Twelve firefighters were injured while responding to an explosion in the Toy District of Downtown Los Angeles on May 16. While the cause of the explosion is currently being investigated by the LAPD an array of media outlets have identified the culprit as SmokeTokes, which markets itself as a “wholesale shop carrying smoking accessories including ceramic pipes, lighters, hookahs & vaporizers.” The Company, tragically, is also a provider for compressed butane: a volatile solvent often used in the legal (and illegal) manufacturing of cannabis concentrates.
Whether-or-not SmokeTokes was illegally manufacturing “hash oil” is not the focus of this digression. Although admittedly, it is the sentiment that seems to drive most of the current event coverage. Instead, I want to forgo the “how” and “what” so that we can consider the “why.”
The demand for medical and adult use cannabis in California is no doubt skyrocketing. With each new locality passing its own set of ordinances and operational requirements, a lot of savvy entrepreneurs have shifted gears and are now competing for highly coveted dispensary and cannabis operations permits. Yet despite the rise in demand for cannabis products and concentrates, the City of Los Angeles has not issued a single permit to operate a volatile extraction facility since legalization occurred in 2016.
So, why would SmokeTokes be selling mass-volumes of a highly volatile substance? Simple. Demand.
With the legalization of cannabis in California driving the market demand through the roof there has been a commensurate increase in the popularity for cannabis concentrates of all kinds. Unfortunately, the limited number of licenses currently issued in Los Angeles has meant that consumers have been forced to seek alternatives to the dispensary. In other words, while the legalization of cannabis businesses has paved the way for the growth of the market, a scarcity in licensed options available in Southern California has meant that people are turning back to the illicit market to find more accessible-priced products and goods.
Why? Consumers are getting tired of paying inflated prices for cannabis products. These high prices are not the result of traditional supply and demand economics, but instead, of the poorly regulated and scaled, legalized market. And, of course, of the shady and uncompassionate business operators who leverage and capitalize on this dynamic. This without a doubt includes consulting firms. This is (the worst of) capitalism unchained.
Returning to LA, those entities fortunate enough to currently have a license to operate are free to control market prices for cannabis products simply because they don’t have any competition. This is why we see exceptionally high mark-up rates in the retail sector of the cannabis industry. This is why we see consulting firms charging so much - they have no competition and are free to imaginatively create prices. At the end of the day if the goal is to ensure public health and safety, then the objective should be to eliminate the existence of the illicit market. This, however, can only occur if the cannabis market is to return to traditional economical standards and practices… to issue enough operational licenses to guarantee a free and competitive market.
We can prevent future tragic events like the SmokeToke explosion. By demanding fair and equitable access to cannabis operational permits we can ensure a fair market that caters to all consumers and not just the elite. By building brands that cater to all levels of income, race, class, gender and sexuality, we can provide viable options to meet the growing demand for safe cannabis products.
But how do we do this? It’s simple. We encourage political hospitality (ala, Jacques Derrida). In other words, we welcome as many actors to the stage as possible without relinquishing absolute control. In this sense, absolute control takes the form of regulation and compliance. These regulations and the subsequent required actions establish the foundation for operations that are both safe and in the best interest of the general public - the host, if you will.
If we can accomplish this goal then we can eliminate the illicit market and do our part to protect the health and safety of the American public. This, however, requires that we stand together and voice our concerns to demand a more accessible licensure and permitting process in Los Angeles, the State of California and the United States.