Josh Wurzer, Chief Compliance Officer, SC Labs
Recently, the LA Times highlighted that Michigan’s cannabis market has surpassed California in sales for the first time. As someone who operates cannabis labs in both states, I have a unique perspective on this shift and feel compelled to reflect on the implications for California, the birthplace of modern cannabis legalization, and how we might reclaim our position as a leader in the industry.
A Tale of Two States
Michigan’s achievement deserves recognition. Their regulatory system has proven to be more effective, especially in addressing critical issues like lab shopping for THC levels. Michigan’s regulators maintain a collaborative and open-door approach with the industry, fostering a relationship built on partnership. This nimbleness and willingness to work closely with operators have allowed Michigan to create a more stable and trustworthy market.
In contrast, California’s cannabis market is marred by a host of challenges. Regulating cannabis in the largest state with the most intricate regulatory environment is no easy feat. The state’s long history of black and gray market cannabis production, coupled with the previous medical marijuana system, has created a deeply entrenched legacy industry that complicates the transition to a fully legal market. Unfortunately, the new regulatory regime has struggled to meet expectations.
Several factors contribute to California’s current struggles:
- High Taxation and Regulatory Burdens: The substantial taxes and regulatory costs are a significant barrier to market success. Reducing these financial pressures on growers and producers is essential to making the market more competitive and accessible.
- Lack of Nimbleness and Collaboration: Unlike Michigan, California’s regulators often engage with the industry in a more secretive and adversarial manner. This lack of collaboration and flexibility has hindered the state’s ability to address emerging issues effectively.
- Intoxicating Hemp Market: The threat of the unregulated intoxicating hemp market has not been adequately addressed. California’s decision to let AB 2223 fail has left a gap in regulation, allowing potentially harmful and unregulated products to proliferate.
- Bad Actors and Lab Shopping: The practice of lab shopping, where producers seek labs that will report inflated THC levels or overlook contaminants, has been a significant issue. This unethical behavior undermines consumer trust and compromises product safety.
Work to be done
Despite these challenges, California remains home to some of the finest cannabis cultivation in the world. Our unique climate, exceptional growers, and rich cultural heritage contribute to producing cannabis of unparalleled quality. To reclaim our leadership position, we must address these issues head-on:
- Streamline Regulations and Reduce Taxes: Simplify regulatory processes and cut excessive taxes to alleviate the financial burden on producers.
- Foster Collaboration: Adopt a more open and collaborative approach between regulators and industry stakeholders to address issues more effectively.
- Address Hemp Market Challenges: Implement stricter regulations on the intoxicating hemp market to protect consumers and ensure product safety.
- Combat Bad Actors: Strengthen oversight and enforcement to deter lab shopping and ensure that all products meet rigorous safety standards.
If California wants to uphold and enhance its legacy as the cannabis capital of the world, it needs to learn from Michigan’s many successes. By addressing these challenges and leveraging its inherent strengths, California can restore its leadership in the cannabis industry and continue to set the global standard for excellence. It’s time to honor the pioneers who fought for this industry by making California a thriving and trustworthy cannabis market once again.