California’s Marijuana Distribution Regulations Force Applicants to Report Themselves To Feds

For those anxiously eyeing the uneven progress of California’s adult use regulatory rollout, the sinking feeling that the legal supply chain isn’t linking up quite right isn’t a new sensation. When Bureau of Cannabis Control chief, Lori Ajax, publicly acknowledged that “at some point, we’re going to see the supply depleted,” the prevailing public perception about the gaps in California’s legal cannabis system became an official fact: It’s still up in the air how marijuana distribution will work in California at this point.

But now, you can add a few extra dashes of frustration (and a splash of conspiracy theory) to the cocktail of frustration around the developing marijuana distribution bottleneck: According to a report from Wired, an “apparent oversight” has created a dangerous catch-22 for aspiring distributors that requires they snitch out their own operations to the federal government during the application process for a state permit.

From Wired:

Anyone hoping to commercially transport cannabis in California must apply for a Motor Carrier Permit (the only exception is for companies transporting their own goods). The catch is, beginning in 2016, the state’s Department of Transportation began requiring any commercial vehicle seeking a Motor Carrier permit to obtain a federal DOT number. That involves explaining to the federales — who are not so cool with this marijuana thing — exactly how the vehicle will be used.

As you might imagine, asking would-be distributors to inform the federal government that they intend to commit a federal crime on an ongoing basis is a pretty hard sell — nobody’s volunteered yet. That means, for the time being, cannabis license holders who aren’t already “licensed motor carriers” can only transport their own products without flagging the feds through the application process.

However, if you’re already a licensed motor carrier, then you already have a DOT number from the feds, which means you don’t have to tell them anything about what you’re transporting.

That means an existing armored transport company moving into the cannabis sphere doesn’t have to explain anything and can simply add cannabis transport to their menu of commercial services.

If this licensing barrier is the result of an honest regulatory oversight, then ostensibly it will be corrected. However, the ongoing fiasco around the state’s (allegedly accidental) “mega-grow” loophole in cultivation licensing suggests these regulatory corrections aren’t quick and painless.

But because California’s cannabis industry (and this reporter) can’t resist a good conspiracy theory, there is, of course, a less probable but more tantalizing possibility: The state deliberately structured marijuana distribution licensing this way in order to favor existing licensed carriers.

What would the legislature’s motivation be for tipping the scales in favor of existing armored car services? Perhaps they assumed established companies would be easier to work into a regulatory framework than companies with origins in an outlaw industry, or maybe they engineered a supply chain bottleneck to streamline market stabilization and benefit a handful of companies with connections to the special interest groups that helped shape the regulations. Ultimately, it’s fun to speculate, but there’s no evidence this is anything more or less than another glaring error in Sacramento’s sweeping approach to adult use legalization.

And the negative impacts on legal cannabis distribution are the same regardless of the state’s motivations or lack thereof: Irrespective of the many other obstacles facing the state’s regulatory rollout, we’re rapidly approaching a point where there simply won’t be enough legal distributors to supply the legal market. The BCC says it’s powerless to change anything — it’s baked into the law and the legislature will have to fix it.

How — and if — that issue is resolved depends on the political will of California’s cannabis community. Because without a sustained demand for a solution, Sacramento can be trusted not to produce one.

TELL US, is your cannabis provider facing marijuana distribution problems?