California Pot Shops Forced to Destroy $350 Million Worth of Weed

California Pot Shops Forced to Destroy $350 Million Worth of Weed

In a move some are dubbing “The Marijuanapocalypse of 2018,” an estimated $350 million worth of cannabis products were destroyed in California last week due to new regulations that took effect July 1st. Legal sales of adult-use cannabis started on January 1st, but it wasn't until six months later that state officials implemented stringent new testing standards, designed to ensure consumer goods do not contain potentially harmful mold, pesticides, and other pathogens.

However, the move left dispensary owners scrambling to unload product that would soon be illegal to sell because it had not been tested as strictly as the new laws require. Around 150 cannabis business owners signed a letter address to California Governor Jerry Brown, begging for more time.

Many retailers offered closeout deals to help offset any potential loss of income but unfortunately, it wasn't enough. Thousands of pounds of cannabis flowers, extracts, and edibles were incinerated, sent to landfills, or composted; in order to remain compliant, licensees were forced to film themselves in the process to prove the work had been completed. Adding insult to injury, businesses had to incur the costs associated with the disposal of non-compliant cannabis.

“We have to remember that, yes, that is going to be a growing pain we are going to have to deal with,” Josh Drayton, a spokesperson for the California Cannabis Industry Association, said in an interview with Wired. “But ultimately Prop 64 passed through wanting to prioritize public safety and public health.”

Producers note that it's not that they don't want safe cannabis – it's that there is also a lack of certified testing facilities that have the capacity to conduct the necessary work. This could lead to a potential backlog for new products looking to hit the market in the future.

Alex Traverso, the spokesman for the state bureau of cannabis control, said there were 31 licensed testing labs throughout the state. “We’d obviously love to have more, but I think we’re cautiously optimistic,” he said in an email to The Guardian.

Many were quick to point out that people have been consuming untested cannabis for years and that it should be up to the customers to decide which products they buy. Others argue that the destroyed material could have been offered to medical patients struggling to pay for their marijuana but that instead, it went to waste. Another expected result of the so-called Marijuanapocalypse is a shortage of approved products on the shelves, leading to higher prices and an increase in demand on the black market, which still very much exists in the Golden State due to the high costs of legal weed.

In May, Gov. Brown allocated $14 million to investigate and dismantle the illegal cannabis trade in California, a move that was welcomed by licensed producers and retailers. They believe the state needs to address “barriers to entry” to the legal industry, such as high taxes and regulatory fees as well as bans on those with criminal records working in the market.

David Kani is an Orange County business lawyer and partner at Hochfelson & Kani, LLP. Kani’s first book Pot Inc. - An Entrepreneur's Guide to the Marijuana Industry is set for late 2018. To book or learn more, contact [hidden email].


David Kani

David Kani is a Newport Beach, California based business lawyer with a focus on cannabis companies, their investors, employees and cannabis-related litigation.
To connect with David: [hidden email] or 714-907-0697.

To learn more about Hochfelsen & Kani LLP:
To learn more about David's book Pot Inc.:
For media inquiries or speaking engagements: [hidden email]

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