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Ep.358: CA Cannabis Control Bureau Chief, Lori Ajax

Cannabis Economy Podcast
Ep.358: CA Cannabis Control Bureau Chief, Lori Ajax

Ep.358: CA Cannabis Control Bureau Chief, Lori Ajax

California Cannabis Bureau Chief Lori Ajax returns for an update on the industry realities post July 1. She shares that the Bureau is listening to the industry and making adjustments as they go to ensure a healthy marketplace. She notes how important it is to participate in public comment to ensure your voice is listened to, heard and receives a response.

Transcript:

Lori: Lori Ajax, Chief of the Bureau of Cannabis Control.

Interviewer: Can you still not believe it? Did you want to say alcohol?

Lori: No. I think I still want to say medical. You know what I- Medical cannabis.

Interviewer: Sure. Yes.

Lori: God, our name's changed so many times.

Interviewer: Absolutely. And that's evolution.

Lori: There you go.

Interviewer: Right? So here we are. It is after July 1st. Thank you for some time, Lori Ajax. Very much appreciate it. We did it.

Lori: Yeah.

Interviewer: July 1st did happen-

Lori: It did.

Interviewer: ... and we actually did do what we said we were going to do.

Lori: We did.

Interviewer: From your perspective, I guess, what were you surprised by? What were you happy with? What were you disappointed by?

Lori: I think the transition ... The ending of the transition period was probably difficult on the bureau, but more difficult on the industry. We really took the hard line. What our regs said, it ended on June 30th. And I know that there was a lot of retailers with still a lot of product that wasn't in compliance. It put them in a tough position where they had to deplete that inventory by selling it off at very cheap. And then, I think the first week we saw that some retailers had some empty shelves. The good thing is that we did see them recover very ... This is a very resilient industry, by the way.

Lori: Lori Ajax, Chief of the Bureau of Cannabis Control.

Interviewer: Can you still not believe it? Did you want to say alcohol?

Lori: No. I think I still want to say medical. You know what I- Medical cannabis.

Interviewer: Sure. Yes.

Lori: God, our name's changed so many times.

Interviewer: Absolutely. And that's evolution.

Lori: There you go.

Interviewer: Right? So here we are. It is after July 1st. Thank you for some time, Lori Ajax. Very much appreciate it. We did it.

Lori: Yeah.

Interviewer: July 1st did happen-

Lori: It did.

Interviewer: ... and we actually did do what we said we were going to do.

Lori: We did.

Interviewer: From your perspective, I guess, what were you surprised by? What were you happy with? What were you disappointed by?

Lori: I think the transition ... The ending of the transition period was probably difficult on the bureau, but more difficult on the industry. We really took the hard line. What our regs said, it ended on June 30th. And I know that there was a lot of retailers with still a lot of product that wasn't in compliance. It put them in a tough position where they had to deplete that inventory by selling it off at very cheap. And then, I think the first week we saw that some retailers had some empty shelves. The good thing is that we did see them recover very ... This is a very resilient industry, by the way.

Interviewer: Sure.

Lori: They recovered.

Interviewer: Sure.

Lori: Within a few days, we saw them just start to get compliant product. I think they're still working with making those relationships with the distributors and getting that compliant, getting that variety of products. So I mean, at least it's good to see that a lot of them have got their shelves filled. So that is good. But I think it was very tough.

Interviewer: These are growing pains, I think is what we're supposed to call them. And if you didn't do what you said you were going to do, how could we follow you in your rule set for the next thing that you say you're going to do. Right? So yes, I'm hearing those same stories of empty shelves. And folks are saying that that still is the case. But we did have a six month kind of grace period. Supply chains are what supply chains are. What is fair would be a question that no one can answer.

Lori: Right. Right.

Interviewer: So here we are post July 1st. Now, within this next timeframe, how much should we expect in terms of change? There are regulations that keep changing. You keep adoption. You keep adapting. What would you highlight to folks that are in California and need to know what you have to tell them?

Lori: Sure. So we just, last Friday, released our proposed final regulation. And I think one of the biggest questions we're getting is to let people know those proposed regulations that we issued last Friday are not in effect.

Interviewer: Not in effect.

Lori: They are not final.

Interviewer: And it gets better than that, doesn't it?

Lori: It does. They actually have forty-five days to get involved and send us their comment or attend one of our public hearings to either say, "Yeah, we like it, but we think you should do this," or, "We don't like that." And I think it's very important they read them and say, "Hey, what works? What doesn't work?" And then, I'm just going to stress the readoption emergency regs that were finalized on June 6th. Those regulations are in effect. And that's where we merge the adult use and medical use licenses, all of that. That's in effect. So it gets very confusing.

Interviewer: Indeed. Give us a few highlights of post June 6th, what I need to be paying to now that I didn't have to pay attention to before.

Lori: Well, post June 6th, if you want to do both adult and medical use, you only have to apply for one license, which is-

Interviewer: There we go. Okay.

Lori: ... great. Right? It's good for us too. We don't have to look at two licenses for each person. And you have one licensing fee, and you designate what you want to do. Delivery changed. You can do dynamic delivering. Meaning, you can take orders while you're on the road. The original regs had $3,000 limit for a delivery vehicle to carry. We raised that to $10,000. So those are some pretty dramatic changes. And then, I think if you look at some of the security requirements. We reduced the security requirements for the non-storefront delivery. They don't have to have the same security as the storefront. Then, we allowed for shared resources, for video surveillance, security, depending on if you have multiple retailers or multiple licensees in the same areas. So I think you saw a lot of good things that went into effect immediately when we did the readoption. So we got very aggressive, and that helped the industry. I think it's helping the industry right now.

Interviewer: And that's simply from listening to the front lines and seeing what reality is and understanding, "Oh, this should be that."

Lori: A majority, I'm going to say most of it is from listening, the feedback we got. And then, a lot of it is just the questions that come in. We had hundreds of questions a week on our email, on phone calls. So really looking at what's confusing the industry, what's causing the greatest pains for the industry, and really, just looking at things, how we can make things better for the whole industry as a whole.

Interviewer: Which would mean, I think, just based on having spoken with you a few times and looking into your eye right now, when we have public comment, we're actually looking for public comment. So where do folks go to find out exactly where public comment is?

Lori: Yeah. The easiest way is on our cannabis.ca.gov website. That has all three licensing authorities, so everything, our regs for both public health, food and ag, and the bureau. And then it also has where we're going to have public comment hearings. So between the three of us, there's 10 over the next month and a half. So there's going to be plenty of opportunity for people to come, tell us what they want us to hear. And then, they can also send it to us by email. We have instructions on how you can get us that public comment. But I think it's so important that people get involved. I think that it is an opportunity. We do listen.

Interviewer: And it's not that- As you said, we do listen. Not that we would need to tell you to do this, but you do have to respond to all public comment.

Lori: We do.

Interviewer: Right?

Lori: Yeah.

Interviewer: So no matter what you say to Lori, she's got to respond.

Lori: We do, which is a little terrifying, by the way, because I have a feeling we're going to get thousands of comments.

Interviewer: You're literally asking for it, Lori.

Lori: Right. We're asking for more work, which-

Interviewer: Right. But in all seriousness, at the end of public comment, what we hope will happen is that we will hear everyone out, we will understand what folks are grappling with, and then, maybe make amendments along the way. Maybe make changes along the way to deal with those realities, as you have already demonstrated that you will do.

Lori: And if we make changes after that 45-day comment, we'll probably go back for a second public comment. Probably not as long. Maybe 15 days. So it's quite the process. So.

Interviewer: Alright. Alright.

Lori: Yippee.

Interviewer: Yes. Exactly. If there is that second public comment, we'll talk to you about that then. After August, after public comment, kind of "Let's go back to the office and answer all of these," what's the next date that I need to be concerned with if I'm in the industry?

Lori: It really depends, at that point. It really depends on what changes we make, and then, where that is. We don't know at this point because we don't know what change- We're waiting for those public comments to come in. Then we'll know whether there are substantial changes, we have to go out for a longer period of time. If they're not, then it's a shorter period of time. So I think it's just get to August 27th, and then we'll know at that point.

Interviewer: Take it from there.

Lori: Yes.

Interviewer: Then, we've discussed how you're like a footloose and fancy free type of person. You're not process oriented. So I'm sure that that's familiar ground to just say, "Well, we'll tell you when we know."

Lori: Oh, wow. Yes. We like to have a plan, though.

Interviewer: Exactly.

Lori: So we have a plan. We know we have to complete this process of the final regulations before the emergency regulations expire.

Interviewer: Right. Of course.

Lori: And that's 180 days from June 6th they expire, so.

Interviewer: What would that day be, then, Lori? It's 180 days.

Lori: I don't know.

Interviewer: We'll look on our calendars.

Lori: I'm not very good at math-

Interviewer: No, but that's good. I think we-

Lori: ... but it's early December, so.

Interviewer: We're giving, yeah, we're giving folks the opportunity to figure it out. But it's kind of by year end is what we're saying.

Lori: It is.

Interviewer: Okay.

Lori: Because we can't have no regulate- I say that, but people would probably like it if we didn't, though, but we have to-

Interviewer: Well, we- I mean, what do you think we've been doing out here, Lori?

Lori: Right. Right.

Interviewer: So understanding that by the end of the year, that's where we're going to land, what are you expecting to see in the industry? What are you worried about, if anything?

Lori: One of the biggest things we have is people just getting into compliance. I talk about this a lot. I think our text of our regulations is over 130 pages. So it's a lot for people to read, and absorb, and then actually implement what we have in our regs. So I think we have to continue to work with the industry, educate them. We have a new unit we're starting. It's a local liaison unit that really is just going to work with locals, jurisdictions to help them get their programs up and running. And then, to do trainings for our applicants so they understand how to apply for a license and things like that. So I think you're going to see a lot of that.
I think, also, the collective cooperative model sun sets on January 9th of next year. So I think we're going to see some folks moving into the commercial cannabis area. So hopefully we're going to get more licensee. Because one thing, during all, we talk a lot about regs all the time, but we're still ... It's important that we continue to issue licenses. We continue to have as many people in the supply chain as possible. And we don't ever stop that. That is always a priority.

Interviewer: Interesting.

Lori: So us working with the locals and getting more cities and counties on board, I mean, I think it's important.

Interviewer: Yeah. The local fiefdoms of California, based on the rule set that we apply what we've voted in here. Are you noticing kind of changing opinion with maybe some of the more reticent localities?

Lori: We are, actually. I think they're starting to understand that they get to choose. Maybe they don't want everything in their city or county. But maybe they just want to do distribution or testing or manufacturing. So I think they're starting to see that it does make sense to put some kind of requirement to allow some of this commercial cannabis activity to occur. And I think it's just helping them, showing them what we've done, providing them what we're doing at the bureau, how our regs are working. I think that is what's going to help them because I think a lot them have been waiting to see what the state comes out. Because in a lot of other areas, usually the state comes out with their regulations, and then the cities and counties follow. And this has been a little bit different.

Interviewer: Yes.

Lori: We've had cities and counties that came out before the state. But I think for the ones that are sort of still waiting, I think they've been just waiting to see what happens, how we handle the implementation. And we can share that, everything we've done. I don't know that we all have to reinvent the wheel. Right?

Interviewer: Right.

Lori: I mean, we're happy to share our knowledge, what worked, what doesn't work. "Here's what we're doing to process licenses." I think that would be very helpful. And I think we got to get better at communicating that to the locals.

Interviewer: Got it. We had talked about the fact that you were definitely in touch with your colleagues in Canada and other geographies. Have you kept going with that? And is there open dialogue, between California and other states, sure, but other international players?

Lori: Yes. Absolutely. Canada, a big one. In fact, it's sort of turned around where now people are coming to us and asking us what we're doing, so it's like-

Interviewer: That's a good sign.

Lori: Yeah. It is a good sign. So yes. Open dialogue with Canada because they're just starting with legalization. We continue to have dialogue with all the states surrounding us. But now it's just spreading throughout the country. So we have a big state regulator group. And that's only good for everybody.

Interviewer: Exactly.

Lori: But I will say California's always ... I always think we're different, though. We are.

Interviewer: Yes. Yes. This is true. Any Californian will tell you that.

Lori: And I'm very proud of that.

Interviewer: Yeah, of course.

Lori: We are different than any other state or country. And I think that's very cool.

Interviewer: Understanding that, what are they asking you or what are you telling them? What could you share with us out here in the open about the type of dialogue, the type of questions that are being bandied about as far as regulations?

Lori: Oh, I think still testing regulation. I think that's always going to be constantly evolving. Like, "How did we determine our batch sizes? What are we testing for? What are we seeing from the results?" So that's always ... I never thought testing would be just so ... I never knew I would be involved in testing as much as we are. And then, the other thing is the manufactured products. I think it's dealing with the thousands of manufactured products, and they're all from the tinctures to the creams, the concentrates, the edibles. I think we all sort of struggle with what's the appropriate packaging and the labeling. And do you treat them differently? Is it different for the adult-use market versus the medical? So I think those are ... Because you're seeing new products all the time and keeping up with that. You know?

Interviewer: Right. With tinctures, you're allowing kind of different kind of rule sets with what they've got there, right? Will you go into that a little bit?

Lori: Yeah. That's the Department of Public Health. They have different THC levels, whether it's a medical market or the adult-use market. And then their proposed regulations. They now have a new category for the sublingual, like the mints and things like that. So you're seeing us already evolving and not just treating it all the same. You're already seeing that. And I think we're going to constantly be tweaking that. Right?

Interviewer: Sure. Sure. Back to testing just very quickly. How pleased are you with where we are as far as testing? What else do we need to be doing? If I'm industry and I'm listening to you, what should I be doing that maybe I think I'm doing, but maybe I'm not?

Lori: Well, since the July 1 into the transition period, we're seeing a lot more products being tested. So we're like nonstop. The certificate of analysis come to us from the labs. We've reviewed, I think, over 4,500 of them. So we're seeing a lot come through. So that's good. Now, the labs are busy. I would always love to see more laboratories in the state.

Interviewer: Sure.

Lori: We're at about 31 right now. And they're keeping up with demand, but I think we would feel better if we had more. But really, it's good to see how much product is getting through testing right now and being able to at least- I think that's what was nice. Now we know everything in the license retail stores have been tested. The product's safe. And I think that's a good thing. And we should all be communicating that to the consumer.

Interviewer: Sensible regulations. Safe patient access.

Lori: Yes.

Interviewer: These were really the only two things that we needed as far as legal cannabis was concerned.

Lori: Yes.

Interviewer: And a few other things along the way.

Lori: Right.

Interviewer: But you get my point. So collaboration with industry. Collaboration with other jurisdictions and geographies. Collaboration with localities. Is there another group of-

Lori: [crosstalk 00:18:08]. You can tell we've done a lot of work.

Interviewer: Indeed.

Lori: Don't we?

Interviewer: Yeah.

Lori: It doesn't stop. We're going to start off ... We did get some money approved in the budget for a public awareness campaign. One of the things we've talked about is how we can communicate better to the public, better to the locals. We still are pretty small. I have two communications guys that do great work.

Interviewer: They are fantastic.

Lori: But there's only two of them.

Interviewer: Which is remarkable.

Lori: And they're great. I mean, they're ... But we do realize we need help doing bigger advertising. We're going to put out for a contract to have some help with that.

Interviewer: Oh, wow.

Lori: I think that'll be very exciting because I think it's important we communicate to folks on what it means to be licensed, how you get licensed, but equally important to tell consumers and patients, "Hey, when you go to a licensed store, this what you can expect from your product. It's going to be tested. It's going to be safe." And I think that's super important.

Interviewer: Absolutely. Absolutely. And that's kind of public education for everybody type of thing.

Lori: Yes. Yes.

Interviewer: I guess I'll just put in start low and go slow.

Lori: Yes.

Interviewer: Because that's an old favorite of mine.

Lori: That's a good one.

Interviewer: When do you think things become somewhat normal?

Lori: Yeah.

Interviewer: If January 9th- If I'm kind of tracking your dates, between January and July, a year from now, do you think we're kind of where are going to be with, of course, changes that come with an ever-growing and changing market? But is that a reasonable expectation?

Lori: I think a year from now is somewhat reasonable because when you think about our final regulations, really, by the end of the year, they'll be in place. So if you think ... And then the collective cooperative model. I think by six months into next year, you're going to see a lot more stability in the industry.

Interviewer: Good.

Lori: I think we're going to still be making changes, but not the sweeping. We're not going to present you with 130 pages. It's going to be small changes that we meet. So I think a year from now we're going to see more stability.

Interviewer: Good.

Lori: Is it going to be normal? I don't know that this industries ever going to be normal.

Interviewer: We don't do normal. Yeah.

Lori: I know.

Interviewer: Yeah.

Lori: It's just like, that [crosstalk 00:20:23].

Interviewer: That's why I changed- I think I interrupted myself.

Lori: Yeah.

Interviewer: Yeah. Exactly.

Lori: Normal.

Interviewer: Stable is what we're going for.

Lori: There you go. How about that?

Interviewer: Alright. Okay. Anything else that is happening now or upcoming that we need to make folks aware of?

Lori: Well, there's so much always happening. But yes. Make sure you look on the website. Go to those public comment hearings. If you can't go, then send us your feedback. And we're always happy to answer questions too. So I just keep people engaged. I know they're probably just as tired as we are with the regs, but if they just will come on. Just we got to-

Interviewer: Keep doing it.

Lori: ... keep doing it. It's important.

Interviewer: And it does feel like we're still, we're on the same team here.

Lori: Right. It sounds like we're on this wheel that never stops.

Interviewer: Oh, no. My point is that you seem to be on the same page with the ... on the same team with the industry.

Lori: Well, I think-

Interviewer: Making sure it happens.

Lori: Well, I think it's important. Right? It's not this us against them. That's not what we want. We want to do this together. And I think we succeed together. I don't think we do it on our own. And we don't have all the answers, by the way. We need the industry, so.

Interviewer: There we go. Perfect. Okay. Public comment. That means comment. Please.

Lori: Yes.

Interviewer: That song just came on, Lori. And what I'm going to do is I'm not going to put you on the spot. It's not putting on the spot. You know that I would ask you for a song. I'm going to give you a song that I think for you.

Lori: Okay.

Interviewer: And then I'm going to give them a song as an attache of you, if that makes sense.

Lori: Okay.

Interviewer: So for you, the song is not that one, but Changes from David Bowie-

Lori: I love it.

Interviewer: ... because that's what we're doing right now.

Lori: Yep.

Interviewer: And then from you, from me, is Better Get it in Your Soul by Charles Mingus-

Lori: I love it.

Interviewer: ... because these are out there. We're doing this. When we say there's a deadline, there's a deadline. Please, please, please work with us.

Lori: Awesome. I love it.

Interviewer: Right? How did we do?

Lori: I think you did great.

Interviewer: Thank you so much, Lori.

Lori: Alright.

Interviewer: I really appreciate that.

Lori: Take care.

Interviewer: In all seriousness, we will check in with you down the line.

Lori: Deal.

Outro: And there you have Lori Ajax once again. Very much appreciate her time. Very much appreciate your time. Stay tuned.

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Cannabis Economy is a real-time history of legal cannabis. We chronicle how personal and industry histories have combined to provide our current reality.