Pot sales create patchwork of confusion

1
159

By Rachel Parsons
Hub Correspondent

The first Friday evening of the new year, Dina “Dr. Dina” Browner stood in the lobby of her West Hollywood pot shop watching the line of customers snake out th e door and down the sidewalk. There was about a 40-minute wait at Alternative Herbal Health Services, one of only four stores selling recreational weed in the Los Angeles area.

“I’m not a doctor,” she said. “I’m board certified by Snoop Dogg.” He is a client, she added, and she flipped on a big screen TV to entertain the patiently waiting crowd as it inched closer to the backroom sales counter.

Although New Year’s Day saw scores of new laws take effect in California, including changes to statutes governing things from firearms to diaper changing stations in men’s restrooms, arguably the most anticipated change was the state’s legalization of recreational marijuana use.

It is now legal at the state level for adults 21 and older to buy cannabis without a medical recommendation in certain places. As lauded as the end to pot prohibition was by some, the move resulted in a patchwork of local jurisdictions and taxation that is creating uncertainty in the industry in the first weeks of implementation.

Location

To do business, a shop must have a state license and local permission to operate. The state left the ultimate decision of whether sale is allowed in each city to that city, resulting in a jigsaw puzzle of possible points of sale that customers have to navigate.

In the Los Angeles metropolitan area, West Hollywood was the only city to pro-actively approve recreational sales permits for four of its existing medical cannabis dispensaries. Those shops were allowed to begin sales of adult-use non-medical marijuana Jan. 2.

Browner, whose store sits on Santa Monica Boulevard, said the West Hollywood City Council told her not to expect too much business too soon.

“I went online and I ordered crowd control stanchions just in case,” Browner said. “And thank God I did … we used to have about 120 customers a day. Now we have 500.”

In Los Angeles, the city began allowing existing Prop D-compliant shops to apply for recreational sales permits Jan. 1, though according to the Department of Cannabis Regulation’s website, it may take “weeks to months” for those to be issued.

The Loft After Care, a medical dispensary within Los Angeles city limits, applied for its permit, but the company does not know how long it will wait, according to one employee. Until then, it will continue to operate as a medical-only service.

Compton still has an outright ban on all marijuana activities, said Dean Jones, senior economic development specialist with the city, but there is a special election Jan. 23 to resolve the question of local sales.

Compton voters pushed for a ballot initiative with two measures included—one asking whether manufacture and cultivation of cannabis and dispensaries should be allowed in the city, the other whether only dispensaries should be permitted.

Jones pointed out if neither initiative is approved, the ban will remain and there are currently no legal pot shops in Compton.

Taxation

Critics of the law, including shop owners and customers, said high tax rates will have an adverse effect on regulated sales and allow the illicit market to thrive.

At the state level, there is a 15 percent tax levied on cannabis products. Previously, there was no state tax on medical marijuana. Cities can apply local taxes and Los Angeles consumers will pay its standard 9.5 percent sales tax and shops will likely pass the city business tax of 10 percent on to customers as well.

With a potential tax of about 35 percent on a recreational purchase in Los Angeles, medical use is not going anywhere, said Alex Kayekjian, manager of Total Herbal Consultation in Woodland Hills, a physician’s office that issues medicinal cannabis recommendations.

“Obviously we were a little concerned,” Kayekjian said. “If it’s turning legal, why would people come and get a med card? The answer to that is the taxes. It’s really expensive now.”

Medical patients will avoid sales taxes if they have a state issued medical marijuana ID card. A recommendation from a doctor will still be needed. Both of these come with fees, but if a patient buys medication routinely that cost will outweigh the taxes, Kayekjian added.

Lisa Tollner, co-founder of Sensi Products, a 10-year-old company that makes cannabis edibles, underscored the industry’s concern over taxation.

“What’s the balance,” she said. “Between taxation and being, and not having the greed for taxes be so rampant that you force the black market to become strong?”

Tollner said she believes things will get worked out, but added that Washington state and Colorado still have strong illegal markets, in part due to the higher cost of buying from a licensed retailer.

Legality

At the federal level, marijuana is still illegal.

Because California’s law leaves final say to local jurisdictions, there is confusion for existing medical shops in many localities around the state.

Tollner said some shops that previously operated where there was no official city ordinance are now sitting in places that have banned cannabis all together. That has hit Sensi’s business, at least temporarily.

“Sales [are] definitely going to fall for us,” Tollner said. “We expected it. We don’t know how severe it’s going to be just yet … there’s still a shakeout that’s happening.”

The Department of Justice threw a wrench into the works during the first week of legalization as well.

Attorney General Jeff Sessions issued a memo Jan. 4 rescinding an Obama administration directive that essentially told the DOJ not to prioritize prosecution of states that legalized the drug.

“What Jeff Sessions did by reversing [Obama’s instruction],” Browner said, “The reality is, it did nothing. It meant nothing to us … we already know how California feels.”

AHHS’s local law enforcement had no issues with the shops. Lt. William Nash of the West Hollywood Sheriff’s Station said there were no incidents involving any of the city’s dispensaries, and it was too soon to tell whether they would curb illegal sales in the area.

Consumer reactions were mixed.

Ken Hamasaka, a Los Angeles resident, said although he no longer uses marijuana, he would still buy from private individuals whom he knew and trusted if he wanted some.

Actor David Krumholtz, who waited in line at AHHS said even with the higher cost and a long wait, he would rather buy retail.

“The convenience of not having to wait for a guy to show up,” Krumholtz said. “You don’t know what’s happening, you don’t know if you can be arrested, you don’t know who they are, where they’re from, who’s watching them, I mean the convenience is worth it.”

Despite the uncertainty and hiccups, there is still optimistic confidence inside the industry that things will work out.

“We believe that the state has done a phenomenal job,” Lisa Tollner said. “It’s not easy, I mean they’re carving out regulations for an entire industry … This year is going to be a year of change and so everybody’s just got to stay flexible and work through it.”

1 COMMENT

LEAVE A REPLY

Please enter your comment!
Please enter your name here