Cannabis leaders discuss industry future at San Jose seminar

Though marijuana is now legal in California, it isn’t always easy to buy and it can be especially difficult for entrepreneurs who are forced to navigate a convoluted bureaucracy to get into the industry.

At a cannabis seminar Wednesday evening at San Jose City Hall, business leaders and government officials from around the state gathered to discuss the roadblocks the legal marijuana industry faces and, more importantly, where it’s headed.

Lamar Thorpe and Monica Wilson, who sit on the Antioch City Council, for example, pointed out the dueling forces in their city over the legalization of marijuana.

Though around two-thirds of the city’s residents supported legalizing marijuana when it hit the ballot last year, several members of the council have resisted allowing businesses to operate within the city. A local church group has been particularly vocal in its opposition and even local law enforcement officials have cited concerns about crime with little recent data, Thorpe said.

“Your local Applebee’s creates more crime than cannabis,” Thorpe said, noting that the restaurant serves alcohol.

Wilson acknowledged she originally opposed allowing marijuana to be sold in the city, but said she felt differently after learning more about the industry.

“I really had to open my mind,” Wilson said.

Sean Kali-rai, the founder and president of the Silicon Valley Cannabis Alliance hopes more local officials will make that same leap. And if they’re not, he’s preparing to push them toward acceptance.

“We’re really going to start to try to push the industry,” he said.

The former San Jose official said he’s meeting with former Obama organizer Peggy Moore and working on a political action committee.

“We will help them figure out how to vote,” Kali-rai said, issuing what seemed to be a barely veiled threat to city officials to get on board or prepare to face a backlash.

For now, though, despite what residents may want, many cities don’t have licensing systems in place to allow marijuana companies to operate legally. So many people are either driving long distances to buy cannabis or opting to purchase it illegally nearby. It also leaves marijuana companies scrambling to figure out the tangled web of different regulations and ordinances, with few options for where to operate.

David Hua is the CEO of Meadow, a Y Combinator-backed software startup that aims to connect medical cannabis patients with dispensaries. But, he said, “It’s been a challenge to be a tech provider in this space.”

Businesses find themselves playing “arbitrage,” Hua continued, urging for increased simplicity across the state.

But reaching that point means that places like Antioch, which is still in the beginning stages of figuring out whether and how to allow legal sales, have to play catch up with places like San Jose and Sacramento, which both have licensed dispensaries and ordinances in place to regulate them.

And it means paying workers fair wages and benefits.

“We’re competing with In-N-Out Burger,” said Kali-rai, noting that the beloved chain pays workers more than $16 an hour in many places and predicting that the industry will have to negotiate labor peace agreements with unions in the future.

“We’re a brand new industry,” Kali-rai said. “We can’t afford to make enemies.”

Fiona Ma, a member of the state’s Board of Equalization and a candidate for state treasurer, thinks the state can help by creating banks to serve cannabis businesses, which right now are forced to pay taxes and fees using cash.

Ma, who moderated a panel at the seminar, said she sees cannabis as the “largest underground economic driver” in the state.

But, she added, so many illegal companies struggle to transition to operating legally because they can be penalize, for example, failing to pay taxes in previous years.

“We really need to have an amnesty program, I think,” Ma said.

And Frank Louie, the chief operating officer of the state’s Asian-Pacific Chamber of Commerce, thinks that when cities do decide to allow cannabis sales, they need to do a better job of reaching out to underrepresented minorities.

“Diversity and inclusion are a challenge,” he said. “I really do think it’s about education.”