Avoiding monopolies with California cannabis licenses

Avoiding monopolies with California cannabis licenses

The current issue (September 2017), of GQ magazine, has an interesting article on the legal structure and secrecy of big companies that are getting into the cannabis business.  As you may know, the State of California is about to issue cannabis licenses in California for those that want to become marijuana growers, retailers, wholesalers, lab testing facilities, and mobile delivery services for marijuana. The State of California currently does not allow certain licenses to be held if you already have a cannabis license.  That is, according to the appropriate departments in the State, to prevent vertical integration, under the fear that large tobacco companies can come in and control the growing, wholesaling, and retail distribution of marijuana, as they did with tobacco.

The State of California currently does not allow certain licenses to be held if you already have an existing cannabis license.  That is, according to our Orange County DUI lawyer, to prevent vertical integration, under the fear that large tobacco companies can come in and control the growing, wholesaling, and retail distribution of marijuana, as they did with tobacco.

The GQ article mentions one company, BioTech Institute, as follows, as one company that has been aggressive in applying for (and paying for) patents on specific strains of marijuana:

If the rest of its patents get approved, and they hold up legally, BioTech Institute might have a near-monopoly over crucial intellectual property for a commodity whose soothing, mind-altering effects make it more valuable than wheat. Unless the hustlers in the rest of the cannabis industry take a break from shoving one another aside to work together against the patents, BioTech Institute could have the market cornered in a few years. The company could control access to a plant that has been shown to reduce tremors in Parkinson’s patients, to help veterans stop dreaming in flashbacks, to relieve the nausea of anyone undergoing chemotherapy. They could charge whatever they wanted.

One cannabis business lawyer,  Gary Hiller, has been helping investors as the lawyer who runs Phytecs and BioTech Institute, according to the article.

California Lt. Gov. Gavin Newsom, a big supporter of the legalization measure, stated that:

“We have got to protect the small cultivators as well as entrepreneurs who don’t have access to millions of dollars.”

To that end, the Adult Use of Marijuana Act – as the California initiative is called – includes language meant to protect the industry “against monopolistic practices” for five years, noted Newsom, the highest-ranking state politician to support legalization measures.

For example, any adult-use cultivation business that operates an outdoor facility larger than one acre or an indoor building that exceeds 22,000 square feet would be prohibited from getting a license until January 2023. All legal rec growers prior to that date would have to fall within those limits.

Under the proposed law, state licensing authorities also would be required to consider whether issuing a particular applicant a permit might stifle competition or create a monopoly.

Newsom stressed the need to ensure minorities have a place in the cannabis industry, and he also said existing medical marijuana businesses that have proven they can operate responsibly will have a leg up in obtaining a recreational license. 

“For those who have been good actors in the state of California, you’re going to be prioritized,” he said.

Contact us today for questions about your California cannabis license.