California has suspended 394 marijuana business permits in a move that critics say will temporarily reduce the number of legal cannabis shops in the state.
The suspension affecting about 5% of California’s legal cannabis supply chain comes after the businesses failed to complete mandatory training and credentialing, Marijuana Business Daily in Colorado reported Wednesday.
The suspensions include retailers, distributors, delivery services and microbusinesses that have not completed steps needed for the track-and-trace system that allows regulators keep tabs on the supply chain, according to the state Bureau of Cannabis Control.
All 394 suspended businesses had ample time to complete the requirement, and the companies must stop all sales until their licenses are reinstated, bureau spokesman Alex Traverso said.
“These were just the stragglers,” Traverso said. “It turned out to be a couple extra months that we gave them. It’s just a matter of getting a password, getting a log-in and doing the training.”
Businesses must upload business inventory data so state regulators can track pot with software from Florida-based Metrc.
Participation in the system is a requirement for a provisional license, which is a transition from a temporary license to a permanent annual permit. All temporary licenses expired over the summer, officials said.
California has 7,392 licensed cannabis businesses. The control bureau oversees 2,630 companies with either provisional or annual licenses, while the state Department of Public Health oversees an additional 932 manufacturers. The state Department of Food and Agriculture oversees 3,830 farmers.
Some industry members said the suspensions could give a boost to the illicit cannabis market, especially if retailers are forced to halt operations.
“We’re kind of incentivizing the illicit market, which is a much more affordable option right now” for consumers,” said Josh Drayton of the California Cannabis Industry Association. “What we really need to be focused on is access and affordability.”