramento to even the playing field in the cannabis space.

The program’s goal is to address the “negative impacts of disproportionate enforcement of cannabis-related regulation.”

“We currently have 30 retail dispensaries in Sacramento, but zero of them are Black-owned,” Brandon Bolton of United Core Alliance explained.

To change that, the city council is issuing 10 new storefront cannabis dispensary permits.

“I think that these 10 new retail licenses give Black and brown individuals a chance to join the legal cannabis space,” Bolton said.

Bolton believes the new permits are a great step forward but said there are concerns with how the city will choose who will receive them.

“I don’t want any conflicts of interest, and I would like the city to be as transparent as they can,” he said.

Bolton said organizations like his weren’t invited to give input on how the permits will be awarded.

“Having that input, having people concerned about the process is a real thing, and I appreciate that, and I think it’s good that we talk about it,” Davina Smith, the Sacramento program manager for Cannabis Management, said.

Smith said her department went to great lengths to ensure a fair process, like speaking with other equity programs around the country and delegating the selection process.

“Originally, we have thought about, you know, my office picking the evaluators and we thought let’s just avoid any appearance whatsoever,” Smith explained. “So we put it off to the city manager’s office, and they graciously agreed to take that on.”

The evaluators selected by the city manager’s office will choose the 10 most “prepared” applicants.

As another way to avoid a conflict, no names or identifying information will be included in the request for qualification process.

“We have these first 10 permits in. We’re going to go back to city council in the future and just see like, ‘OK this is how it’s going. How does the city council feel about opening up more of these opportunities?’” Smith said.

For Bolton, it’s another step towards equality in the cannabis space, something his organization hopes to continue.

“Let’s continue to have this open communication channel, utilize the information that we are gathering as a community and start to implement that into the procedures that you develop,” he said.

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After years of discussions, Sacramento expected to approve 10 new marijuana shops

The Sacramento City Council is expected to vote Tuesday to allow 10 new storefront marijuana dispensaries in the city in an effort to address longstanding equity issues in that industry.

Of the city’s current 30 dispensaries, none are owned by Black men or women – a population disproportionately arrested during the War on Drugs, according to Malaki Amen, executive director of the California Urban Partnership.

To address that issue, the council has been discussing for years whether to allow more pot shops to open.

The council previously discussed holding a lottery to choose the 10 new shop owners, but the council directed staff to instead select them based on criteria.

The proposed criteria include evaluating whether applicants will be able to successfully submit a complete application for a dispensary permit, be able to successfully operate a dispensary, and utilize criteria “reasonably necessary to protect the public health, safety, and welfare,” the staff report said.

It’s unclear from the report whether applicants would have to prove they have capital or investors to start the business.

Amen raised issues about whether that criteria will allow the people most impacted by the War on Drugs to open dispensaries – the goal of allowing new shops to open in the first place.

“We’d like the opportunity to participate in a conversation about what those methods should be and the criteria should be,” Amen told the council’s Law and Legislation Committee last month.

Councilman Jay Schenirer said there are limitations on how the city language can be written, for legal reasons.

“I think we all have the same goals on this program around equity,” Schenirer said.

The people interested in opening shops had a say in the criteria language, cannabis manager Davina Smith said.

The Law and Legislation Committee, which contains four council members, unanimously voted to recommend the item to the full nine-member council, a sign it will likely pass.

To be considered, applicants must be participants or former participants in the city’s Cannabis Opportunity Reinvestment and Equity (CORE) program. That program is only open to residents who meet certain requirements, such as earning a low income, living in certain zip codes most impacted by the War on Drugs, or having a prior arrest for a cannabis-related charge. The program had about 159 graduates as of late August.

While permits for manufacturing, cultivation, delivery and distribution have been available, no permits for storefront dispensaries, the most desirable, have ever been available to new applicants. When recreational marijuana became legal California, the city allowed the shops already selling medical marijuana to have the only storefront permits.

Last year, The Sacramento Bee reported that one group of business partners had been able to gain ownership of a third of the city’s storefront dispensaries, despite a city code intended to prevent that. The code has since been strengthened.

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Sacramento may allow 10 new pot shops to address inequity in city’s marijuana dispensaries

Sacramento is poised to allow 10 new cannabis dispensaries in an effort to fix long-standing equity issues in the city’s retail pot market.

Of the city’s 30 dispensaries, none are owned by black men and women, demographics that were disproportionately arrested during the War on Drugs, Malaki Amen, executive director of the California Urban Partnership, has said.

To address that, the City Council in 2018 approved the creation of the Cannabis Opportunity Reinvestment and Equity (CORE) program. For those who meet certain income, zip code and other requirements, the program waives thousands of dollars in fees and prioritizes applicants for permits.

Although permits for cultivation, manufacturing, and delivery are available, there is no way for a CORE graduate to open a dispensary, which most want to do. About 117 people recently graduated from the program.

Councilman Larry Carr proposed the city get rid of the cap altogether. If his colleagues won’t agree to that, he suggested the city allow 30 new permits so half the shops in the city would be owned by CORE participants.

“There are 30 licenses granted. Equity will be when there are 30 CORE licenses granted,” Carr said.

He said he would accept a minimum of 10 new permits, however, and Councilman Allen Warren agreed.

Councilmen Jeff Harris and Eric Guerra raised concerns with allowing too many new shops, suggesting the city should start with three.

Mayor Darrell Steinberg, looking for a compromise, suggested the city allow 10 new permits spread out over two years.

Amen said he would prefer the city allow 10 new permits a year. That’s the amount the city currently has the staff and resources to process, said Assistant City Manager Leyne Milstein.

“I appreciate concerns across the board from the mayor and council and yet I still have concerns about tip-toeing toward equity when we’ve been down this road for five years now,” Amen said, referring to when the city first started discussing equity issues in the city’s cannabis market. “We’re at a point not only where the city has to build trust with communities damaged by the War on Drugs, but we really have to be intentional about opening up this market.”

MARIJUANA DISPENSARY SCANDAL, FBI INVESTIGATES

The discussion followed reports by The Sacramento Bee that revealed a man who was indicted in October with Rudy Giuliani’s associates in a campaign-finance scheme co-owns a Sacramento dispensary. His business partners own a total of nine of the city’s 30 shops under the “Kolas” brand. In 2011, the business partners only owned two, city applications show. City code bars owners from selling or transferring permits.

Although city staff had been checking since 2014 to make sure at least one name remains in the application from the previous year, dispensaries have been allowed to add new names of owners, then over time, remove the names of original owners. The council in November amended city code to prohibit people with an ownership interest in a storefront dispensary from obtaining an ownership interest in another dispensary.

In addition, the FBI has been investigating whether pot business owners in Sacramento have bribed local officials in exchange for favorable treatment.

Ashby said the city’s priority should be fixing the problems that allowed the business partners to accumulate so many permits.

“I don’t understand how one person came back with (so many) when we very clearly, every member of this dais said that’s not gonna happen … and it happened anyway,” Ashby said Tuesday, holding up a copy of the article. “All the ones that were monopolized could’ve gone to women and minority-owned businesses.”

After The Bee stories were published in October, the council passed a moratorium on dispensary transfers, which lasts until March 11. The mayor called for a new city audit and for a new employee to be hired in the city auditor’s office to focus solely on the cannabis department.

The council approved the creation of that position Tuesday.

“I’m confident that we are beginning to build the checks and balances so if there is a problem that raises eyebrows, we know about it and we can act,” Steinberg said.

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About 20% of licensed marijuana companies in California’s capital city face temporary closure

More than a fifth of the cannabis companies in Sacramento, California, are confronting the possibility of at least a temporary suspension of operations on the first day of February.

City regulators sent notices to dozens of registered marijuana businesses in December as a reminder they had not formally completed the process for acquiring a Sacramento business operations permit.

Though many have finished the process since then, officials in California’s state capital said last week that 58 businesses still have not completed the paperwork and might have to cease operations as of Feb. 1 until they can get it in order.

“We felt that it was our obligation to ensure that our applicants were moving forward, and if they weren’t, then they’re no longer going to be able to continue to operate,” Sacramento Assistant City Manager Leyne Milstein said.

Here’s what you need to know:

  • The city has a total of 265 pending marijuana business applications, including many that are already operational, Milstein said.
  • So far, the city has issued 107 licenses, including 85 operating permits for companies that have completed the entire process.
  • The 58 that face closure are cultivators, manufacturers, distributors and delivery services. None are retail storefronts, Milstein said.
  • Milstein noted letters went out to license applicants last July, reminding all that they needed to finish the permitting process. Since then, many have complied.

Any of the 58 that do not comply with the order to cease operations could face civil fines.

At least one of those companies has already filed a legal challenge, asking a judge for a stay on the Feb. 1 deadline, said attorney James Anthony, who represents Marpe, a state-licensed cultivator in Sacramento that received one of the December warning letters.

Anthony said Marpe is working on complying with the city regulations but that it could take another six months to a year.

“Now I guess we’re going to slug it out in front of a judge,” he said.

Another state-licensed Sacramento operator who received one of the letters, Teri Apple, who has run cannabis delivery service STC Alternative Healing since 2016, said she’s uncertain whether she can make the Feb. 1 deadline.

Apple said she’s been trying to come into city compliance since receiving a notice in July that her building wasn’t up to code, but the city building department has repeatedly identified new problems for her landlord to handle. That’s delayed her ability to finish the permitting process, Apple said.

Her landlord will have to complete new electrical work and interior remodeling – all of which is unlikely to be finished by the start of February, Apple said.

“If it wasn’t for the building department throwing different things at us, we would have been completed,” she said.

Apple is worried that even a temporary closure would force her out of business.

“To have me shut down, even for a week, it could be the death of me,” she said.

John Schroyer

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24 Cities Sue State Over Regulations, Trying To Put An End To Pot Delivery

SACRAMENTO COUNTY (CBS13) — Two-dozen municipalities across California coming together to try to put an end to pot deliveries. Eleven local cities from Solano to Stanislaus counties have joined the lawsuit.

The state policy says marijuana companies can drive around and make home deliveries anywhere in the state, but leaders from 24 cities now want local control over who can deliver and where. Some marijuana companies say regulating deliveries will put the brakes on their businesses for good.

Maisha Bahati is co-owner of a new marijuana business: “Crystal Nugs.” The company only does delivery.

“We fought to get here. It took us two and a half years to get here,” Bahati said.

The Bureau of Cannabis Control developed delivery regulation over a two-year period.

“Everything is regulated to a ‘T.’ Everything is tested multiple times,” Bahati said.

She says the state also requires her to put her product on lockdown, literally. Every delivery has to be under lock and key in the back of her delivery car. She worries if the lawsuit passes, delivery businesses like hers won’t survive.

“That would certainly limit the radius that we could deliver. That could kill a new cannabis business overnight,” Bahati said.

She also worries about her clients who don’t drive and would somehow have to get to a dispensary.

“More so it hurts the consumers who rely on cannabis products. There are a lot of elderly that call us every week,” she said.

Two of the cities in the lawsuit are Ceres and Dixon. We spoke to city managers from both towns who call state-run delivery a “fatal flaw” for cannabis control.

“That’s not really the real local control we were looking for, and promised, with prop 64,” said Dixon City Manager Jim Lindley.

Ceres has two dispensaries, Dixon has one. Those businesses have local permits, but also relationships with leaders and law enforcement. These city managers say delivery drivers do not.

“With a delivery, we have no idea who is doing the delivery.  How is that person vetted? Who is the actual person doing the delivery? We’re not opposed to the delivery service at all. We just think the delivery service needs to be regulated like the rest of the industry,” said Toby Wells, Ceres City Manager.

The lawsuit was served to the Bureau of Cannabis Control on Tuesday. Leaders with the state-run organization said the public voted clearly for statewide delivery in 2016. Unless a Judge halts these services while the case is pending, drivers can continue to deliver.

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California is growing so much marijuana it could crash the market

California has too many marijuana farms, see the full list on Observer — growing too much product — according to a 2019 cannabis harvest projection.

Vessel Logistics, a San Francisco-based cannabis distribution company, found that more than 1,142 acres of cannabis farms hold state permits. They can produce up to 9 million pounds of crop every year, but the permitted wholesale market can realistically support 1.8 million to 2.2 million pounds.

“Thus, even when a 50 percent cut in production is accounted for, a significant oversupply is unavoidable in 2019,” the report concluded. 

California isn’t the only state to grapple with an overproduction of bud. A state audit found that Oregon growers are producing twice as much cannabis as the state market can support, and that there is “more than six year’s worth of supply sitting on shelves and farms,” according to Oregon Public Broadcasting.

“We’ll be in the same boat, but it will be more actual material,” said Daniel D’Ancona, president and founder of Vessel Logistics.

Until now, growers with a temporary license have relied on the black market to sell any product that couldn’t measure up to the state’s pesticide testing program or when there was a better price to be found, D’Ancona said. He said that all goes away as more growers are subject to the state’s Track-and-Trace program.

The program records “the inventory and movement of cannabis and cannabis products through the commercial cannabis supply chain — from cultivation to sale,” according to a state FAQ on the program.

Growers with a provisional or annual license are required to use Track-and-Trace. Temporary permit-holders are not. Instead, they are required to document all sales using paper invoices or shipping manifests.

“As soon as Track-and-Trace goes in place, it’ll be like trying to fit an elephant through a keyhole,” D’Ancona said. 

The Vessel Logistics report concluded that because the cannabis industry in California has over-relied on both the black market and out-of-state sales, producers and manufacturers over-estimated the actual wholesale demand in the state.

“The impact will be felt across the entire supply side as permitted companies compete for a wholesale market that is a fraction of its pre-Track-and-Trace size,” the report found.

Over-production is just one of many hurdles that the cannabis industry faces in the Golden State.

Thousands of growers with a temporary license could soon be thrown onto the black market or forced to shut down unless the Legislature passes a law to push back the deadline for an extension application.

California also is a messy patchwork of legal statuses for cannabis cultivation and sales.

“The retail sector has been primarily restrained by city and county governments restricting retail and delivery businesses within their jurisdictions,” the report found.

The report recommends that cannabis cultivators create “strong relationships with processors and distributors,” that farmers partner with teams that have experience with the state’s Track-and-Trace program, and that farmers seek the advice of distributors “to gauge product demand before planting the wrong crop or over-planting.”

Or, as D’Ancona put it, “They need to grow less. …. If they grow like they’re used to growing … the products are going to be selling for less than the cost of production.”

So what do others in the industry think?

Jacqueline McGowan, a cannabis lobbyist with the firm K Street Consulting, says that while she is a self-confessed “doom-and-gloomer” about the cannabis industry in California, she would need more information about the Vessel Logistics report methodology before agreeing with the findings.

“Businesses without a product that consumers demand and without relationships with competent distribution partners will in fact be devastated, but the industry as a whole will be able to offer cheaper products to consumers, which is the best way to compete with the unregulated market,” McGowan said.

She added that other factors that have to be looked at are how much of the over-production will qualify for the licensed market, how much of that would pass the state’s strict pesticide policy and how many growers with temporary licenses (which are free) will go on to get provisional or annual licenses (which are not).

“Will this cause another ‘extinction event?’ Absolutely. But will it cause the industry to collapse? No it will not,” she said.

By Sharon Okada

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Marijuana is legal in California. So why is the CHP arresting delivery drivers?

Cannabis may be legal in California, but the new rules of the road are so confusing that even former California Highway Patrol officers are struggling with them.

That became clear on a September morning when a pair of former CHP officers who now run a licensed cannabis distribution business found themselves arrested after a traffic stop on Interstate 5 in Stanislaus County.

Rick Barry, 48, and Brian Clemann, 47, were released from custody in Merced hours later, but the CHP kept the $257,000 the two men were transporting and handed it over the the Department of Homeland Security, according to a lawsuit filed in Merced County Superior Court.ADVERTISING

Barry and Clemann also are suing the CHP in San Francisco Superior Court, where they’re seeking a ruling directing state and local governments not to interfere with the legal distribution of marijuana.

“It appears the CHP will stop at nothing to disrupt the lawful and legal transport of items involved in the medicinal cannabis industry,” Barry and Clemann said in a press release.

Their predicament underscores one of the key challenges that cannabis distributors face a year after a California law legalizing recreational marijuana took effect.

Marijuana may be legal in California, but it’s still an illicit substance under federal law and people in the business run the risk of time in custody or lost product if they run afoul of local authorities.

State and local governments also want to prevent illegal marijuana distributors, such as black market growers and drug cartels, from operating easily.

The California Office of Administrative Law last week handed down a ruling that sought to clarify how distributors should move about the state. Its decision upheld a Bureau of Cannabis Control regulation that states “a delivery employee may deliver to any jurisdiction within the State of California provided that such delivery is conducted in compliance with all delivery provisions of this division.”

Bureau Chief Lori Ajax said in a statement that “These approved regulations are the culmination of more than two years of hard work by California’s cannabis licensing authorities.”

But the ruling was unpopular among long governments that wanted to retain influence over how marijuana is sold in their jurisdictions. Its opponents included the League of California Cities and the California Police Chiefs Association.

“We are deeply concerned with the adoption of the new cannabis regulations, which allow for the delivery of cannabis anywhere in the state. We are already having trouble enforcing a new and complex industry, and this allowance will only make enforcement even more difficult,” California Police Chiefs Association President David Swing said.

CHP SEIZURES OF CANNABIS ON THE RISE

The CHP hasn’t slowed down in cannabis seizures since legalization. In fact, the department seized nearly eight tons of cannabis between January and November of 2018. That’s almost double the amount of cannabis the CHP seized in 2017, and the most it has taken in a calendar year since 2014. 

CHP spokeswoman Jaime Coffee said in an email interview that “in order to legally transport cannabis in California for commercial purposes, a person must possess the appropriate (Bureau of Cannabis Control) license and comply with the BCC administrative regulations.”

That means state officers remain on the lookout for black market operators.

Barry and Clemann, the former CHP officers who now own Eureka-based Wild Rivers Transport, weren’t transporting cannabis when they were stopped on Sept. 6, 2018. Their vehicle was searched when a police canine detected cannabis during the traffic stop, according to their lawsuit.

The cannabis distributors acknowledge they left the CHP on bad terms after careers there that lasted more than a decade, Clemann said. The CHP in 2015 accused Clemann of burglarizing an evidence room. A jury in 2016 found him not guilty, according to the Del Norte Triplicate.

Barry and Clemann went into business together in 2017. Clemann in an interview said he and his partner resolved only to deal with “white market” cannabis companies when they opened their distribution company.

“We make sure they’re a licensed company,” he said. “We do our research, then we transport from A to B.”

MEMBERS OF THE CHAMBER OF COMMERCE

On the day of the arrest, Barry and Clemann were collecting a payment for cannabis oil. Clemann said he and his partner carried their distribution license from the Bureau of Cannabis Control.

Clemann said he and Barry identified themselves as “prior” CHP officers when an officer pulled them over. Clemann said the officer accused them of lying about their status. Clemann said the officer appeared to mishear “prior” as “retired.”

The difference between the two words can be significant to law enforcement officers. “Retired” generally means the former officer left the department in good standing after a full career and is receiving a pension.

“Prior” can connote the former officer left the department after a shorter career and in varied circumstances.

The CHP published a press release after the arrest that said Barry and Clemann called themselves retired police officers. It also said Barry and Clemann were arrested on suspicion of illegal possession of concealed firearms and possession of more than $100,000 derived from the unlawful sale, possession for sale, transportation or manufacturing of a controlled substance.

Neither Barry nor Clemann has been charged with a crime, court records show.

Wild Rivers Transport is a member of the Eureka Chamber of Commerce. Its business license is suspended by the California Franchise Tax Board because it failed to file a tax return on time and it has an outstanding balance of $250, according to the department. 

Kumin, the attorney representing Barry and Clemann, said in an email interview that “the fundamental issue here is whether the CHP is going to follow the will of the voters of California and the Legislature and stop cooperating with federal authorities in the ongoing federally instigated war on cannabis.”

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Big ban on the ‘sesh’ scene


Medical cannabis collectives would gather at word-of-mouth events, where patients would meet suppliers at farmers market-like settings

“Prop. 64 killed medical marijuana!” Jose Lara shouted at a pop-up medical cannabis collective marketplace in December. The sales representative for NorCal Nectar, a cannabis oil extraction company, was lamenting the January 9 repeal of California’s Medical Marijuana Program Act, which now bans medical cannabis collectives from gathering and selling products in a farmers market-like setting. This also means that patients who once joined these collectives to afford their medicine must now buy directly from higher-priced medicinal and recreational dispensaries.

Cannabis collectives, also called cooperatives, are private nonprofits whose member patients and suppliers gather at “sesh” events such as December’s pop-up known as an Orbit Show, where patients speak directly with product representatives and receive significant discounts over dispensary prices. Collectives were conceived as part of Proposition 215 in 1996, and their legal protection was reaffirmed in 2003 with passage of Senate Bill 420.

After voters approved Proposition 64 in 2016 to legalize recreational cannabis, state regulators overruled the medical provisions. In January 2018, the deadline was set for collectives to relicense or reduce their size to “caregiver gardens serving no more than five people,” according to the state Bureau of Cannabis Control.

But because reaching full compliance would be too costly for such small groups, most collectives have disbanded.

The 1130 Club collective averaged more than 700 patients at its last few Terpy Thursday events, according to operator Will Hennessee. At the December event, hip-hop music spilled out into the cold air, while the smell of Philly cheesesteaks from a food trailer wafted back inside. As patients shopped for cannabis, some said goodbye to their favorite vendors and wondered about the future.

“It’s been an emotional three days,” said Karrie Stackpoole, a sales representative for SpOILed Gold Country extracts. She said she heard talk of organizing secret meet-ups, but was apprehensive about the risk. “I don’t want to go underground,” she said.

An early indicator of her future was a patch inside a display case reading, “In Memory of Prop 215, 1996-2017.”

“Wasn’t California supposed to protect the small growers, and patients like us?” asked Debra Cowen, a massage therapist and medical cannabis patient since 2013. While buying vape cartridges for her joint pain, Cowen repeated a common view in the medical cannabis community that “politicians threw medical marijuana under the bus for the taxes.”

Some dispensary owners agree.

“As a patient and dispensary owner I understand what many of these patients feel, and how hard it was before to afford your medicine,” said Haley Andrew, owner of Dixon Wellness Collective. “Hopefully our regulators are understanding why patients are using sesh parties … and can help on the regulatory side to lower the taxes on cannabis.”

The view is also echoed among dispensary owners who applied for recreational business licensing, in addition to operating as a longtime medicinal haven.

“When we advocated for state regulations, we expected that all businesses in operation would be able to transition into the regulated market,” said Kimberly Cargile, executive director of A Therapeutic Alternative in Midtown. “It is very sad because most of the people stuck in the unregulated market are there for the right reasons, they just want to help patients safely access affordable cannabis.”

Alex Traverso, communications chief at the state bureau, said it plans to work with collective operators to help transition them over to the legal market. He also said that the bureau has already issued temporary licenses to businesses operating as collectives.

“I would love to comply,” said Hennessee of the 1130 Club. “But we don’t have the money to compete with the big companies.”

Hennessee scheduled a meeting with member suppliers to consider their future in the new regulated climate.

“I do not know of any collectives that were able to transition without taking on partners that either brought money or business experience to the table,” Cargile said.

Critics argue that on-site cannabis consumption at sesh events violates local ordinances. Organizers of these pop-up marketplaces would regularly change the event locations to stay under the radar of local authorities. The state Bureau of Cannabis Control has pledged to increase enforcement in 2019.

When asked about the likelihood of local prosecutions, Sacramento Chief Deputy District Attorney Steve Grippi told SN&R in an email that the office doesn’t offer “charging opinions on hypothetical arrest scenarios.”

Still, Orbit Show organizer Jose Agacio was philosophical about the future.

“It’s been well worth the endeavors and obstacles,” he said. “With the community staying strong, the support and dedication of every one, we shall see a brighter day.”

By Ken Magri