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California's Cannabis Distribution Network May Not Be Able to Meet the Demand for Legal Weed

Despite these concerns, California regulators believe that the cannabis industry will survive these growing pains.

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Recreational cannabis sales in California are off to a strong start, but some industry insiders are concerned that the state's cannabis distribution infrastructure may not be able to support the high demand for legal weed. "There's going to be huge bottleneck in the distribution network in California at some point," Terry Blevins, co-owner of a SoCal cannabis distribution company, told The Washington Post. Blevins said that he doesn't "believe there are enough businesses to handle" the billions of dollars of product the industry is projected to move this year.

The cannabis industry in California was largely unregulated for years, and dispensaries were able to make simple, private arrangements with cultivators and processors to deliver their product. Now, cannabis products can only be transported by licensed distributors, and some industry experts are concerned that a dearth of distributors could leave cultivators with products rotting in their warehouses and dispensaries without stock to sell. A similar situation occurred in Nevada last year, when unprecedented demand for legal weed left dispensaries' shelves barren within days of the start date of legal sales.

Under California's new recreational cannabis regulations, distributors are tasked with more responsibilities than their counterparts in other canna-legal states. Not only do they have to safely transport cannabis from cultivators to processors and dispensaries, they also must ensure that these products are lab-tested for safety. Additionally, distributors must collect state excise taxes from retailers and cultivation taxes from growers.

Despite these concerns, Lori Ajax, chief of the California Bureau of Cannabis Control, believes that the recreational cannabis industry is robust enough to survive these growing pains. Ajax told The Washington Post that state regulators will ensure that distributor licenses are kept widely available, so that new distributors can jump into the market if necessary. "I'm feeling pretty good that we are going to be OK," Ajax said.

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