San Diego’s legal pot stores could run short of recreational marijuana this summer when the seasonal rise in tourism sends the demand for cannabis soaring in a city that’s emerged as a mecca for the sale of weed.
Analysts and retailers say the government hasn’t been approving cultivation licenses fast enough to meet anticipated demand. And the state is preparing to prevent the sale of cannabis that doesn’t meet quality control standards, which could tighten the supply.
“There is a worry among our members that there could be a shortage over the summer,” said Dallin Young, executive director for the Association of Cannabis Professionals, a San Diego-based trade group.
“With the increase in tourists, in addition to the already high demand among San Diegans, there just might not be enough adult-use cannabis to go around.”
San Diego attracts about 35 million tourists a year, roughly 8 million of whom visit during July and August.
No one knows what percentage of tourists purchase recreational marijuana, which is sold in 13 licensed stores in San Diego. But local retailers say tourists have significantly contributed to the big crowds they’ve been drawing since adult-use cannabis first went on sale in early January.
Industry analysts say upwards of $5 billion in marijuana will be sold in licensed stores statewide this year.
San Diego currently is the only place in the county where customers can buy recreational marijuana. There are no major cultivators locally that serve that specific market. Most of the cannabis is brought in from other parts of the state.
City officials intend to approve adult-use cultivation licenses. But Young says it’s unlikely that the first of those companies will be in full operation until next year. And San Diego won’t be getting help from Oceanside, which recently approved the cultivation of marijuana, but only for medicinal sales.
There’s also change occurring at the statewide level.
Starting July 1, the state will officially begin enforcing rules that specify quality assurance for commercial adult-use marijuana.
“July is the busiest sales month of the year, so there could be a shortage if there’s not enough pesticide-free adult-use cannabis available,” said Will Senn, who runs two Urbn Leaf marijuana stores in San Diego and is scheduled to open a third later this month.
“The testing is meant to protect the public’s health.”
Major quality-control problems also would drive up marijuana prices.
“Consumers may not be too sensitive to modest price increases, but large ones might have a bigger impact,” said Lynn Reaser, an economist at Point Loma Nazarene University. “A jump in domestic prices could also spur an increase in illegal imports and the black market.”
Startup problems aren’t unusual in the marijuana industry. A distribution issue briefly led to a supply shortage last summer when stores in Nevada began selling adult-use cannabis. And the state of Washington experienced lots of conflict over the licensing of pot stores after recreational marijuana was approved in 2012.
California is experiencing its own growing pains. And the supply problem might not be the key issue, said Adam Orens, a founding partner of the Marijuana Policy Group, a Denver-based consultancy.
“Not having enough places to buy cannabis might be more of a limiting factor than not having enough people to grow it,” Orens said.
San Diego officials have agreed to issue as many as 36 licenses to operate stores that sell recreational or medical marijuana, or both. So far, there are 13 stores. And the number might not grow quickly because of zoning problems in three of the city’s nine districts.
Orens said that the relatively small number of stores could be giving the impression that sales are higher than they appear.
That question will be settled in early May, when the state issues sales figures for the first three months of the year.
For the moment, Rocky Goyal believes that there’s a genuine boom going on.
“Customers often have to wait to get into stores, then wait some more to get served,” said Goyal, who runs the Apothekare dispensary in Mission Valley. “Everyone’s busy.”