Marijuana lawyer in Sacramento Discusses Proposition 64 and Vertical Integration

 
Many of us Californians understand that possessing marijuana is now legal for individuals over the age of 21, but even more don’t understand that a new industry is currently being planned and developed as marijuana entrepreneurs across California race to ready themselves for the State’s rollout of the licensing system for retail cannabis production and sale.

Entrepreneurs have largely been left in the dark when it comes to some of the greyer areas of the State’s recently passed legislation, Proposition 64. The confusion will soon give way to a mad dash of cultivation, distribution, and retail sales entrepreneurs attempting to license themselves once the Bureau of Cannabis Regulation begins accepting applications. The exact date is still up in the air, but the plan is for businesses to begin operating legally at the beginning of 2018.

Vertical Integration

 
What is vertical integration and why is it important with regards to California’s recently passed recreational use bill? Vertical integration is a process by which a producer of a product attempts to capture all elements and steps of the products life cycle within one business entity.

An easy example to help describe this is the production of bread:

Company A owns and operates the field in which the grain is grown, the processing facility where the grain is turned into flower, the bakery where the flour is made into bread, and the retail store that sells the bread.

The above represents a fully integrated company that handles all aspects and inputs of the final product’s production. This allows the company to capture the profits at each level of production for itself (which normally would have been passed onto someone else), which will give them a cost advantage over competition who is not vertically integrated and must pay a premium to providers of the services described above.

With regards to the planned retail cannabis industry in California, an easy example of vertical integration would be a cannabis cultivator who also owns a retail dispensary that sells his own product. Another example would be a cultivator who uses his own cannabis byproducts to manufacture cannabis extracts. Both represent a form of vertical integration with regards to the laws from Proposition 64, because each business (cultivation, extract manufacturing, and retail sales) each require a different license.

What Exactly Does the Law Outline?

 
The design of the overall regulation of the industry is in an infantile stage, and the law was vague with regards to vertical integration, but essentially, the law states that certain types of vertical integration will not be allowed – while others may not.

The marijuana lawyer in Sacramento at Wing and Parisi has made an educated guess and suspects that vertical integration involving cultivation and retail sale will be the primary form of integration targeted by regulators – this will likely be banned. We suspect that some forms of integration with regards to the cultivation and manufacturing of cannabis extracts to be allowed, but this is just a guess. Nothing has been set in stone by the regulators as of yet, but it will be important to be ready once applications are being accepted. Speaking with a qualified medical marijuana consultant will help you be ready when the time comes. There are steps that can and should be taken in advance of the application process, and only a medical marijuana lawyer in Sacramento can help. Call today to discuss how we can help you and your business be ready for the coming rush!

Contact us online or call at (916) 441-4888 for a free and confidential initial consultation with an experienced marijuana lawyer in Sacramento, available in Spanish. We appear in state and federal courts in the Sacramento and Davis communities as well as throughout Placer and San Joaquin counties.

The Law Office of Wing & Parisi serves clients in the Sacramento and Davis communities as well as throughout Placer County and San Joaquin County. Hablamos espanol.