California Pot Users Turn Out in Droves to Ring in Legal Sales

Back Bloomberg Jan 5, 2018 By Jennifer Kaplan

California rang in the new year with a newly legal product: cannabis.

The state officially launched legal marijuana Monday, and customers lined up to celebrate the historic moment in San Diego, Sacramento and Oakland — some of the municipalities given the green light to start sales on Jan. 1. Meantime, in Los Angeles and San Francisco, the state’s first- and fourth-largest cities, customers were turned away empty handed.

“I had to come Day 1,” said Peter Papineau, 40, while standing in line for the Harbor Collective dispensary in San Diego. “It’s about time.”

Papineau previously had a medical recommendation for cannabis, but didn’t get it renewed after California voters passed a referendum in November 2016 to legalize the plant for recreational use. Medical pot stores, which have been legal in California for more than two decades, must receive new state permits to continue operating.

“I’m excited about going to a store to buy weed instead of just getting a little baggy,” said Will Doudna, 21, who was in line at the Harbor Collective with two friends. He also used to have a medical recommendation, but let it lapse.

The market for marijuana in the state, the world’s sixth largest economy, is expected to reach $3.7 billion this year and more than $5.1 billion in 2019, according to the research firm BDS Analytics. Seven other states and the District of Columbia have legalized recreational weed, boosting a market that Cowen & Co. predicts will grow to $50 billion by 2026, up from $6 billion in 2016.

Out the Door

Lines were out the door and in some cases around the sides of buildings in San Diego, where stores were allowed to open at 7 a.m. Monday.

“There were people in line 15 minutes before we opened,” said James Schmachtenberger, founder of Mankind Cooperative in San Diego, which previously sold medical marijuana and now is also licensed for adult recreational use. He says he expected his store to serve 1,500 people Monday, more than double a typical day as just a medical dispensary.

While sales were set to start Tuesday in West Hollywood, customers in some other cities will have to wait. San Francisco stores are on track to begin recreational sales to adults on Friday. Los Angeles won’t be ready for at least a few weeks.

As of Monday morning, more than 400 businesses had received licenses from the state to legally operate under the new California regulations, according to a statement from the Bureau of Cannabis Control.

Related: Meet California’s New ‘Pot Czar’

“This is an historic day for the state of California,” Bureau of Cannabis Control Chief Lori Ajax said in the statement.

Inventory Crimped

Even stores that opened on New Year’s Day were affected by delays in licensing to growers, manufacturers and distributors. That led retailers to remove some inventory from shelves.

“This is less than half the products we normally carry,” Schmachtenberger said.

Stores also used stop-gap measures designed by the state to facilitate the transition from one regulatory regime to another. They put purchases in opaque, childproof bags with stickers saying the product inside hasn’t been tested as required by the new legislation.