ORHOF - Why Did California Suspend Over 400 Cannabis Businesses and What Does That Mean for the Industry?
California is one of the hottest markets for the cannabis industry in the entire country. According to research company BDS Analytics, the state is already expected to hit $3.1 billion in sales this year; that number is expected to reach $7.2 billion by 2024. That's even more than the $5.2 billion that BDS estimates the cannabis market in Canada will be worth five years from now.
California presents a tremendous growth opportunity for the industry. And so when investors learned that the Bureau of Cannabis Control (BCC) and the California Department of Public Health suspended more than 400 marijuana licenses, it raised some questions. After all, the cannabis industry has been riddled with scandals lately, from CannTrust Holdings growing pot illegally to companies being too aggressive when it comes to advertising. There have been many reasons for investors to push "pause" on investing in cannabis, at least for now.
The reason for the recent time-outs in California isn't tied to any illegal activity. Instead, it looks to be due to administrative issues more than anything else. A variety of cannabis businesses, including retailers and distributors, failed to complete training and other steps necessary to enroll in the state's track-and-trace system. Those are crucial pieces allowing regulators to stay on top of the industry, and the supply chain in particular.