Former OC Register Owner Thinks He Knows What OC's Cannabis Biz Will Look Like in 20 Years
Just make her OC's weed queen, already
Photo by Scott Feinblatt
Ever wonder what Orange County is going to be like in 2040? We'll probably still have off-duty cops manhandle junior high school kids, and the county will likely maintain its national conservative reputation even if the local scene is increasingly blue. Despite this, one thing is pretty certain: there will be weed.
Last Thursday, Chapman University held a conference focusing on what OC will look like in 20 years. The future, apparently, will have no Muslims and have former Los Angeles Mayor Antonio Villaraigosa, who was invited to speak on...something. And the king of OC's weed scene is Eric Spitz, a former co-owner of the Orange County Register who now plays an active role in the SanTana cannabis industry.
So we're supposed to trust the words of a East Coast guy who saw the Register become a national, bankrupt laughingstock under his co-tenure with fellow lunatic Aaron Kushner? Um, yeah.
Spitz used the cities of Irwindale, Carlosville and Garden City as examples of municipalities that are finding their way through the new legalization era. Although none of them quite replicate Orange County’s situation in regards to cannabis, it’s easy to see how the scenarios could apply to our anti-green county.
Although it’s unclear where Garden City or Carlosville are located exactly (the latter suspiciously sounded like SanTana, for reasons that will become evident soon), the first half of the lecture centered on the issue of legal and illegal, or “rogue,” cannabis businesses operating simultaneously within the same city. (This sounds awfully familiar *cough* Santa Ana *cough*) Spitz explained that it’s irresponsible governing when one group of businesses are running under a proper system and by official regulations, while another group of the same type of businesses are not because it hurts the community and perpetuates an illegal industry.
“There are twice as many illegal [dispensaries] as there are legal ones in Carlosville and law enforcement hasn’t done a good job at shutting them down,” said Spitz. “The reason is because it costs a lot of money to shut down stores. When the city does, the dispensary then turns around and sues them for being shut down. The thing the dispensaries always say is, ‘Why are you shutting me down and not the other guy? That’s selective enforcement, so I’m suing you.’ There are all kinds of reasons why a city council, mayor or a staff choose not to do anything, but doing nothing isn’t a good answer.”
Im your biggest fan (leaf)!
Spitz crunched theoretical numbers of how much it costs to shut down one storefront and the legal fees that come with it, which roughly lands around $760,000. To shut down a delivery service is an additional, estimated $500,000. So if a city doesn’t have a solid stream of incoming revenue, it’ll be nearly impossible to cover the costs of shutting down illegal businesses. That's why it’s important to have legal dispensaries, according to Spitz: because their revenue will help cover the shutdown costs.
The whole scenario can easily be applied to what’s currently going on in Orange County's only 420-friendly city. There are 14 legal dispensaries open in Santa Ana. There are, um, a lot of undocumented dispensaries in Santa Ana (and the surrounding cities), and the city is already cracking down on some. The Measure BB-compliant dispensaries (the legal ones) have formed an alliance and are suing 14 rogue dispensaries in the area in hopes to shut them down for good. “People have died from synthetic marijuana,” Spitz said. “That's going to happen over and over and over again if we continue to perpetuate an illegal industry and don't enforce the proper system and channel.”
People have also died from third-hand tobacco smoke, but whatever.
After explaining that cities have three options to legalize cannabis—full adoption, or allowing everything from retail to cultivation to distribution and everything in between; partial adoption, or allowing retail and not cultivation, or allowing cultivation and manufacturing and prohibiting retail; and industry shut down, meaning a full ban on cannabis—Spitz shifted from the local scale to the national scale and dropped some interesting stats. He explained that the market size of the marijuana business in the U.S. is $53 billion. For perspective, the beer industry is worth $100 billion, the liquor industry is $60 billion and the wine industry is $40 billion. So cannabis is already larger than wine and not quite the size of liquor. But what Spitz emphasized was the Golden State's role in all this. “The key part here is that California is the epicenter of the marijuana business…it makes up at least 50 percent of the entire national industry.”
This is the face of Orange County Cannabis in 2040. Get ready.
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But one of the biggest challenges the cannabis industry faces is itself: will it evolve from being a cottage industry and grow into a sophisticated one? The people for the maturity of the industry think it will experience that growth, as long as it goes into a three-tiered supply chain, the way alcohol operates. Spitz explained that within the next five years, the business will look a hell of a lot like the alcohol industry, as he estimates the three-tiered system will be implemented. The tiers would level out to distribution, manufacturing and retail. Those who are against the industry's maturity and hope it remains a cottage industry want it to be a two-tiered system consisting of the distributors and retailers.
But the problem with the two tiered system is that it’s already proven to be faulty at best. Colorado has applied the two-tiered supply chain to their industry, and 96 percent of the stores out there are failing, per Spitz. “Colorado is the poster child of what not to do,” he said. “Over the last two years, the biggest retailers have become cultivators and the biggest cultivators have become retailers, so now there’s an integrated system there, and unless you're one of the big guys, you're not doing well.”
So what’s the message in all this? The pressure is on, California, because what happens with us is going to gage how the rest of legalization goes for the distant foreseeable future (unless, of course, our new attorney general, Jeff Sessions, follows through on his law to ignore state's rights and send in the feds). But Spitz seems to believe that won't happen. “Everyone is watching California, right now,” said Spitz. “It is incumbent on us to ensure we do this right because we are the epicenter of this industry.”
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