Posted on June 28, 2013 by News Admin
Hundreds more could be forced to shut down in the coming months, ensuring that California will remain one of the most unpredictable, chaotic MMJ markets in the country for the foreseeable future.
If you’re currently operating any type of MMJ business in the state (particularly in southern California), buckle up and prepare for a bumpy ride. Most importantly, remain as flexible as possible to deal with changing conditions and have a Plan B professionally in case the whole endeavor goes up in smoke. And if you’re eyeing possibilities in California, the best opportunities may very well be in the home-grow market and in products for patients/users such as smoking devices (more on this later).
The overall business climate in the state is grim: From Anaheim and Los Angeles to Inland Empire, San Bernadino and Riverside, dozens of cities and counties across the state have outlawed or put in place restrictions on medical marijuana operations in recent weeks, while others are moving in that direction. At the same time, numerous towns with dispensary bans on the books for awhile have finally started enforcing the law.
Chalk it up to last month’s brutal Supreme Court ruling that essentially gives cities and counties the ability to enact dispensary bans, as well as pressure from district attorneys and a recent ballot measure in Los Angeles that will force most of the city’s centers to close.
“It is a perfect storm,” said James Slatic of MedWest, which sells vaporizers and other products, adding that the turmoil is having a huge affect on those in the real estate side of the industry. “Landlords are extremely distressed as they now have vacancy’s to fill in a slow economy.”
Indeed, the closure of so many dispensaries is having a ripple effect on the entire industry. Businesses that provide services and products to dispensaries – from advertising to equipment – are taking huge revenue hits as their client base shrivels, and many are hanging by a thread.
The turmoil is even evident at industry gatherings and events.
“I was just at the High Times Medical Cannabis Cup in San Francisco over the weekend, and it certainly looked like there were fewer booths and smaller crowds this year, both on the dispensary side as well as the ancillary business side,” said Khurshid Khoja, the principal and founder of Greenbridge Corporate Counsel, which provides legal services to MMJ businesses.
Khoja added that the medical cannabis business community is increasingly looking outside the state for opportunities.
“Fortunately, I haven’t seen any significant dropoff in my business law practice yet, though I am seeing the bulk of investor and entrepreneurial interest gravitate away from the uncertainty of markets like California and into the much more stable regulatory environments in Colorado and Washington,” Khoja said. “Additionally, there’s a lot of excitement about the new dispensary laws in Nevada.”
But it’s not all doom and gloom: Amid this chaos, some MMJ businesses are adapting to survive, while others are thriving.
Universal Hydro said it has seen overwhelming demand in California for its new indoor hydroponics systems aimed at home growers, fueled by an increase in the number of patients looking to cultivate their own supply or marijuana as their local dispensaries close.
“Due to an overwhelming response from our customers, we sold out of our first batch run of systems in four days,” said Steve Fields, Universal Hydro’s master grower, adding that the company expected the initial supply to last a month.
Other ancillary products, such as MedWest’s vaporizers, are doing a brisk business.
Additionally, many dispensary owners who were forced to close their shops have continued to operate via discreet delivery services and “mobile” centers, though the legality of these operations is questionable in some areas.
And some entrepreneurs are still rolling the dice, opening dispensaries in cities across the state even as many close.
Adam Bierman – co-founder of MedMen, which provides MMJ marketing and consulting services – said he has even helped three new dispensaries open up in California over the past few weeks.
He has a brighter assessment of the MMJ business situation in California than some other observers. Bieman said the overall market for cannabis isn’t changing – patients and users are still seeking out and paying for marijuana at the levels they did before – but how they get it might. Some patients might drive to nearby cities and towns where it’s legal, others will rely on delivery services.
“The revenue is not changing, the demand is not changing, ” he said. “A lot of people who ran dispensaries are now going to delivery services. The demand is being filled. And new dispensaries are still opening up.”
He also questions whether government officials in Los Angeles – where hundreds of dispensaries are supposed to close – will be able to enforce the new law, saying that those regulations are somewhat vague anyway and legal challenges will likely result. Either way, Bierman said the current climate isn’t much different that its been in the past, noting that the California MMJ industry has always been volatile.
Others, however, say it’s just a matter of time before the hammer drops and believe that the recent developments have caused unprecedented chaos for business owners.
“The mere fact that individuals are still running dispensaries and operating illegally in Los Angeles does not mean it is good for business,” said F. Freddy Sayegh, a medical marijuana attorney in Culver City, California. “Just because the city hasn’t begun enforcement doesn’t mean it won’t. I already had several dispensary clients shut down. And it’s not just them. Ancillary businesses are taking a hit. Employment is taking a hit.”
We've helped thousands of happy customers start & run their medicinal & recreational businesses in all legal states. Whether you're serious, curious or just looking to gather information, GreenZipp can help.
Primarily through word-of-mouth alone, GreenZipp has become the company people trust to help start and run their legal marijuana businesses. For the last 4 years, people have been using GreenZipp because it's famously easy, straight forward, with no hidden costs. Combine that with our best-in-the-biz customer service, and you've got a unique and delightful offering of products and services.
We've been in business for 5 years, so you can depend on us to alleviate the anxieties and pressures of starting and running your business. Not once, has a single customer ever been in trouble with the law - ever. We're extremely proud of that number. Our job is to keep you safe and compliant with regulations and allow you to run your company without fear or anxiety. We've gone and will continue to go to the ends of the earth for our customers. Learn more about our company.
Many customers come to us saying that they've been told they need a lawyer to start their businesses. Sure, you can definitely use them, but you don't need them. Heck, you can even do it yourself if you don't mind putting in the time and making some costly mistakes from time to time. We take the complicated, confusing and time-consuming process of starting or running your marijuana business and boil it down to plain, detailed and easy-to-follow steps. Or, we can just do the whole process for you.
Here's the best part: We're so effective, lawyers and law firms hire us to service their marijuana industry clients for them.
Absolutely. You can see how our customers feel about us via an independently certified, 3rd party review website. We're extremely proud of our 5 out of 5 Star rating.
We offer a free Starter Package to help people understand the industry and us a little better. Check it out.
New business owners, seasoned entrepreneurs, investment groups and law firms all rely on GreenZipp. We've been fortunate to earn the repeat business of our customers, including some of the top lawyers and law firms in the country.
There's a lot of (mis)information out there. At best, it's usually speculation from non-professionals, old wive's tales or completely fabricated. It can be tough to navigate. With that in mind, here are a few things we've prepared for you:
GreenZipp is a medical & recreational marijuana consulting firm that's helped thousands of customers establish and run their marijuana businesses in all legal states since 2010. With industry-leading, streamlined and cost-effective products and services that abolish hourly & hidden fees, we'll be sure to make you happy.
We’ll send periodic news, new product releases and exclusive promotions.