The following interview was originally printed in the December 2017 issue of Marijuana Venture, on sale now.
Lori Ajax
Lori Ajax is arguably the most powerful person in the cannabis industry right now.
She may not be a high-profile business leader or a major financier, but as the first chief of California’s Bureau of Cannabis Control, Ajax is forming the mold for the largest population of cannabis businesses in the world. She’ll have the final say on many of the regulations, licenses and practices that will govern medical and recreational cannabis in the Golden State starting Jan. 1, 2018 — a level of authority she earned after 22 years of climbing the ranks of the state Department of Alcoholic Beverage Control.
Despite her position, the reigning “pot czar” remains quite affable when discussing the industry and emphasizes her dedication to establishing a safe, open and thriving marketplace for current and future business owners in earnest detail.
As California blazes its trail toward legalization, Marijuana Venture spoke with Ajax about her flexible approach to the industry, the responsibility of overseeing such a monumental task and the burning question on top of everybody’s mind — will the state meet its deadlines?
Marijuana Venture: You’ve been called the California pot czar. What do you think of that title?
Lori Ajax: It doesn’t bother me. That happened the day I got announced, back in February 2016. It was completely unexpected. I never thought there would be that much press. I think I was a little naïve about how many people would be interested in who is the next Bureau of Cannabis Control chief. That name just sort of stuck.
The great thing is that now at the local level we have a lot of ‘pot czars’ across the state. I’m the statewide one but then there are a lot of local czars.
MV: You’ve moved from a position in the Department of Alcoholic Beverage Control into a role in which any move made by you and your staff will be met with opposition. What’s that like?
LA: You don’t just see that in cannabis. You see that with any regulation that gets introduced from most state agencies. You are not going to get people to agree, and certainly this is probably one of the more unusual industries in the fact that they’ve been operating for decades with no state regulations. I think it’s always tough for anyone running a business that has been operating for a long time when the state says, ‘Now we are going to have regulations.’
But I don’t know if you would expect in any industry that people would always agree with what the state is doing. I think that just comes with the territory.
You’re right that not everyone is going to like what you do. Not everyone is going to agree with it, but as a regulator, you are trying to strike a balance. I think if you have good, sound policy behind why you’re doing things — and you can articulate those policies — I think that will determine your success.
I have said this a lot, but I think there is a willingness to change regulations if things are not working. As a regulator, if you can say, ‘Hey, if something is not working, we are willing to make changes,’ I think that gives a comfort level to folks, because you don’t know what the unintended consequences are going to be when you put something in place.
Taking an interview after her keynote speech at the California Cannabis Business Conference, Lori Ajax has spent numerous hours on the road learning the needs of the industry.
MV: When you were facing these concerns from different groups on the inside and outside of the industry, were there any issues you couldn’t be flexible on or something that had to supersede other concerns?
LA: That’s a good question. As you know, we have the draft medical regulations out there and the ones that are the toughest for us to change are the ones that involve public safety issues, like child-resistant packaging.
A lot of the stuff that some people would comment on was statute. It wasn’t really based on our regulation. Obviously, the bureau and the other two licensing authorities (the Department of Public Health and the Department of Agriculture) can’t change statute, but it really was nice to get feedback from everybody. There were some things that we learned from those regulation hearings, from the public comments, that really made us go, ‘Huh, maybe we don’t need to do it this way.’ We’ve made changes in the new regulations that are coming out in mid- to late-November based on those comments because it made sense.
We were pretty open to anything, unless we really thought it compromised public safety or consumer safety when it comes to testing cannabis.
MV: There was a report over the summer that only 15% of California growers can currently meet the state’s strict regulations on testing. What is the state doing to prevent cannabis with potentially dangerous pesticide or microbial levels from being sold through the adult-use market in the early months of opening?
LA: The adult-use cannabis, once we begin operations on Jan. 1., is going to have to go through a testing laboratory. I’m not a scientist, but we are responsible for the testing laboratory regs. Part of those regulations is testing for 66 pesticides and also the microbial.
A lot of this was in our draft medical regulations so folks have a good idea of what the labs will have to be testing for and so on our part it’s continuing to communicate to those cultivators and manufacturers that nothing is going to be able to get through to the retail market unless it’s gone through testing and through that distributor.
California Insurance Commissioner Dave Jones (left) backstage with Lori Ajax at the California Cannabis Business Conference.
MV: What would you say has been the most difficult obstacle so far?
LA: (Laughs.) It’s hard to narrow down just one … but probably time.
We had the Medical Cannabis and Regulation Safety Act, then our role expanded when Prop 64 passed and then it further changed when SB 94 passed several months ago. I think the continuous change and having to keep up with that and be ready to change directions, those have been some of the obstacles.
Time has never been on our side with this one.
MV: With the deadline coming and the size of the program in mind, it’s kind of ridiculous to expect a program of this scope to launch without any issues. So how will you measure its success?
LA: I think for us, you would like to see the businesses who are currently operating with local approval to have little disruption when Jan. 1 comes around — meaning that we would get them a temporary permit to operate. We don’t have anybody that is operating legal adult-use cannabis, because that is going to be new on Jan. 1, so it’s important to get them up and running as quickly as possible as allowed by the local jurisdiction.
MV: At what point are you going to feel like you have the time to take a break from this project? Is there a certain milestone?
LA: I think the true measure is getting through the first year and doing what we can to make sure that the regulated industry thrives. I think that’s our responsibility over the next year.
MV: Obviously, everybody wants to know: Is the licensing process on schedule?
LA: Yes, it is. We have been holding licensing workshops. There has been a tremendous response. We have had all the state agencies involved with any part of cannabis regulations at these workshops. We do have, right now, what is going to be required to apply for a temporary and then some information for anticipated checklists for the annual license. Once our regulations are finalized we are going to, hopefully, have our online system ready by December to start accepting applications. That way we can start issuing temporaries on Jan 1.
Right now we are on track. Even though time has been a challenge, I think that we need to flip that switch and start regulating. When we start issuing licenses is when we can really start fine-tuning the processes.
People are counting on us to bring this in on time and we’ve been working for the last year and a half to make sure that we deliver. It’s important for us as a state, that we do deliver on time.
MV: The dual licensing requirement is one of the cornerstones of California’s regulatory scheme. Has the bureau taken a hands-on or hands-off approach with other municipalities?
LA: It’s been a lot of hands-on. You’ve got some local jurisdictions out there that have got a pretty comprehensive cannabis program and licensing system right now. So, for us it is good to learn from them what has worked and what hasn’t.
Then you’ve got some that are trying to figure out what they are going to put in place, what they should be allowing. They need to know where we are in the process, what we’re doing and our license types, because it really helps them develop their ordinances.
Some of them are actually waiting to see what the state does, because then the locals can come in with their ordinances or regulations and they can be more restrictive, but they can’t be more lenient. I think some of them just want to see what we’re doing and I think it’s a two-way street for information sharing. It’ll be hands-on for a long time.
MV: The Bureau of Cannabis Control reportedly needed to hire some 82 employees. Has that happened?
LA: Oh, yeah. Every week we have new bureau staff starting. We are aggressively hiring and we have staff reviewing applications, scheduling interviews; it’ll be going on from now until the end of the year and into 2018.
Lori Ajax (left) with The State of Cannabis event organizer and executive director of C.A.R.E., Susan Soares.
MV: How many employees does the agency have working on approving temporary licenses?
LA: That depends on how many people we hire by the time we start taking applications. Let me assure you, every single employee here, if we need them to work on applications and licensing, it’ll be everybody doing whatever they need to do. I have a fantastic staff. They are well trained and we are prepared for anything. It doesn’t matter who you are — we might pull you to do whatever is needed.
So, I don’t have an exact number because whatever I tell you now is going to change because we are going to be constantly hiring. We need a lot of people looking at applications.
MV: Is there a time frame for how long temporary licenses will remain in place before permanent licenses are issued?
LA: Once we issue a temporary license, it will be good for 120 days. During that 120 days they will have to submit their annual application. We’re hoping that when we get their annual application we can get through that before the temporary expires on the 120th day. If we haven’t been able to process it, we can give a 90-day extension.
So, the answer is that we would like to get the annual applications in as quickly as possible, but at the same time we realize that we are not sure about just how many people are going to be applying in the first few months. So, to be sure, if it’s on us that we haven’t gotten to their full application, we want to be able to then offer an extension so they can continue operating.
MV: Is there anything to stop a “gray market” business from continuing to operate without a temporary state license or local license?
LA: We are hoping that we’re doing a good job of encouraging people to get a license. I do feel that in the first few months that message has to be continuously sent by us. But at a certain point, you are absolutely right, for those that aren’t going to get licensed and they are still out there illegally conducting commercial cannabis activities then there has to be some sort of enforcement.
But I think you’ve got to at least give people a chance to get licensed.
The last thing we want is you get your license and you go through all the hoops and pay all these fees and the guy across the street is still operating and not doing that. That’s not good for our system. So, we have a plan and we are just hoping that we’ve made it possible for people to get licensed with us.
This interview has been edited for length and clarity.