Recreational pot retailers say shortage in supply could lead to surge in prices

SAN FRANCISCO (KGO) -- California's recreational marijuana industry is booming, but retailers say a shortage of suppliers could lead to rising prices.

Aaron Flynn is a locally permitted and state licensed marijuana grower. He's a rarity in the state's new recreational industry.

"What we have now is more and more dispensaries every week, but we have very few producers less than 10 percent in the state and I can speak to San Francisco less than 5 percent of the producers are locally and state authorized," said Flynn.

The shortage of authorized growers is a problem for retailers.

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"Basically what that means is if a dispensary gets licensed then they can only purchase product from a licensed distributor and a licensed producer," explained Flynn.

Many of the retailers already had permits to operate at the local level, which made getting a state license quicker. Growers however, have operated off the radar until now. So the paperwork to get them regulated is taking longer. Currently, there are not enough growers and distributors licensed to provide product. High demand, low supply.

Many of the established retailers anticipated this shortage so a lot of the stock that you see in store was purchased in advance of the 2018 law explained Ian Jones the buyer for Medithrive in San Francisco.

"We're good. We're projected to be fully stocked until March," said Jones.

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Not all retailers planned ahead like Medithrive.

"The people who didn't are scrambling now," said Jones.

Flynn the San Francisco Chair of the California Growers Association, he says members are reporting a two to three week backlog for licenses.

"I guess I feel that legislators kind of drag their feet a little bit on this sort of thing because of the whole I don't know, stigma," said Wency Sierra, a Chicago resident who was purchasing from Medithrive.

Flynn says lawmakers and the industry simply didn't have enough time from when the law was passed to when recreational marijuana became legal to get everything sorted.

The supplier backlog will result in higher prices and could take months to sort out.

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