THE POT PIPELINE: FROM HOME-GROWN TO HIGHLY REGULATED

Is pot the cherry on top for alcohol distributors?

SACRAMENTO, Calif. — California’s new landmark medical cannabis laws create a new kind of private business that will play a central role regulating the state’s $1.3 billion pot industry: a licensed distribution scheme that appears to favor alcohol wholesalers.

By 2017, all cannabis authorized to be grown, processed and sold in California must pass inspection by licensed distributors that will charge fees for quality assurance, lab testing, and transportation by Teamster drivers.

Nearly 20 years into a heretofore unregulated medical cannabis market, California adopted a layer of bureaucracy that some growers and artisan producers say potentially threatens the integrity of their products and will certainly raise consumer prices.

Suspicious minds in the marijuana industry believe an extremely large alcohol distributor with trucks and warehouses reaching from Northern California’s pot grows to Southern California’s massive marijuana market secured that mandate by pouring major amounts of money into Sacramento recently.

That lobbying logic flows perfectly, neat as Scotch in crystal. Alcohol distributors have infrastructure and experience that could be very useful in moving pot products anywhere in California.

But do alcohol distributors have the experience handling either medical or agricultural products?

That’s a sobering consideration.

Maybe food distributors are better suited? Here in the self-annointed Farm-to-Fork Capital of America, Gov. Jerry Brown and the California Legislature threw shovels of dirt on any hope of a farm-to-stoner economy. There’ll be no direct farm sales, no cannabis-supported agriculture bud-of-the-month boxes. Only mandated marijuana middlemen.

Perhaps specialty food distributors can ease pot farmers’ fears about whether distributors are qualified to handle sensitive raw cannabis and maybe even siphon off some high-end boutique business for themselves.

Of course, a mega alcohol distributor like Southern Wine & Spirits could compete with a mega food distributor like Sysco Corporation.

There’s a lot to chew on, given the likelihood Californians will vote on legalizing recreational cannabis for commercial sale and adult use next year.

Want something like a hang-over headache? Consider the additional costs and carbon foot print no matter who the distributor licensees are.

The price of pot will go up.

You wanted pot to be regulated like beer?

This is that regulation, elevated California-style.

Pay the middleman, man.

Freaked out by all the changes? Here. Take a hit off my California pot pipeline and track the platonic ideal of unregulated home-grown to this-is-what-you-get-when-you-ask-for-it regulations.

HOME-GROWN

Grower > consumer


BLACK MARKET

Grower > wholesaler/processor > dealer > consumer


CURRENT CALIFORNIA MEDICAL MARIJUANA METHOD

Grower > testing lab (optional) > dispensary > consumer

Or:

Grower > manufacturer (may be grower) >  testing lab (optional) > wholesaler (optional) > dispensary > consumer

And occasionally at farmers markets:

Grower > consumer

In general:

  • Growers plant and harvest cannabis.
  • Growers or other manufacturers produce concentrates (kiff, water hash, oils, wax, shatter, etc.); pre-rolled joints; edibles; inhalers; transdermal patches; and other products.
  • Testing labs (optional).  Growers or manufacturers send random batch samples to labs for testing.
  • Growers self-distribute to dispensaries, paid directly or on consignment.
  • Growers sell directly to manufacturers of concentrates, edibles and pre-rolled joints.
  • Growers sell directly to consumers at farmers markets.
  • Manufacturers contract with distributors or self-distribute, are paid directly or on consignment.
  • Dispensaries package bulk wholesale raw cannabis and manufactured cannabis products for display and sale, and display and sell pre-packaged manufactured cannabis products.
  • Consumers purchase cannabis and cannabis products.

FUTURE CALIFORNIA MEDICAL MARIJUANA METHOD

Grower > transporter > distributor > transporter > testing lab > transporter > distributor > transporter > dispensary > consumer

Or:

Grower > transporter > distributor > transporter > testing lab > transporter > distributor > transporter > manufacturer > transporter > distributor > transporter >  testing lab > transporter > distributor > transporter > dispensary > consumer

The details:

  • Licensed cultivator grows cannabis and packages raw flowers and trim for wholesale distribution.
  • Licensed transporter delivers cannabis from licensed cultivator to licensed distributor.
  • Licensed distributor receives cannabis and performs quality assurance and inspection of product and packaging.
  • Licensed transporter delivers tested product from licensed distributor to licensed testing lab.
  • Licensed testing lab tests raw cannabis for concentration, pesticides, mold, and other contaminants.
    Note: Licensed distributor may obtain testing license and perform in-house analysis.
  • Licensed transporter returns test sample to distributor.
  • Licensed distributor performs final inspection and execution of contract between licensed cultivator, licensed dispensary or licensed manufacturer.
  • Licensed transporter delivers cannabis from licensed distributor to:
    • Licensed dispensary, which receives cannabis to be displayed, weighed and packaged at dispensary.
    • Licensed manufacturer which refines cannabis into concentrates (water hash, oil, wax, shatter, butter, et al); produces finished products such as pre-rolled joints; packages cannabis in pre-weighed amounts for display and sale at licensed dispensaries; and produces edibles from raw cannabis purchased wholesale from cultivator or purchased from wholesale from another licensed manufacturer.>
      • If licensed manufacturer produces edibles from cannabis concentrate purchased wholesale from another licensed manufacturer, that product’s cycle will move via transporter from cultivator to distributor to test lab to distributor to manufacturer to distributor to test lab to distributor to dispensary. 
      • If a licensed cultivator is also a licensed manufacturer, product goes through testing by the distributor only after manufacturing. 
  • Licensed testing lab tests processed cannabis or manufactured cannabis product for concentration and purity of the product.
  • Licensed transporter returns test sample to distributor.
  • Licensed distributor performs final inspection and execution of contract between licensed cultivator and licensed processor or licensed manufacturer.
  • Licensed transporter delivers processed or manufactured product from licensed distributor to licensed dispensary.
  • Licensed distributor charges licensed processor or licensed manufacturer a fee for services.
  • Licensed dispensary displays and sells processed and manufactured cannabis products.
  • Consumers purchase processed and manufactured cannabis products.
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