We sat down with Josh to talk banking, regulations, and more
California currently represents the largest adult use market not only in the United States, but across the entire world with slightly more than 39 million people currently living in the state. The California Cannabis Industry Association, or CCIA for short, was formed to unite the legal cannabis industry in California under the banner of an educational resource for policy makers. The CCIA currently represents the diverse interests of the cannabis industry: retail, cultivation, manufacturing, delivery, distribution, testing, insurance, packaging, and various ancillary services.
We sat down with the CCIA’s communications and outreach director, Josh Drayton, to talk about the CCIA and what is currently happening in the legal cannabis industry across the Golden State.
Josh, thanks for taking the time to talk with us today. Tell us a little bit about your background and what brought you to the CCIA?
Absolutely. For almost four years now, I’ve been the communications and outreach director for the CCIA. Prior to this, I worked in politics for the California Democratic Party, running campaigns throughout the state. Having lived in Humboldt County for over 10 years really gave me a very different vision of what the industry was, as well as how people use the industry as an economic driver.
I’ve always believed that we need to regulate the industry. A turning point for me, that caused me to get more politically involved, was on a specific 420. I was in San Francisco for a concert and thought: “Let’s just run over to the Golden Gate park.” As I was making my way through the parking lot of a huge festival, we saw some 12-year-old kids sitting by the baseball diamond. They were showing each other the cannabis that they’d just scored. Walking by, I thought this is why you regulate. We need to have control. We do need to keep it out of the hands of children and make sure we’re creating tested, regulated products.
So, in 2015, I made the jump from working in politics to working in cannabis politics, when the state was beginning to create medical regulations for the industry. Although medical use of cannabis was legalized in 1996, we never created a state framework of regulations for the industry so it could expand and grow. There was no sense of continuity from the state to all the cities and counties. At the time, when I was in Sacramento, it was very discouraging. Everyone thought it would be a career killer, that it was, ultimately, going to taint you. But from my experience living in Humboldt–knowing those farmers in that community–I felt that the cannabis industry, in general, really deserved better representation. That’s what really pulled me into the CCIA.
Currently, there’s a massive unlicensed market problem in California, especially in Los Angeles. Coming from Humboldt, where a lot of unlicensed farmers are being affected, how do you feel that the BCC is handling the licensing roll-out?
I think one of the biggest challenges we face, as an industry, is all of the barriers to entry into the regulated market. I think we’ve made it very difficult by having the dual state/city licensing system. Plus, 60 percent of the state operates with a full ban. So the challenge is statewide. I think one of the challenges in Los Angeles is the legacy cannabis market. There have been legacy operators, retail and delivery, for decades. It really wasn’t ever addressed. So enforcement is a real challenge. But it’s only part of the process. Again, I think communities need to be working with their existing cannabis operators to bring them into the regulated market. I’d like to see that be the Number One priority, with more cities and counties moving in a direction of regulating, recognizing that it gives them more control.
As far as the education campaign that the BCC has put forward, my concern is that it’s late. At this point, consumers have had access to adult-use cannabis since 2018. But they really haven’t been educated on how to identify regulated operators and regulated products. So a lot of these illicit retail establishments that exist continue to exist and sell illicit, untested, unregulated product to consumers, which brings us to the vape issue.
The two deaths [in California from vaping] occurred in areas where a full ban of cannabis is in place. In those two deaths, both gentlemen acknowledged that they purchased illicit vape cartridges; that’s what they were consuming. So it brings up a lot of different points. Is our failed war on drugs working? Is it attending to public safety and public health? I believe, no. At the state level, we need to find a way to make sure that we’re educating consumers as to how to identify a regulated product and the importance of knowing what they’re consuming. Ask consumers to really do their homework. It’s an unfair expectation that all consumers somehow know all of this innately. We need to do a better job of reaching them.
Again, L.A. is specifically challenged. I know that they don’t want to rush into over-regulating cannabis or allowing too many licensees. But we have to be realistic that L.A. is the largest cannabis market in the world, with the largest population where cannabis can be sold. We need to be offering more establishments for consumers. We don’t want to see monopolistic behavior in any way, shape or form. We need open market policies to really get things off the ground.
Touching a little bit on the vaping issue. Additives such as vitamin E acetate, or off-gassing from bad carts seem to be the two front-running possible causes. We’ve seen bans put in place within certain markets as a response. Do you think that’s the right methodology?
It’s really important to have fact-based data to make educated decisions. The California Department of Public Health is doing patient interviews. They’ve interviewed every single patient who has been identified with this respiratory illness and they’re doing toxicology reports. I hesitate as to whether it’s the best path forward is to go ahead and ban. Is that the best solution to the problem? If we currently ban, will we force all current vapers into the illicit market? We have to be realistic. We need to take a measured approach and make sure we’re identifying the right additives or coil that manifests off-gassing. We don’t quite know. Folks need to slow down; we need to make educated decisions. Hype and hysteria only do more damage.
In the City of Los Angeles, there’s a request to move forward and ban all vapes for one year. Why? Of course, we want to ban and get rid of illicit vapes. Still, our cannabis and our cannabis products are tested at a rate above and beyond any other manufactured goods in the state of California. So I think a collaborative approach is best. I want to see governments working with the industry. Let’s work with the manufacturers and find out about their own research and development. What is their data telling them? A ban only further vilifies the industry. There’s a big difference between regulated cannabis and illicit cannabis. And there’s a big difference between cannabis and tobacco or e-cigarettes. We need to be realistic and take a very measured approach.
METRC is the software system that’s being used statewide to record the inventory and movement of cannabis and cannabis products through the commercial supply chain. How do you feel the METRC roll-out is going here in California?
There’s caution right now. There are a lot more unknowns about the system than knowns. They’re currently working and doing events throughout the state, making sure operators are as informed as possible and undergoing training. It’s a whole new level of work for these companies, which they’ve never had to deal with before. I think there’s going to be a learning curve. It’s going to take some time to, not only get the system fully up and running, but to make sure it’s a closed-loop system in which everyone is part of it. We really do need that data and research. We want to find out when there’s diversion, where the problems lie. I think there’s some hesitation on the part of the industry in believing that this is a silver bullet for their problems. But I do think it’s a step in the right direction.
The SAFE Banking Act recently passed the House of Representatives. Should it fail in the Senate, do you believe that California will introduce an in-state solution?
I’m hopeful for the SAFE Banking Act. This is the first time that any sort of cannabis bill has passed at the federal level. So the tides are changing. We’re seeing bipartisan support. The more folks become educated, the more they want to find solutions for regulating this industry and make sure they’re tending to public safety and public health. That’s a big part of the banking issue that folks are missing out on. An all-cash industry is absolutely detrimental. I recently met with a retired Oakland police officer to talk about what he’s seen and how things are shifting. He says he’s seen gang violence shifting in Oakland. They’ve begun focusing on cannabis businesses, because they’re known to be all-cash. I do have hope that it’s going somewhere and that the conversations are at least happening.
In California, we did have Senate Bill 51 introduced by Senator Hertzberg. The governor has committed to working with Senator Hertzberg very early next year to strengthen that bill to see if we can move forward.
How is 2020 shaping up for the cannabis industry here in California?
I think we’ll see some streamlining of business operations. I think that the administration is going to collaborate with the industry in order to figure out how to have Prop 64 reach its potential. As this is the first year of this new administration, they were a little hesitant to make sweeping changes. But, ultimately, I think we’ll see a lot of bills that died this year get revisited in 2020. At this point, we’re still looking for the governor’s signature on a few key bills. Senate bill 34, the compassionate care bill, for instance, is critical. We’re waiting for signature on AB 1529, which will address the vaping issue. It mandates a universal symbol be printed or etched onto all vape carts, all vape pens, which will help folks identify whether it’s a regulated product or not.
The industry is evolving so quickly. The cafes and lounges that West Hollywood is looking to introduce are a totally different concept from the legacy operators in Northern California. There, they have tasting rooms or allow vendors to come in and promote their products to consumers. I think we’ll continue to look at cannabis tourism. As a former Humboldt County resident, I can say that being able to see how your cannabis is grown on an outdoor sun-grown farm is a special experience. Consumers will become more educated. Much of this is new to them, including the products that are available. We’re seeing variety that we’ve never seen before. Folks need to figure out what works for them and what doesn’t.
I’m hoping that more municipalities open up. The industry needs to stay engaged. We’re building a a living, breathing, foundation for the industry right now. As exhausted as everyone is with all the work that it’s taken to stay compliant and stay on top of the changes that we see daily, it’s worth it. We saw 55 bills this year. We’ll probably see as many next year. Folks need to stay engaged to make sure that their concerns are being heard by the legislature.