The first week of California’s new marijuana market was a landmark moment in Humboldt County’s cannabis history, but many in the industry said they still face a long and uncertain future.
The spotlight in this first week of recreational cannabis sales was on local dispensaries who had lines of customers both new and old waiting to make their first purchase on New Year’s Day and beyond. The Humboldt County Collective in Myrtletown began recreational sales on Jan. 2, with the collective’s Manager Savannah Snow saying they have had customers ranging from ages 21 up to 90.
Snow said that prices for products have gone up by $20 in some cases because of the state’s excise taxes, and that new state regulations will lower the allowed dosage of edibles. But Snow said they have stocked up on certain concentrate products in anticipation for the demand.
“Overall people have just been stoked for recreation. It’s been really fun for us actually,” Snow said.
The EcoCann Dispensary in Eureka was the first dispensary to open in Humboldt County on Jan. 1. After switching from a solely medical cannabis dispensary to both recreational and medical New Year’s Day, EcoCann Dispensary owner Jeff Poel said they have been selling as much cannabis in a day as they used to in more than a week.
But the changes brought on by the new set of state rules have begun to manifest.
Under California law, a cannabis must obtain approval from its local government and then obtain a state license in order to operate lawfully. Any cannabis sold must be from a licensed business as well, which has affected supply.
Poel said Thursday that they ran out of certain concentrates because there are not enough licensed manufacturers and no distributors to deliver them.
“It’s really crazy,” Poel said. “It’s topsy turvy until things settle out.”
Geoffrey Hoopes is a co-owner of the Arcata-based cannabis distribution company UpNorth Distribution.
Unlike the old system of Proposition 215 where his business could transfer medical cannabis from collective members directly to dispensaries without any oversight, Hoopes said the new era of regulation has overhauled the way their company does business.
Some of the indoor cultivators whose product UpNorth transported to dispensaries are not licensed and therefore can no longer do business with them.
Hoopes said they still have a network of licensed dispensaries to work with, but will now have to work to find some new cultivation customers.
“How we built these relationships was built on the back of this old system,” Hoopes said. “We were able to bring in product in a much looser fashion.”
While week one was booming for local dispensaries, Hoopes said they were expecting slow sales on the distribution side because many dispensaries stocked up before the new regulations took effect.
“What has happened prior to Jan. 1 is a lot of stocking up by most dispensaries in order to avoid that [15 percent state excise tax],” Hoopes said. “Most dispensaries did quite a lot of buying in this last month. With the rush of new consumers coming in and some not having their doors open, it was kind of a bypass week for us in the buying realm. We need to figure out where pricing is going to land.”
Hoopes said week one allowed him to focus on other aspects outside of cannabis such as workers compensation and disability access requirements for their new office and storage space at Arcata’s Marijuana Innovation Zone.
One local cannabis manufacturing company, Humboldt Alchemy Group in Phillipsville, was the first cannabis business in the county to receive a state license.
But its co-owner Eric Martin said Thursday that they are still working to finalize its operations plans for the state that lays out how exactly they will process the cannabis into concentrates.
Martin said that this process must be detailed and submitted electronically to both the state and county’s track-and-trace systems which work to ensure no illegal cannabis enters the legal market and vice versa.
Martin said they are also having to begin hiring qualified candidates over the next six to eight months.
A self-described high school dropout turned cannabis cultivator, Martin said he now feels like he has to go back to school to remain in the cannabis industry under the new regulations.
“There is going to be a whole bunch of looking over each others’ shoulders to make sure we learn the systems that have been put in front of us,” he said.
Martin said that while they work to finalize their business plan, they are also working to find licensed growers to supply cannabis.
Humboldt County Growers Alliance Executive Director Terra Carver said the future of the county’s cannabis industry is in cultivation. The majority of the 2,000 people who have applied for cannabis business permits in Humboldt County are cultivators.
“I think the manufacturers have had an interesting first day in trying to understand who they can work with and who they couldn’t,” Carver said. “Our cannabis farmers in Humboldt County, I think the big moment in Humboldt County will be when the first light deprivation harvest happens in June or July.
“... Come mid-summer we’ll really see how Humboldt County shines in the market because that’s when our locally licensed farmers will be looking for or already have those relationships to market,” she said.
Honeydew Farms LLC co-owner Alex Moore said he had received around 30 of the cannabis cultivation licenses he applied for from the state for his 6-acre farm.
Because the state limits a cultivator to having one license that allows up to 1 acre until 2023, Moore said he has had to obtain several smaller cultivation licenses in order to get his farm fully permitted. The application fees and licensing fees have cost him $100,000 more than he would had to pay if the medium license limit didn’t exist, Moore said.
While Moore said he has been the target of scrutiny by some in the industry because of the size of his farm, he said that he is trying to compete with other areas like the Central Valley where large-scale industrial grows are expected to become licensed.
“Quite frankly we’re wondering how we can compete with that,” Moore said. “We share the same anxiety as many people in the industry are. Is this business model going to work? I don’t know.”
While the new state regulations have significantly increased costs of business and changed everything from worker safety standards to how cannabis is able to move throughout the market, Moore said that to be part of the end of prohibition is both historic and exciting.
“I think that Humboldt has a pretty big existing industry here and I think that we have a lot of great opportunities,” Moore said.
Will Houston can be reached at 707-441-0504.