The following article was originally printed in the December 2017 issue of Marijuana Venture, on sale now.
Los Angeles is the largest municipal market in the country, but even well-established businesses are in a state of limbo as the calendar rolls over to 2018 and adult-use marijuana sales become legal in California.
Calvin Frye, who owns the Cloneville dispensary in Studio City, uses some colorful language to describe the predicament. Suffice it to say, Los Angeles — and by extension, the state as a whole — is a mess.
The problem, as Frye sees it, is that the city has not enforced its own laws, creating a situation in which the shops currently operating in compliance with local regulations remain in direct competition with gray market dispensaries that were supposed to be shut down years ago with the passage of Proposition D.
Prop D, approved by voters in 2013, was designed to reduce the number of dispensaries within city limits to 135, the number operating prior to Sept. 14, 2007, when Los Angeles passed its interim control ordinance (ICO).
By the time the law was enacted, “there were more green crosses than Starbucks,” Frye says.
The pre-ICO dispensaries, as they are known, are the only shops in the city officially allowed to operate. But a lack of enforcement since the law went into effect — coupled with the absence of a path for new entrants to legally join the industry — has meant that instead of dispensaries being limited, the number has grown considerably.
Estimates of the number of dispensaries open in Los Angeles now total in the thousands with enough illegal cultivation facilities to keep all of them stocked with product.
The pre-ICO dispensaries are also supposed to get the first shot at licenses when the recreational market opens. But the confusion is enough to make long-time owners who tried to do things the right way pull out their hair.
“People have been doing it wrong and unsupervised, so to speak, for so long that there will be lots of headaches, potential lawsuits, fines and whatever for quite a while until things settle down,” Frye says.
Frye has been in business since 2005. A former scientist at Amgen and Baxter Bioscience, Frye founded Cloneville after seeing the money made by a friend’s dispensary in West Hollywood.
As word of his shop got out, a local TV news crew looking for a story about illegal dispensaries knocked on his door in hopes of a “Gotcha!” interview, Frye says. But after meeting him and seeing his license, the news crew re-filmed the first segment with “much better attitude,” Frye says. That night a “wonderful story” about how his shop helped sick people get medicine appeared on the news.
“I became an instant hero,” Frye says. “My sales increased instantly.”
Following his stint on local television, Frye got a call from a documentarian who was working on a movie with comedian Doug Benson called “Super High Me.” Frye appeared in the movie and his sales took off again.
Today, as his state and city prepare for full legalization in January, Frye is concerned about what the switch will mean, considering the draft regulations call for non-licensed cultivators and dispensaries to shut down. While he supports this enforcement, he knows the growers and retailers play a large role both within the Los Angeles supply chain, but also the statewide industry.
Frye, who is part of the work group crafting the regulations, says he would like to see some temporary licenses given to manufacturers to make sure there is still product on the shelves in 2018 and stores like his can remain open. He is also keeping an eye on how the municipalities are crafting their rules. For example, while the city of Los Angeles is looking to keep shops open, the county has issued a ban. Smaller cities like Malibu are limiting the number of shops.
Frye plans to take Cloneville — so named because of the thriving clone business he added to the shop’s medical mission — into the recreational market as soon as he can. He is also focused on helping develop rules so that mom-and-pop shops like his do not get squeezed out by larger, corporate interests when the new market opens, considering he’s the one who has been “dodging bullets” for the past decade.
“I’ve done that activist thing for 12 years,” he says. “I can say without a doubt that I am one of the pioneers.”
Like most L.A. dispensary owners, he’s not sure when or how to apply yet, leaving him and his business in an uneasy limbo, waiting for rules to be finalized and applications to open. But he knows the most important thing is to make sure as many of his fellow shop owners get on board so California’s industry is regulated and protected through state laws.
“We need to get under that umbrella as soon as possible,” he says.
And when that day comes, Frye, who does not actually consume cannabis, may finally try some of his own product.
“I’m saving the big bong hit for a truly monumental moment like rescheduling,” he says.