One big question for California's cannabis industry in 2017 is whether the state will actually stick to its 12-month deadline to implement recreational marijuana regulations, or if the date gets pushed back as it already has in Massachusetts. Pictured: In this Saturday April 23, 2016, file photo, petition signature gatherer Peter Keyes, right, discusses marijuana legalization in Sacramento, Calif. (Rich Pedroncelli, Associated Press file)

What does 2017 hold for California marijuana? Experts weigh in

The past year was a momentous one for cannabis, with voters doubling the number of states that allow recreational marijuana overnight while making medical marijuana legal in more than half the nation.

But casting ballots to support legal weed was just the first step. And in 2017, those legalization schemes will likely be largely stuck in that awkward in-between time, with lots of growing pains ahead before they can become reality.

California’s Proposition 64 set a deadline of Jan. 1, 2018 for the state to get its regulatory ducks in a row and start handing out licenses for shops to legally sell recreational marijuana for the first time.

Between now and then, industry insiders have many questions.

Which cities will welcome businesses, and which ones will regulate them into oblivion? How much will licenses cost? Will corporate growers take over? Will the Trump administration interfere? And will the state actually stick to that 12-month deadline, or will it get pushed back as it already has in Massachusetts?

“We cannot delay the implementation of recreational marijuana here in California,” said Doug Francis, CEO of Irvine-based Weedmaps, a website that helps consumers find dispensaries. “The people have spoken. The train has left the station. We have got to move forward quickly to keep California the nationwide leader.”

The Cannifornian chatted with Francis and other key players in California’s cannabis industry about some of their concerns and what they hope to see change in 2017. Here’s what they said.

Regulation rollout

For Nikki Lastreto — who grows the Swami Select cannabis line with her husband, Swami Chaitanya, in the hills of Northern California — the biggest concern for 2017 “is the amount it will cost to cover permits, fees, professional help, distribution, track and trace taxes, and so much more.”

Prop. 64 laid out a complex licensing and regulatory scheme for all businesses that hope to operate in California. The plan was modeled on a set of laws approved in 2015 for medical marijuana businesses, which also have to be licensed after Jan. 1, 2018.

While broad strokes of the new regulations were defined in Prop. 64, state legislators and staff members still have to hammer out fine details over the next 12 months of how business owners can apply for licenses, how much they’ll cost and more.

Safe to say, complying with it all won’t be cheap. And it’ll be a big change for industry folks who’ve operated for decades largely in the shadows.

“I’d like to see cannabis companies focusing more on compliance,” said Jim Patterson, CEO of Eaze, a Bay Area tech company that facilitates cannabis deliveries. “While many do a great job of this already, 2017 will be a crucial year for companies to work more closely with regulators to create responsible frameworks from the city to state level.”

Since local governments still have full authority to block or regulate cannabis businesses within their boundaries under Prop. 64, several industry leaders spoke of concerns about how city and county laws put in place this year might hamper the industry.

“One of my biggest concerns is that local regulators won’t take the time to investigate solutions like tech-enabled cannabis delivery, and will instead opt to block access without considering the negative impact,” Patterson said. “Responsible regulation is the only way to diminish the illicit market and promote safe, controlled access.”

How local governments treat cultivators is a significant worry for Anthony Wagner, executive director of the Southern California Responsible Growers Council.

“Previously, municipal and unincorporated jurisdictions have relegated cultivation to industrial zones, inside warehouses and under 100 percent synthetic light,” he said.

Throughout 2017, Wagner’s organization plans to focus on promoting a lawful path to outdoor cannabis and hemp farming in rural residential and commercial agricultural zones throughout Southern California, where many members have been farming for decades.

“These farms will offer skilled, high-wage jobs to local residents, contribute to jurisdictions through increased tax revenues and operate in a legal and responsible manner – without negative impacts for adjacent properties or the community as a whole,” he said.

Growers worry about corporatization

Many cannabis farmers didn’t support Prop. 64 for one main reason: They were afraid it would open the door for agricultural giants to come in and squeeze out local farmers.

“Even though it is estimated that Humboldt provides 70 percent of the marijuana consumed in California, to no surprise, the drafters of Prop. 64 never consulted us at all,” said Robert Sutherland, cofounder of the Humboldt-Mendocino Marijuana Advocacy Project.

“Greed is loose from its cage,” he said. “In the years ahead, we’ll see lots of consolidation.”

Prop. 64 did limit the size of farms for the first five years to give smaller growers an edge coming out of the gate. But many farmers fear that won’t be enough.

“Large corporations are all too ready to mount a hostile takeover of our nascent success,” Wagner said. “Their deep pockets and adept history of navigating regulatory bureaucracy puts the local farmer at a severe disadvantage.”

Wagner hopes coalitions such as his for Southern California farmers will give small growers a more powerful voice as they work with local governments in 2017 to lay the groundwork for the future of the industry.

“Diversification and choice are key to sustainability,” he said. “Our local farmers provide for both.”

Hope for banking solution

When asked about the one change he hopes to see for the industry in 2017, David Dinenberg, CEO of KIND Financial, said, “I would hope that access to banking becomes more readily available.”

Federal law still classifies cannabis as a Schedule I narcotic on par with heroin. As a result, major banks and credit card companies won’t do business with growers and dispensaries out of fear they’ll be penalized for money laundering.

“That means access to capital is shut off for them, and they are disadvantaged when it comes to operating in a cashless environment,” Francis said. “No business should have to survive in an environment like that.”

State Treasurer John Chiang has formed a working group focused on finding ways to provide banking services for the cannabis industry. They met once in December – with no federal representatives present – and have four more meetings planned throughout the state this year.

Given how many states now permit some form of legal marijuana use, Chiang has said he’s optimistic they’ll be able to make progress in 2017.

Uncertainty over Trump administration

One surprise turn in 2016 cast a shadow of doubt over many industry insiders’ hopes for cannabis progress at the federal level: the election of Donald Trump.

In the past, Trump has said he supports both medical marijuana and state rights. He’s anything but predictable, though. And concerns mounted when the President-Elect chose Alabama Sen. Jeff Sessions, who’s staunchly opposed to cannabis, as his top pick for Attorney General.

“The fact that the new Trump administration has been silent on this topic, as well as the new appointee’s history – we are all guessing,” Dinenberg said. “The unknown is the scariest.”

Maybe Trump will continue his tradition of surprising everyone by backing legal cannabis. Maybe Obama will send pot lovers a parting gift and push to reschedule marijuana in his waning weeks in office.

After fighting for legalization for so many years, many marijuana pioneers plan to keep their battle-tested mix of realistic optimism going strong in 2017.

“We hope for total federal legalization,” Lastreto said. “In reality, we’ll be very happy if Mendocino County will issue us a license and permit to grow.”

Staff writers Lisa M. Krieger and Will Houston contributed to this report.

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