December 29, 2017 / 11:00 AM / a year ago

California set for New Year's buzz with recreational marijuana sales

    By Steve Gorman
    LOS ANGELES, Dec 29 (Reuters) - California adults not
content to ring in the New Year with the traditional fizz of
champagne can look forward to celebrating with the buzz of
marijuana, purchased for the first time from state-licensed
retailers of recreational pot.
    Dozens of newly authorized marijuana stores are due to open
for business across California on Jan. 1, launching yet another
chapter in America's drug culture and the largest regulated
commercial market for cannabis in the United States - one valued
at several billion dollars.
    The rollout is expected to be gradual and bumpy. The state
only began handing out licenses in mid-December, issued on a
temporary basis because implementing regulations were still
under review.
    Newly permitted retailers will rely on a hodge-podge of
marijuana producers in the state's illicit "gray market" to
stock their shelves for the next six months, until
state-licensed growers can harvest their first crops. 
    And many jurisdictions, notably Los Angeles and San
Francisco, will be closed to business in the recreational pot
sector for days or weeks because of additional local approvals
applicants must win.
    Shops in San Diego, San Jose, the Bay area-towns of Berkeley
and Oakland, and Eureka - the heart of Northern California's
cannabis country - are among those ready to go on Day One, said
Alex Traverso, a spokesman for the state Cannabis Control Board.
    "The market is going to be kind of rough getting started,"
said Jordan Lams, chief executive of Moxie, a company based in
the Los Angeles suburb of Lynwood that specializes in making
cannabis extracts, including oils used in electronic
vaporization, or "vape," devices. 
    He predicted supply shortages early on. 
    California led the way in legalizing marijuana for medical
purposes in 1996, and more than 30 states have followed suit
since then, though cannabis remains classified as an illegal
narcotic under U.S. law.        
    On Monday, California will become the sixth U.S. state, and
by far the most populous, to legalize, regulate and tax sales of
recreational marijuana - a market catering to consumers wishing
to buy the drug for its mind- and mood-altering properties.
    Colorado, Washington, Oregon, Alaska and Nevada were first
in launching recreational pot sales on a state-regulated basis.
Massachusetts and Maine are on track to do so in 2018.
    With California and its 39.5 million residents joining the
fold, more than one in five of Americans will now live in states
where recreational marijuana is commercially available to buy in
state-licensed stores.
    Many among the new recreational pot proprietors previously
operated as medical cannabis dispensaries, under a patchwork of
local regulations. Some will now be licensed by the state to
sell both.
    The recreational sector - what state regulators prefer to
call the "adult use" market - is considered more lucrative. 
    "This is the moment we've been waiting for," said Daniel Yi,
spokesman for the 7-year-old Los Angeles-area dispensary chain
MedMen, which is expanding from a medical business model to
serving recreational users as well.
    The stage for Monday's grand opening was set when voters
passed a ballot measure in November 2016, Proposition 64,
immediately legalizing personal possession and use of
recreational pot by adults 21 and over. They could also grow
their own.
    But it has taken California lawmakers and bureaucrats over a
year to devise a licensing, regulatory and tax structure for all
phases of the commercial distribution chain.
    A key goal of the new regime is to eliminate California's
illicit marijuana production and farms, which account for
roughly 60 percent of the nation's pot supply and are blamed for
degrading the environment.
    Supporters also point to a hefty new tax revenue source that
by most estimates will total $1 billion a year. Both medical and
recreational cannabis will be subject to a 15 percent state
excise tax, though medical pot will be exempt from regular state
sales taxes.
    Recreational customers are limited to buying no more than
one ounce (28 grams) of raw cannabis or its equivalent at a
time, though individuals may grow up to six plants per person.
    Investors have expressed an eagerness for a piece of
California's burgeoning legit marijuana market, estimated to be
worth $4 billion to $11 billion.
    Opponents, however, have argued liberalized marijuana laws
carry major public safety risks and make pot more accessible to
    Analysts expect much of the illicit trade in recreational
pot will quickly gravitate to legit retailers as prices come
down and reach parity with the illegal market.
    An eighth ounce of "fairly good-quality flower," labeled
with such names as "Blue Dream," "Youth in Asia" and "Super
Glue," will go for about $35, said Yi of MedMen, which plans to
wait until Jan. 2 to launch recreational sales in two of its
sleek, artisanal shops in West Hollywood and Santa Ana.
    Three other MedMen shops within the city of Los Angeles will
probably have to wait for at least a few weeks, Yi said.

 (Reporting By Steve Gorman, Editing by Ben Klayman and Rosalba
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