On Jan. 1, at 6 a.m., Mayor Jesse Arreguín will stand outside the Berkeley Patients Group at 2366 San Pablo Ave. and cut a ribbon that officially opens sales of recreational cannabis in Berkeley.
Arreguín won’t be purchasing any marijuana for himself, he said, but he will probably be an anomaly among the many expected to flock to BPG that day. Marijuana aficionados who don’t have medical cannabis cards have been waiting to buy pot ever since voters passed Proposition 64 in November 2016, and Berkeley is one of four cities in the Bay Area that will permit sales of “adult-use” cannabis on Jan. 1, the first day legally possible. Dispensaries in Richmond, Oakland, and San Jose will also be open. San Francisco’s cannabis stores won’t open until Jan. 5.
“We are stocking up beforehand to be ready for what we anticipate will be increased demand,” said Sean Luse, the chief operating officer of BPG, Berkeley’s oldest and largest cannabis business. It has been selling medical marijuana since 1999 and has outposts in Nevada, and soon, in Emeryville.
Even though there has been more than a year to prepare for the sale of recreational cannabis, the day will arrive with the state and only a few cities offering temporary permits, good for 120 days, and with widespread uncertainty about the impacts of the new law.
Will there be an overwhelming rush of new customers, like there was in Nevada when marijuana became legal on July 1? That could mean a tripling or quadrupling of sales for dispensaries. Or will California’s long history of permitted sales of medical cannabis mean there won’t be a surge of new buyers?
“There is a bit of uncertainty about what the lay of the land will be on Jan. 1,” said Luse.
BPG officials aren’t sure what to expect. The most number of people BPG has serviced in one day, since it moved into its current facility, is 1,200, according to Lauren Watson, BPG’s marketing and communications manager. That was for 420 on 4/20, a day that celebrates cannabis culture. On paydays, as many as 700 to 800 people can come in, she said.
Berkeley’s other two permitted, operating dispensaries, Cannabis Buyers Club of Berkeley and Berkeley Patients Care Collective, also expect to be open for recreational sales on Jan. 1. (As of press time they were still waiting for their state licenses, but the state is processing applications rapidly.)
To sell recreational cannabis in California, a company has to be licensed by both the state and a local entity. California has been working on the rules that will oversee the sale of all cannabis ever since the 2016 election, but the new Bureau of Cannabis Control only released its regulations in November. It is issuing temporary permits while it finalizes permanent regulations and subjects them to public review, which should happen in the spring, according to Lori Ajax, the chief of the Bureau of Cannabis Control.
In general terms, recreational users who are over 21 will be able to purchase one ounce of loose cannabis or flowers, eight grams of concentrated cannabis, and six immature cannabis plants a day. (Medical users can purchase eight ounces of cannabis each day.)
Edibles, which much be professionally packaged off-site in child-resistant containers, cannot contain more than 100 mg of THC in each package or more than 10 mg per serving. Capsules or suppositories can contain 1,000 mg of THC. (Medical patients can purchase 2,000 mg.) Both medicinal and recreational users will have to pay state excise and local taxes, but holders of medical cannabis cards won’t have to pay the 7.25% California sales tax. In Berkeley, medicinal users will also pay lower taxes than adult use users.
Cities and counties have been grappling about whether to allow recreational sales of marijuana. The vast majority of the 500 jurisdictions around the state have decided to prohibit cannabis sales, according to Ajax. That includes cities such as Albany and Palo Alto.
In order to get a state license, dispensaries and manufacturers must first get a license from the city in which they operate.
A few months ago, it looked like Berkeley was not going to have the regulations in place that would permit its three operating dispensaries and other businesses to start selling recreational cannabis, produce cannabis products, or provide testing services on Jan. 1. City staff recommended to the City Council that permits not be issued until new laws were adopted, which would not happen before the spring of 2018. But the City Council voted on Oct. 3 to issue temporary licenses to the cannabis businesses that have already been operating with licenses in Berkeley. In Berkeley, there are the three already operating dispensaries, three dispensaries that were approved in 2016 but have not yet opened, a testing lab, and manufacturers that produce lotions, tinctures, and edibles.
But a host of other types of cannabis businesses, such as delivery services or nurseries that want to grown cannabis starter plants, won’t be able to start operations on Jan. 1 since Berkeley has not yet licensed them. This has drawn some criticism from people eager to get smaller cannabis operations up and running.
“I’m pretty disappointed with Berkeley’s lack of care for the little guys,” said Austin Cable, who sits on the city’s Cannabis Commission. “There are a lot of people sinking their nest-eggs trying to be ready for Jan. 1. If Berkeley was on top of their game they would be passing their license system by Jan. 1.”
Collectives to become illegal in 2018
The new state laws will also impact collectives, small groups of people who grow cannabis for themselves and operate out of homes in residential districts. California does not recognize collectives, so they will become illegal in 2018, Elizabeth Greene, who staffs the Cannabis Commission, told the City Council in October.
Doc Green’s, a manufacturer of topical cannabis lotions and ointments that operates in the Gilman District, was the first manufacturer to get a state license, according to its co-founder, Daniel Kosmal. The company sells wholesale to dispensaries and collectives. He is anticipating a bump in sales after Jan. 1. , which means the company should grow.
“We’re intending to expand and bring on some investment to help expand,” said Kosmal.
Steep Hill, the largest testing facility in the country, has already doubled its staff since the summer to 60 in anticipation of the sales of recreational marijuana. Berkeley had already mandated testing all the cannabis that consumers use and is, in fact, a state leader in that regard, but testing will now be required state-wide, said Cathie Warner, the vice-president of public relations for Steep Hill, which is located at Ninth and Parker streets. Cannabis distributors will now have to test samples of all their batches for a variety of contaminants before they can sell them to retail operations. Warner believes the company will soon have to find additional laboratory space.
“It’s all growing really fast,” she said.
The Cannabis Buyers Club of Berkeley, located 3033 Shattuck Ave., will open at 9 a.m. and plans to serve a New Year’s Day brunch, much like it has for many years, said Aundre Speciale, a director of CBCB. The business is not sure whether there will be a rush of recreational customers since CBCB doesn’t advertise, she said. But the dispensary plans to set up two distinct lines of business, one for medicinal marijuana, and one for recreational cannabis, she said. There will be separate entries, separate lines and separate cash registers.
Speciale said she is delighted that recreational cannabis will finally be easily available at retail outlets.
“I have been a cannabis activist since 1989 so this is the culmination of my life’s work,” she said. “I am really excited.”
Berkeley Patients Group is gearing up for the rush of recreational users in many ways. The dispensary is installing a vending machine with quick-sale items like pre-rolled cannabis joints, as well as lotions, tinctures and edibles, which will be positioned by the front door, said Watson. There will be new point-of-sale software at every register to make purchasing easier, and BPG plans to beef up its online ordering, although everyone will still need to come in an pay with cash since no banks work with cannabis businesses, precluding the use of credit cards.
Buying for a mood rather than an ailment
In the coming months, BPG will be building out a call-center so people new to cannabis, as well as those with questions about what the best strain to use, can call up and have a conversation rather than asking those questions when there are dozens of people in line, said Watson.
One of the biggest changes might be in the way the benefits of cannabis are conveyed, said Watson. Currently, since everyone who comes to BPG is a medical patient, the cannabis dispensary is geared to solving medical ailments, such as nausea from chemotherapy, pain, insomnia and other issues.
Now people will come in and want a certain effect or mood, said Watson. Products are being marketed by the feelings they will provide, like relief, or bliss, calmness or relaxation, she said, pointing to a selection of vape pipes that offered those exact moods. For the inexperienced but curious, BPG is thinking about creating a cannabis starter-kit with low-dose items for new users, she said.
Chuck Wood is one of BPG’s behind-the-counter advisors. For years he has been helping medical patients determine which strains of marijuana would help their conditions. He said he did not think it would be difficult to start suggesting cannabis strains for mere fun.
“They are looking for a feeling, not to treat symptoms,” said Wood.
Even though only a handful of places will have state and local licenses by January, many businesses will continue to operate in the gray market, according to Luse. Taxes on legal cannabis are high and there are those who will avoid paying them, he said. The state will levy a 9.75% harvest tax, a 15% excise tax, plus a sales tax for recreational cannabis. On top of that, cities will levy their own taxes he said.
“All the gains of legal marijuana will go out the window if you tax it too much,” said Luse.
Berkeley officials don’t know how much money in taxes will flow to the city coffers as a result of the widespread use of adult cannabis. Taxes from medical cannabis sales were $1.39 million in fiscal year 2016 and $1.52 million in fiscal year 2017, according to Matthai Chakko, a city spokesman. Cannabis is taxed at $25 for every $1,000 sold of medicinal cannabis and $100 for every $1,000 sold of adult use cannabis.