This Week in Cannabis: The Future of Dispensaries Post COVID-19, Cannabis Tax Break, and Organic Cannabis Standards
As state restrictions begin to lessen, the California Cannabis industry is seeing changes in the new future. These changes include modifications to dispensaries, Cannabis tax, and organic products. Here’s more on what’s happening in the industry.
A Look at Dispensaries Post COVID-19
As a result of COVID-19s impact on California Cannabis businesses, the industry is expecting a change in the future of commercial Cannabis. All businesses have begun practicing social distancing and implementing new safety restrictions for customers and employees. These practices are likely to stay in place as Stay-At-Home initiatives are lifted. Businesses with delivery licenses have already seen an increase in sales during this time and plan to continue these methods as the state opens up.
“We initially saw a two- to three-times increase in sales when the pandemic started. Consumers were likely worried about scarcity, which contributed to higher-than-normal purchase behavior. Things have since normalized, with a slight overall increase to sales pre-COVID,” said Kiana Anvaripour, Sweet Flower CMO.
Other predictions of the commercial cannabis space point towards a more personalized experience and a high-end retail feel. The industry has become more conscious of how to better serve customers during this pandemic, and this should positively affect how businesses are run in the future.
Southern California Groups Push for Temporary Cannabis Tax Cuts
A California minority coalition is pushing for tax breaks for Cannabis. California currently has the highest unemployment rate in the US, and business owners are feeling the pressure of hefty state taxes. A portion of consumers have also abandoned certain shops fighting to stay open for their cheaper or illicit counterparts. As a result, some commercial Cannabis owners are struggling to keep food on the table. High tax rates are contributing to their continued struggles.
“If action is not taken now, many of our business colleagues and friends may be pushed into the gray, or worse, back into the illicit market,” read a letter submitted by the coalition.
At this time, no additional action has been taken. However, the coalition continues to reach out to other entities to support their cause.
California Cannabis Regulators Announce First Organic Standards
Organic Cannabis has been on the agenda for many California regulators for quite some time now. According to the US Department of Agriculture, Cannabis cannot be deemed organic because the plant is still illegal according to the federal government. As a result, California regulators have unveiled a plan, known as the OCal Program, to work towards this organic goal.
Regulations of the plan will ensure that products with the OCal seal will be certified organic according to the standards of the National Organic Program. The OCal Program is the first-of-its-kind effort to establish Cannabis state-level organic standards. This program will be considered comparable to the National Organic Program.
“Our hope is that the proposed program will be cost-effective enough that the cannabis industry can fully participate. Right now, testing expenses represent 10% of the cost of product production, resulting in an exceptionally pure product at no small expense. Hopefully, the Organics Program can work with cultivators to develop methods that ensure the program safeguards purity in a cost-effective manner,” said Sarah Armstrong, policy chair for Southern California Coalition to Cannabis Wire.
In response to this proposal, the state has opened a public comment window that will remain open until early July.
Do you have questions about your California Cannabis business? We can help. Give us a call at 949-268-2857.
Unlock Legal is a compliance and regulatory law firm that specializes in criminal defense, license defense for California licensed professionals, and cannabis law, counseling cannabis operators and investors on existing or start-up businesses.
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