Cannabis QA with Victor Gomez

Pinnacle Strategy president on what to expect after Jan. 1

Pinnacle Strategy President Victor Gomez

Q: Can you briefly talk about your involvement with and why you got involved with the cannabis industry?

A: Initially my experience around cannabis was on the public policy side. I spent years working for the City of San Jose. As many know, San Jose was one of the original trailblazers in developing city policy to regulate the medical cannabis industry. That’s how everything started— medical access.

When I launched my own consulting firm, it was the legal, public policy side of, “How do we address this emerging industry that’s not going anywhere and that’s likely to grow over the years?”

Last November Proposition 64 passed. We knew it would add another layer of the regulatory side going above and beyond medical. My knowledge and experience is on the public policy side, also as a land use consultant. I work for others outside of the cannabis industry.

Eventually I got hired by San Benito County to guide them through their process of adopting an ordinance, as well as the City of San Juan Bautista. Other jurisdictions and politicians have either contracted or consulted with me regarding their legislative needs.

My experience wasn’t necessarily on the advocacy side. I’m not going to pretend I say I know anything about the industry. The industry and how that operates, I leave that to professionals, those that own cannabis companies. What I bring to the table is the legal perspective, not as an attorney but as a consultant who understands MCURSA and implementations of medical and adult use in California.

Will anyone 21 and over be able to walk into an existing dispensary on Jan. 1 and buy legal adult use cannabis?

It depends on what the local jurisdiction adopts. A good example is Hollister. If you currently are one of the two permitted dispensaries, you will not. The only way you can get cannabis at a Hollister retailer when they open up is if you have a medical card to purchase cannabis. It depends on the jurisdiction.

In San Jose, they are 100 percent ready and on Jan. 1 if you’re 21 and over they’re ready to allow walk-ins. It’s a little different in Hollister and other jurisdictions that haven’t transitioned to recreational yet. They’ll still have to follow the old model of having a medical license to do that.

To an extent, I hate to say it, but unless the Hollister City Council moves to allow them to do recreational sales, the Hollister permittees will be at a disadvantage while those who’ve adopted recreational will have a larger customer base.

We have received comments from patients who currently get their medicine from dispensaries or delivery services. How will their access change on Jan. 1?

It shouldn’t change at all from the medical perspective.

Taking a step back, I run campaigns and I’m running some up in Oregon. I’ve been spending time in Eugene and other areas. Oregon has been up and running for about six months on medical and recreational. I noticed the higher-quality cannabis seems to be shifting over to the medical side. The more expensive, taken-care-of product seems to be being used for extraction or consumption more on the medical side. Where on the recreational side, you’re seeing a different quality cannabis. Some argue it’s a lower quality making it to recreational side in Oregon.

If anything I think if that does happen in California, it shouldn’t change anything on the medical side. If you’re a medical card holder, you’re still getting service, but there will be a significant dip. A lot of medical card holders are now looking at Jan. 1 and wondering why they need a license.

There will be a dip in medical licenses that will go down quite a bit, but I’m not a believer in it’s going to go away. You still have patients between ages of 18-21 that cannot purchase recreational cannabis so they will have to keep their cards. There are people who have specific medical needs, whether they’re suffering from glaucoma, cancer, migraines, whatever it may be. A lot of folks on the medical side are used to specific products that recreational won’t provide for them.

Products like cannabis-infused topicals, edibles and tinctures are already sold in dispensaries, but do you think those kinds of products will ever make it to supermarket shelves?

I think it’s going to take some time before we see anything like that prosper and open up. Animals, for example. I know a lot of pet owners who have actually used cannabidiol (CBD) based products for their animals. Their dog may be 13-14 suffering from pain and arthritis. There are other dogs that suffer from fear. People do provide those products for their pets. Unfortunately, they can’t purchase them at the pet store.

I think that will become a trend in the future, I don’t see it necessarily happening in the next five years. But like alcohol prohibition, it took time to get it served. It takes some time for the public to feel comfortable.

Will it happen in the future? I think it will, but it will take a lot of time and it’s going to take the community a while to get used to cannabis being legal, even CBD-based.

Will medical cannabis operations be able to operate if they have not applied for local licenses?

No, you have to have a local permit to retain a state permit. It all starts at the local level.

I follow what other cities are doing. That’s why I think to an extent it’s okay for these jurisdictions to have temporary bans to allow them to develop a policy.

Now if a jurisdiction has a permanent ban and no plans to lift it anytime soon, it’s problematic. I think the state would limit their tax revenue from the cannabis industry.

For example, San Benito County doesn’t have medical or recreational anything. So if the county wants to apply for grants through this new cannabis tax revenue coming into state, I don’t see the state granting San Benito anything because it doesn’t allow cannabis.

How does the Hollister City Council’s recent ban on adult-use operations impact those medical cannabis businesses who have already received local licenses to operate? Does it affect their chances of getting a state license?

It will not have an effect on them getting a state license. You have a choice right now to get class M (medical) or class A (adult use), it depends on your use. If you have a local medical license, you will only qualify for a medical state permit. But if you have both, and you can have both, you can apply for both medical and adult use at the state level.

The state is going to be watching closely what local jurisdictions are doing. That’s going to be closely monitored.

To the question regarding impact and this 45-day moratorium, I think the concern with maybe some of the elected officials and the concern with a small segment of community is, they’re concerned that first we’re only doing medical dispensaries. I’m not sure they’re necessarily okay with someone being able to walk into the door of these two permitted dispensaries for recreational use. The debate is on the retail side.

For me, on the manufacturing, distributing, cultivation, and testing sides it’s a no-brainer for the council to move from medical and add recreational to all those license types. There’s no public access to those. If you have an adult-use license, you can only sell that product to recreational dispensaries.

Right now if you have med license, you can only sell to the medical side of dispensaries. If the mayor and city council are concerned about recreational cannabis access by residents, they could keep the retailers at medical if that’s a concern. The other license types, it really makes no sense to ban them from getting recreational permits. Hollister residents can’t just walk into a cultivation, clip a couple buds and take that home.

If I live in Hollister or San Benito County, I can grow six plants in my house and guess what, no one can tell me whether I can do with it or not. All you’re doing is banning recreational sales, not recreational use. You cannot ban recreational use, that’s illegal.

I will say this: On the retail side, if Hollister keeps the medical only and does not allow dispensaries to do recreational, recreational users will go buy their cannabis elsewhere, which means Hollister will lose tax revenue from that.

San Benito County has told existing cannabis operations to “abate” themselves until the Board of Supervisors can pass an ordinance and regulations in spring 2018. Is this realistic? What concerns have you heard about the abatement?

Self-abatement, it’s realistic. I don’t think it was necessarily self-abatement though, as code enforcement and the sheriff from what I understand have been following up on these cultivators. They gave them notices in November to self-abate. I don’t know where they are with that, I don’t have clients that fall within those illegal operations, but from what I understand I attended one of the hearings and illegal cultivators that were given notices to abate have abated. It looks like it worked. I know staff, specifically Sarah Dickenson, put a lot of work in on that. I know the county wanted to move forward with a clean slate.

I don’t think all illegal operations will cease. I’m sure there’s some in the county that the county doesn’t even know about. Will the county have a complete clean slate by the time they reconsider their policy in April 2018? I don’t think so, I think they’ll still have a lot of illegal cultivators out there.

The smart thing to do is pass an ordinance, rules and regulations, find out where they are, and get them to comply so you can start getting tax revenue from them.

The state licensing board has said they just need an allowance (say in the form of a written letter) from a local municipality to give a business a state permit to operate. Do you have any clients who have received emergency licenses from the state? What are your thoughts on the state licensing board?

That’s true, you have to have at least indication, some kind of proof that you’ve been granted a permit.

For example, Dr. Ahmad Rafii (owner of Euphoric Life Inc.) had legislative approval. Now he can go pursue his medical industrial license at the state level. While he doesn’t have an actual permit in hand, he has recorded action of their approval of the permit.

As for the state licensing board, I think the process now seems to be pretty fair. I don’t know how prepared they’ll be to move forward with these permanent permits. They did hand out quite a bit of temporary licenses, but I think time will tell how prepared they’ll be to get these other operations or other permanent licenses granted. I’m sure they’ll be overwhelmed to an extent, but everything seems to be going smoothly.

The state team up there is learning at the same time the industry is learning. Everyone is in a learning stage. There’s still a lot of growing pains to come over the next 12 months. Overall I think they’re doing a good job and they moved swiftly considering this new recreational law passed just 12 months ago. I think they’ll be ready. They’re excited to cash in on this industry. They’ll make a substantial amount of money through taxing.

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