Orange County’s 11th licensed medical marijuana dispensary, Bud and Bloom, opened at an interesting time.
Less than two weeks before the Santa Ana shop welcomed its first patient, Californians voted to legalize marijuana for all adults. Though the new rules of Proposition 64 won’t let dispensaries sell to recreational customers for another year, the state’s vote to legalize marijuana has already boosted business at medical shops and sparked greater interest in an industry that’s long struggled for legitimacy.
But there might be a catch.
Days before Bud and Bloom opened its doors, President-Elect Donald Trump chose Alabama Sen. Jeff Sessions as his top pick for Attorney General. Sessions is staunchly opposed to marijuana, so potential industry investors – many already concerned about diving into an industry that’s still illegal on the federal level – just got even more nervous.
“(The Sessions nomination is) definitely causing some concern,” said real estate investor Kyle Kazan, who closed on a $12.6 million fund to invest in Bud and Bloom and other cannabis ventures the day before the election.
“But I’m optimistic by nature, which is why I’m investing in this industry before it’s federally legal. And we’re not slowing down.”
Bud and Bloom is the second dispensary opened by Aaron Herzberg and Chris Francy, who are partners in the Costa Mesa-based real estate firm CalCann Holdings.
They opened OC3 a few blocks away in September 2015. A month later, Gov. Jerry Brown signed into a law a sweeping set of regulations governing California’s medical marijuana industry, setting new rules on product testing and labeling, and more being rolled out now.
With those new laws in mind – and in anticipation of Prop. 64 ushering in a new era for legal marijuana – Herzberg and Francy did things a bit differently at their second shop.
The shop is still tucked away in an industrial area of Santa Ana thanks to city zoning laws. But the owners added lots of windows along St. Gertrude Place to shed both literal and figurative light on what they’re doing inside.
Rather than place all of the products behind the counter, as is the custom for many licensed shops in Southern California, they created an open floor plan with accessible shelves. The idea is to let customers check out the labels on chilled cannabis-infused drinks or under-the-tongue tinctures.
The owners also are tacking on state sales tax at the register rather than hiding it in increased prices to avoid irritating customers who are used to buying cannabis tax-free on the black market.
“We can’t operate halfway between legality and illegality,” Herzberg said. “It’s very important for the business and the industry to move forward.”
That philosophy is what attracted Kazan to Bud and Bloom.
Twenty years ago, Kazan was an officer with the Torrance Police Department, where he regularly busted drugged drivers.
He eventually left law enforcement as his real estate career took off. But the Palos Verdes resident said he decided during his time wearing the badge that the War on Drugs was doing more harm than good, leading him to work with the group Law Enforcement Against Prohibition.
Along with Bud and Bloom, he also has investments in a cannabis greenhouse and a soon-to-open dispensary in the Santa Barbara area.
Kazan still gets heat from former law enforcement buddies, and disapproving looks from other friends for his involvement in the industry. But he said he’s noticed an easing as marijuana legalization spreads and former critics start to see businesses operate above board.
He hopes that within a couple years, shopping at Bud and Bloom – with its reclaimed wood and industrial finishes – won’t seem much different than browsing the wine section at Trader Joe’s.
There’s still the federal illegality of marijuana – and the possibility of stepped up enforcement in the Trump administration – to contend with.
Bud and Bloom has an ATM machine, which is a federally regulated device. Since few banks and no major credit card companies will work with the cannabis industry, it’s a cash-driven business. So that machine figures to be key to the store’s economic survival.
Also, the owners can’t deduct expenses the way most businesses can thanks to a provision in the federal tax code.
Much like Pres. Barack Obama, Trump, as a candidate, said he supports states’ rights to carry out their own marijuana programs. Whether Sessions (or Trump) will stick to that agenda remains to be seen.
It’s also not clear whether Santa Ana – or other California cities – will decide to allow recreational marijuana shops in their boundaries. If they do, Francy said Bud and Bloom will be ready to cater to both types of clients.
In the meantime, it’s full steam ahead for the dispensary, with a grand opening celebration planned for Black Friday.
The shop is offering holiday deals inspired by Prop. 64, which lets a medical marijuana patient give away up to an ounce of flowers or up to 8 grams of concentrated cannabis to any legal adult.
So while a white Christmas is unlikely in most of Southern California, a green Christmas isn’t out of the question.
Here’s a virtual tour of Bud and Bloom.