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California Goes Marijuana Crazy on Jan. 1: What You Need to Know

A customer buys marijuana products at the Perennial Holistic Wellness Center, which is a medicinal marijuana dispensary in Los Angeles, California on March 24, 2017. Mark Ralston—AFP/Getty Images

Golden State tokers rejoice. The biggest legal recreational marijuana market in America is finally ready to open its doors.

It’s been more than a year since California voted to legalize adult-use cannabis sales in the country’s most populous state by passing Proposition 64, but actual legal recreational weed sales have been on hold while state lawmakers decided on the regulatory framework for the new legal market. While medical marijuana has been legal in California for two decades—accounting for roughly $2 billion in annual sales—state residents must wait until January 2018 before they are able to legally buy marijuana in California without a doctor’s approval.

California will soon join states like Colorado, Oregon, and Nevada that have already expanded into adult-use marijuana markets (in total, seven states and the District of Columbia have legalized recreational marijuana). In some of those states, eager consumers celebrated the first day of legal recreational pot sales by lining up at their local dispensaries in order to be among the first to participate in the newly-legal marijuana economy.

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Here’s what you need to know about the start of legal recreational marijuana sales in California:

When and where can you buy recreational marijuana in California?

California’s new recreational marijuana laws will go into effect on Jan. 1, 2018, but that doesn’t mean you’ll be able to go straight from your New Year’s Eve party to a local dispensary. First of all, state rules will dictate that cannabis not be sold until 6 a.m. or after 10 p.m. And, while the state’s Bureau of Cannabis Control is issuing temporary licenses to dispensaries this month that will be effective starting Jan. 1, it remains to be seen exactly how many California dispensaries will eligible for those licenses from the get-go.

Some of the roughly 1,000 existing medical marijuana dispensaries statewide, which also must apply for new state licenses, are likely to be among the first to land new licenses for both medical and recreational cannabis sales. But, entrepreneurs hoping to land their own licenses will also have to make sure that they have the approval of their local county or municipality, and the Los Angeles Times notes that most of the cities in California have still not approved recreational marijuana sales. The San Diego Union-Tribune puts the number of California cities and counties that have banned either the sale or cultivation of cannabis at higher than 70%.

Leafly, a Yelp-like website for the legal cannabis industry, has a list of California cities in which legal recreational marijuana will soon be going on sale, though the site notes that not all dispensaries are likely to be fully licensed by Jan. 1.

What are the new laws going into effect?

For the most part, California regulators followed the path of legal frameworks from other states where legal recreational pot is already sold. For instance, you must be at least 21-years old to buy legal cannabis, and you can’t just smoke it anywhere. For the most part, any public space where you are unable to smoke a cigarette will also be off limits for sparking a joint, while it will also be illegal to consume marijuana while in an automobile. Meanwhile, for business owners, marijuana dispensaries and other similar businesses in the state will continue to not be allowed to operate within 600 feet of any school, and they will need to maintain 24-hour surveillance for security reasons.

Lawmakers have also been working on other measures, including devising a banking plan for the industry as well as voting against allowing cannabis businesses to deliver their products via drone.

Also starting in January, California will introduce a 15% state excise tax on every purchase of a cannabis product. With additional state and local taxes tacked on, some customers could expect to pay an effective tax rate of 45% on each purchase of adult-use marijuana. (For what it’s worth, Colorado also has a 15% state excise tax and other states levy higher sales taxes, as well.) It’s all part of California’s plan to eventually collect an estimated $1 billion in annual tax revenue from the legal adult-use marijuana industry.

How big will legal adult-use cannabis be in California?

In order to collect $1 billion a year in taxes, the state will need to reach a projected $7 billion in annual legal recreational cannabis sales. (California residents already reportedly spend that much on marijuana annually, but most of it is still on the black market.) At that rate, California would easily be the country’s largest legal marijuana market, as the entire legal cannabis industry in the U.S. is expected to pull in roughly $10 billion in total sales for 2017. That number would almost certainly get a boost in the coming years, as legal markets grow in California and other states, such as Nevada (where legal recreational marijuana sales kicked off over the summer) and Massachusetts (where the adult-use market is expected to open in July 2018).

(California’s legal adult-use cannabis market could even be bigger than the one that may be coming in Canada, as the state actually has more residents than that entire country.)

One potential major obstacle for California’s legal marijuana boom could be the federal government. Cannabis sales are still illegal on the federal level, and the Trump administration has played coy about its plans for the burgeoning marijuana industry, even as the man the president hand-picked to be the country’s law enforcement officer has made it no secret that he despises the drug. Last year, Attorney General Jeff Sessions refused to rule out prosecuting people who sell cannabis, even when they do so in accordance with state laws. But, for now states like California have little choice but to move forward with their long-gestating plans (and, perhaps, gear up for a fight down the road).

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