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Eureka, Arcata cannabis dispensaries reflect on ‘up-and-down’ year
Frustrations include track-and-trace, saturated market
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Humboldt County’s cannabis industry has made it through another year of legality, a feat for a marketplace swarmed by regulatory costs and state bureaucracy since its inception.
For a handful of pot dispensaries in Eureka and Arcata, the trek has been worth it. Several of the city’s marijuana shops said the past year has brought good returns. They cited strong relations with local growers and said most businesses are on good terms.
The dispensaries did echo concerns with the state’s fledgling track-and-trace program, which became fully implemented this past summer. The stores also said the ever-increasing supply of dispensaries has been a problem.
Profits and taxes
Cannabis permit holders learned last month the state plans to raise business tax rates in the new year. An industry expert predicted that under the new rates, the cost of eight ounces of marijuana buds could rise by $5 to $10 under the new tax rates.
“People are still trying to work through the kinks of the current system,” said Savannah Snow, store manager at The Humboldt County Collective on Myrtle Avenue. “To already increase the tax by as much as they’re going to is bound to push even more people to the black market.”
Another unintended consequence, Snow predicted, is that large companies with deeper pockets will be able to keep prices the same. Smaller dispensaries won’t be able to keep up, she said.
Still, the dispensaries interviewed by the Times-Standard this week said business is good. Cannabis is selling, and new strains are popping up locally all the time.
“We’ve been busier and more profitable than ever before,” said Brianna Chapman of The Heart of Humboldt in Arcata. “Of course, we still hit the lulls that come with students leaving town but cannabis tourism has been great for us all throughout the year.”
But the industry is still bracing for tax increases as advocates push for policy reform in Sacramento.
“We’re hopeful that in 2020 we’ll see Sacramento move the ball on this and reduce this burden of taxes chasing consumers back to the unregulated market,” said Terra Carver of Humboldt County Growers Alliance.
That Eureka and Arcata have not imposed their own tax burden on dispensaries has been a major boon for the local industry, Carver added.
Eureka and Arcata have been quick to embrace retail cannabis. Each of the cities’ planning commissions were swift in approving dispensaries in locations around town. But for the existing dispensaries, each new arrival means an ever more saturated marketplace.
“The point of more dispensaries is for ease of access,” Snow said. “But if you put ’em all in the same spot, it hurts everybody — it creates a fight for the bottom.”
What makes things more difficult is the product’s very nature. Cannabis has its dedicated fans, but doesn’t convert too many newcomers, said Mariellen Jurkovich of Humboldt Patient Resource Center, which has locations in Arcata and Eureka.
“It’s not like you open a dispensary down the street and people say, ‘You know what, I think I’m going to start using cannabis now,’ ” Jurkovich said.
Eureka is not done adding dispensaries. More are on the way.
But the alternative is a cap on permits, which Carver said is always a sub-optimal fix. Cities that do implement caps wind up rewarding those who can pay the most for licenses, she said.
Mariellen Jurkovich, director of the Humboldt Patient Resource Center in Arcata, looks at marijuana plants in the center’s “flower room.” (Shaun Walker — The Times-Standard file)
For the most part, the dispensaries are getting along even as the marketplace tightens, said Julius Adams of Proper Wellness Center in Eureka.
“We’re all really chill with each other,” Adams said. “We refer customers to each other when there’s a product another place might have.”
Proper Wellness Center is leaning into the “healing” side of cannabis to differentiate itself, Adams said.
The business also plans to open a smoking lounge in the next two months. Along with neighboring EcoCann and others, the dispensary would become one of the first businesses with an on-site consumption area anywhere in the state.
Tracking, tracing and testing
Across dispensaries, the largest headache has been the state’s track-and-trace program, METRC, a complex system that requires dispensaries to extensively tag and log their individual products.
The idea is to allow California regulators to trace every step of legal cannabis’ path from farms to the shopping bags. But dispensary representatives say the process leads to tedious, lengthy legwork without guaranteed results.
“Track-and-trace is an inherently tough concept,” Snow said. “I understand why they’re doing it and I absolutely want to know where my products are coming from, but it’s not going all that well. When you have a binder with like 500 products and there’s a 24-digit number to identify each, it becomes very convoluted and tough.”
Strict testing standards can also delay business. Regulators insist on dispensaries listing precise and accurate THC counts on products, but determining exact percentages can be an expensive and uncertain process, dispensary representatives said.
“While testing can be a difficult and expensive process for a cultivator, the issue doesn’t lie with the testing labs,” Chapman said. “The real issue is that those who wrote these laws and requirements regarding testing are not the people who grow and process cannabis, and I don’t think they were fully aware of how tough of a process it can be.”
Shomik Mukherjee can be reached at 707-441-0504.
Eureka, Arcata cannabis dispensaries reflect on ‘up-and-down’ year Frustrations include track-and-trace, saturated market Share this: Click to share on Twitter (Opens in new window)