Having struggled fruitlessly for years to get his marijuana delivery business a proper storefront, Stephen Zyszkiewicz had plenty of questions for California’s first state weed czar when she came to speak to the industry in Oakland.
He also had some advice.
“If you work there,” Zyszkiewicz told Lori Ajax, the chief of the fledgling Bureau of Medical Marijuana Regulation, “you should probably try cannabis.”
Laughter rippled through the packed room of pot attorneys and business owners, who know she’s said she never smoked the stuff. But though Zyszkiewicz remains concerned about getting a license, and about high taxes or stringent regulations making regulated weed so expensive that the black market flourishes, he came away from the event hopeful.
“It was better than I expected,” he said. “They weren’t just talking at us.”
Two decades after California voters authorized medical marijuana, the state’s massive cannabis industry is entering a new era. New laws mandate a sweeping regulatory regime. People such as Zyszkiewicz, accustomed to operating on the margins of legitimacy, are puzzling over how to get on board.
At the center stands Ajax, a career Department of Alcoholic Beverage Control official who is swapping policing booze for overseeing bud. She’ll be directing traffic for the cluster of state agencies responsible for issuing licenses and regulating the industry. A white board in her office tells her how many days remain before a January 2018 deadline to get the rules in place.
Ajax said she didn’t plan to take Zyszkiewicz up on his offer. With the self-effacing instinct of a practiced bureaucrat, she professed bewilderment that people are so interested in her history with the substance she’ll now oversee.
“When I was in alcohol, I don’t think people really cared who the alcohol chief deputy was,” Ajax said. “I think that’s been the interesting part about this, is the attention.”
She’s in high demand these days. After Ajax finished speaking at the Oakland event, a cluster of people swarmed toward her to ask about everything from labeling to diversity in the industry. She received a standing ovation at a California Cannabis Industry Association event in Sacramento. A man with a grey ponytail approached and pressed into her hands a copy of his book, “The Newbie’s Guide to Cannabis & the Industry.”
Such a guide could be instructive. Her experience with the industry is practically nonexistent. She said the circles she moves in never really gave her the opportunity to try pot. She deflects questions about whether cannabis has medical benefits (“it doesn’t matter what I think”), if she’ll vote for full legalization (“that is between me and the ballot box”) and how she voted on the 1996 initiative that authorized medical marijuana and, eventually, made her job possible.
“I don’t remember. But I don’t think it matters,” Ajax said. “It doesn’t matter what I think. I have to just move forward with what I’ve been tasked to do.”
During the Oakland forum, many of the answers from Ajax and her lieutenants were some form of “we don’t know yet.” They will lean heavily on the industry for guidance.
“What we know is licensing and regulation,” Adam Quinonez of the California Department of Consumer Affairs said as he introduced Ajax. “What we don’t know very well yet is the cannabis industry.”
Her first official visit was to an Oakland dispensary called Harborside Health Center. Owner Steve DeAngelo, perhaps the closest thing the industry has to a mogul, said Ajax was surprised by “some of the more unusual products,” such as THC-infused skin patches, in the dizzying array that goes far beyond the beer-wine-spirits triad of her former province. Ajax recalled seeing topical creams.
Despite Ajax’s freshness, DeAngelo was pleased with her open-mindedness. He noted that she “pretty studiously did not take an opinion on policy issues” and avoided “preconceived notions or stigma about cannabis.”
“She seemed to be genuinely interested and to appreciate the legitimacy of our medical cannabis mission,” DeAngelo said. “She struck me as someone who was really trying to find an appropriate balance between being an enforcement agent and being someone who was essentially in charge of designing a whole new industry.”
In fact, some pot workers say they actively wanted a blank slate. When the California Growers Association heard the new bureau was launching, executive director Hezekiah Allen said, they conveyed to Gov. Jerry Brown’s office two criteria for its chief: experienced bureaucrat, and zero industry experience.
“The experience of a cottage cultivator in Siskiyou County has been very different from the perspective of a larger retailer in the East Bay. ... We find some really entrenched perspectives,” Allen said. “You know how people talk about activist judges?” he added. “We wanted to avoid an activist bureau chief.”
Industry infighting has risen as people have learned how their business could be affected by anything from the cost and number of licenses to who can hold one.
A major source of dispute is a rule that prohibits growers and dispensary owners from transporting and distributing their own product. Many worry about their businesses being dismantled. Despite the bureau’s inability to change the law, Ajax was repeatedly pressed on the issue. Allen said, “A tremendous amount of political pressure is being applied to anyone who will listen.”
“Many of our businesses, which are already operating in multiple areas, are going to have to find some way to come into compliance. ... How do I do that in a way that respects the value I’ve created as a business operator?” said Dan Grace, president of Dark Heart Nursery. “The rules ... are causing untold anxiety throughout the industry.”
The bureau will also have some discretion to decide when someone’s criminal record bars them from getting licenses, a key issue for an industry in which many players have incurred past drug convictions.
Pot may be novel for Ajax, but she has ample experience governing vices. In her decades working for the Department of Alcoholic Beverage Control, she had to administer alcohol laws legendary for their complexity. The “tied-house” system rigidly separates the people who make, transport and sell alcohol, with enough exceptions layered in to confuse even seasoned business owners.
Alcohol business owners with whom she worked gave her high marks for helping them navigate those laws, particularly as the rise of craft breweries forced some reassessment of the industry.
“I had a lot of good conversations with her about the beer business in general,” said Glynn Phillips, owner of Rubicon Brewing Co. in Sacramento. “She said many times: We want you guys to go out there and make money and generate tax revenue for the state and create jobs and all that.”
Roberts and Tom McCormick, head of the California Craft Brewers Association, used the same metaphor: When the ABC shows up at your business, it’s like being pulled over by a state trooper.
“There’s often tension between my members and the ABC, the same kind of tension as when you see a CHP cruiser behind you on the freeway,” McCormick said, but when Ajax came to speak to skeptical brewery owners, “she was the highest-rated speaker at our conference.”
Such experience could guide Ajax with, for instance, small-scale growers who, like craft brewers, worry about getting their product to market amid competition from larger businesses. But Ajax noted there are major differences between pot and alcohol. The opportunity to try something new helped lure her away.
“I was intrigued by the development of a new department and being able to regulate something that’s not like alcohol,” she said. “It’s not very often that in state government there’s a new bureau or a new department.”
In some ways, Ajax will be starting from scratch. The rules her bureau lays down will help dictate who can or cannot thrive.
“Imagine being (the auto industry) in Detroit in 1895,” said Matt Kumin, an attorney who works with medical marijuana industry. “We haven’t even gotten to stoplights and green lights.”
But while a highly regulated industry is a new development, the cultivation and sale of marijuana has been going on for decades. Old hands are wary about the future and about a wave of moneyed newcomers who will try to shape the rules.
“I don’t want the (bureau) to reinvent the wheel. Marijuana has been grown in California for the last 40 years,” Charles Pappas, who co-founded a San Francisco dispensary shuttered by the federal government, told Ajax in Oakland. “I hope you listen to the people from Humboldt and Mendocino that have been doing it for years and years.”
At a glance
Name: Lori Ajax
Education: Bachelor’s degree, criminal justice; California State University, Sacramento; 1992
Experience: California Department of Alcoholic Beverage Control, 1995-2015: chief deputy director, 2014-16; deputy division chief, 2011-14; supervising agent in charge (Trade Enforcement Unit), 2011; supervising agent in charge (Sacramento, Yuba City and Redding districts), 2007-11