MJBizMag August 2020 - 50

How to Compete With the Illicit Market
STUMBLING BLOCKS
From Illicit to Legit
D
Scarce and expensive cannabis business licenses
keep underground operators from joining the legal market
By Omar Sacirbey
ebby Goldsberry, the CEO of
Magnolia Wellness in Oakland,
California, and a longtime
champion of cannabis and social
equity, had a realization while viewing
videotape of looters robbing her store in
June amid protests against the killing of
George Floyd in Minneapolis.
" I saw people who probably sell
marijuana for a living and cannot
access a permit because they're too
expensive, " she said. " The illicit market
exists because the licenses are nearly
impossible to secure. "
Many marijuana business owners
such as Goldsberry and public-policy
experts argue that one of the best ways
to shrink the illicit market is to get
illegal operators to join the legal sector.
In fact, many do. But a scarcity and
high cost of licenses has made going
legal impossible for many more aspiring
cannabis business entrepreneurs,
leaving them stuck outside the legal
market while looking in.
COTTAGE INDUSTRY LICENSES
In markets such as California and
Massachusetts, the lack of licenses
is less a state-level problem and more
a local issue because many local
governments-upwards of 60% to 80%,
some experts say-have prohibited
or limited marijuana businesses from
opening. The results are vast " legal pot
Cannabis business licenses are prohibitively expensive for many marijuana cultivators and sellers,
leaving would-be entrepreneurs stuck in the illicit market. Courtesy Photo.
deserts " where illicit marijuana dealers
are the only sources of cannabis for miles
around. Goldsberry speculated that
many looters of marijuana companies
included people from these " deserts. "
Offering more affordable licenses is
one solution, and there are precedents
for how that might be done. Before
Proposition 64 legalized recreational
cannabis in California, both San
Francisco and Berkeley offered what
Goldsberry called " marijuana cottage
industry licenses. "
48 Marijuana Business Magazine | August 2020
For example, before 2018, San
Francisco issued cottage-industry
permits to people who made edibles in
their kitchens. Like larger businesses,
they had to follow standard health codes
and other compliance measures.
" Let's do that, " Goldsberry said of
licensing small marijuana businesses. " I
think that's the solution. "
Berkeley also issued permits for what
were essentially home-based delivery
services. " You buy it in your front living
room. You store it in your bedroom and

MJBizMag August 2020

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