Brokers are commonplace in a myriad of industries but when it comes to cannabis, they are in short supply. Regulatory barriers and a lack of transparency around brokers have left the industry in uncertainty and worry. But there’s a rising call for all of this to change.
A ‘broker’ is a person or firm who arranges transactions between a buyer and a seller for a commission when the deal is executed. They help save time and money and often are able to negotiate better deals for buyers and keep products moving for sellers.
A cannabis broker is just that — a broker who is involved in the exchange of cannabis or cannabis-related products. They provide a useful role in the industry by increasing market liquidity and boosting the local economy.
However, due to current Bureau of Cannabis Control (BCC) regulations, it’s impossible for cannabis brokers to share samples with their prospective buyers. Furthermore, Section 5004 requires licensees that work with brokers to report brokers as financial interest holders. This requirement is neither efficient for licensees nor brokers.
For example, licensees may only work with a broker on a single deal and then never work with them again. So going through the lengthy reporting process is not worth their while.
Michael Schlaepfer, an active California cannabis broker, says:
“Can you imagine being a broker and having 500-1000 clients? Each of these clients will have to add you as a financial interest holder on their license application, otherwise, technically they are not able to work with you. Having to rely on a licensee to add you to their application is not fair to you. As a broker, you can only be responsible for yourself.”
Establishing a broker’s license for recreational and medicinal cannabis in California seems a common-sense solution that would benefit everyone in the industry.
This license would formalize and legitimize broker services, thus encouraging the buying and selling of products and ultimately improving business for all. It would grant brokers the ability to present their license to clients and only be responsible for their side of reporting. Plus, from the client’s perspective, all transactions will be guaranteed compliant and the whole process will be expedited.
According to many industry insiders, the need for a broker’s license has grown in recent years. Schlaepfer, agrees:
”When I started brokering three years ago [at the start of legalization], many more businesses were hesitant to pay me as they didn’t want to get into trouble. I have heard this concern less and less often as the industry grows. I think this is due to licensees gaining more respect for brokers and the services they provide.”
For now though, until enough of the industry, as well as lawmakers, decide that a broker’s license would be beneficial, cannabis brokers will have to continue operating within the gray area of the law… and the pressing uncertainty and economic challenges shall remain.
Anyone who is interested in getting involved can play a role by educating lawmakers and licensees about the benefits of brokering. There is also a petition to the California Senate and House of Representatives garnering support for the creation of a cannabis broker’s license.
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