December 31, 2017

A Tale of Two Cities

January 1, 2018 marks an historic occasion for the cannabis industry: the start of legal adult-use sales in California. Since a substantial number of BDS Analytics employees live in California, we decided to get out on the streets and talk to consumers and industry players about it, and report it in near real time here.

The word “compliance” has been very loosely defined in the California cannabis market, but it takes on a very strict meaning January 1, 2018 when laboriously reconciled medical and adult-use licensing regimes take effect.

Very few of the state’s municipal regulators, or its 3,000 cannabis stores, are ready. That became crystal clear on the first day of BDS Analytics’ visits to as many stores as we could get to during this year-end transition from the medical-only era to full adult legalization in the country’s largest state.

My first store visit was on Christmas Eve across the railroad tracks from the runways of the San Bernardino International Airport. “Get Lifted with Us” said the banner across the gate in the six-foot fence around the corner lot on which no less than three separate stores were operating at full steam.

I asked the receptionist behind the glass in the waiting room of the first store I went into if she needed my medical card. “No, we’re Prop 64 compliant,” she cheerfully told me. “Meaning the city of San Bernardino has already issued adult-use permits,” I asked? “I don’t know, but we’re Prop 64 compliant.” I got the same response from the receptionists at the other two shops in the same compound.

I checked the online sources for dispensaries in each town on my way home from the Inland Empire to the Central Coast two days later. Nothing in Adelanto, Boron, Mojave, or Tehachapi, but a half dozen or more in Bakersfield.

A search turned up Golden State Cooperative, one block over from the emergency room entrance to San Joaquin Community Hospital. I was buzzed inside what had clearly been a doctor’s office years before, where Manager/CFO Liz Terry told me GSC’s story. Opened in 2009, the dispensary was compliant in a very different sense from the stores in San Bernardino: “All our product is tested,” she told me. “We take a very medical approach; our first question to a new client is always, ‘what do you use cannabis for?” All the products are color coded for type and labeled with test results. She plans to begin paying California’s 15% excise tax January 1, though she worries about how she’s going to compete with other local stores she doubts will do the same.

“So you’re locally licensed,” I presumed. Actually not, as it turned out. Bakersfield has never offered a medical program, though Terry said an initiative has been qualified for the November 2018 ballot to force it to do so.

Night and day, I couldn’t help thinking about these two stores. Both claiming to be compliant, though in very different ways; as diverse as California itself, but the same in having to operate in the vacuum created by local regulators refusing to bend to the will of the voters, as state regulators finally have.

On January 1, we’ll be in some other stores—those who’s local jurisdictions have previously provided medical licensing, and then provided adult-use permitting processes in time for the retailers to get their state licenses so they can be open on an historic day for the cannabis industry. It is a day on which the number of Americans living in states in which cannabis can be sold legally to any adult nearly triples.


Tom Adams

Managing Director

Industry Intelligence Division






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