Over the weekend, California cannabis retailers were forced to destroy over $350 million in marijuana products. July 1st marked the end of the transitional exemption period, so dispensaries all across the state were attempting offload all marijuana products that were untested. Many are referring to the event as the "Marijuanapocalypse" due to the amount of untested product that had to be disposed.
Spokesman for the California Cannabis Industry Association, Josh Drayton noted that, "Sacramento is seeing possibly up to 8,000 pounds of product that will need to be destroyed." This type of loss can be devastating for a dispensary that wasn’t aware or prepared for the implementation of new packaging and testing regulations.
All non-compliant cannabis flower and pre-rolls had to be composted or taken to a manned solid waste facility. Additionally, if a dispensary decided to destroy their product themselves, they had to make a record of it by filming or taking photos of the process.
Several hundred cannabis retailers were offering deep discounts and fire sales to limit their losses leading up to July 1st. Moving forward cannabis retailers will need to ensure that all of their inventory is tested and packaged before it departs from the licensed distributor.
Destroying copious amounts of perfectly good cannabis is yet another bump in the road for California dispensaries as they adjust to operating in a regulated marketplace. Not only have cannabis retailers lost a considerable amount of profit but they’ll be losing a lot of vendors as well.
Now it seems that California dispensaries are experiencing a cannabis shortage following the destruction of so much untested product. The Bureau of Cannabis Control’s mandate to start selling laboratory tested marijuana puts pressure at every stage of the supply chain despite their efforts to ensure the safety of cannabis consumers.
Licensed wholesalers like Caliva, are rushing to fill orders to supply cannabis dispensaries up and down the California coast. Calivia CEO, Dennis O’Malley remarked that, “I really didn't anticipate a large change in July, simply because the Bureau of Cannabis Control had done such a great job at signaling what they were doing.”
“We're happy to help people through that transition,” O’Malley noted, “but it was as-advertised that there really was a true shortage of flower. … Luckily, we have enough compliant inventory to service them all, but I've never seen that much demand so quickly on a weekend, saying, 'Hey, we need flower kind of A.S.A.P.' That has led us to work a full two shifts through Saturday (June 30), Sunday and now through this week, through the Fourth of July holiday to fill all orders.”
Whether or not the marijuana shortage is just a temporary issue stemming from the new regulations, or more long-term is yet to be determined. However, it is certainly signals cannabis retailers across California that preparedness is essential when it comes to meeting compliance deadlines.
A large majority of marijuana dispensaries are still awaiting their permanent annual business license which will allow them to use the Metrc Reporting System. It’s imperative that cannabis retailers research dispensary point of sale software that provides full integration, like IndicaOnline, to ensure a smooth transition. Any cannabis retailer who has applied for an annual license should contact IndicaOnline to schedule their Metrc integration and product migration.