SALT LAKE CITY — Cannabis only recently became legal to grow in Utah for medicinal purposes, but growers say they're feeling challenged by federal law while managing rapid growth.
Currently, there are eight medicinal cannabis grow operations in Utah and with demand fairly stable, the Utah Department of Agriculture and Food says they have no reason to issue any more in the near future.
Chris Jeffery is the CEO of medical cannabis producer of one of these eight facilities, WholesomeCo and says the federal government doesn't make it easy on his business.
"Narcotics in cannabis on the federal level is classified schedule one, they tax you on your gross profits, Jeffery explained. "So even if you lose money on a net income basis, you're still paying a big tax bill and so that's been, that's really the biggest challenge."
The Utah Department of Agriculture and Food has issued 770 agent cards to licensed grow facilities. Those cards allow people to work in the facilities and oversee everything from impurities and toxicity to security.
"Part of our job on the regulatory side is just to make sure that they're not getting into any situations where the federal government might want to come and start taking a look," explained Cody James, who works as a UDAF Industrial Hemp and Medical Cannabis Programs Manager. "Again, our producers are doing a really good job of making sure they're following our regulations."
All that compliance, Jeffrey says, is causing some legal growers in places like California to raise the white flag and maintain a presence in the illegal market.
"They're really having challenges with the compliance costs and time that the need to spend in being compliant California to an extent that is not allowing them to compete with the illicit market," Jeffrey explained. "[The] illicit market is taking a lot of their market share."
For now, Utah's legal market is growing rapidly. From September 2020 to now, Utah went from 11,000 medical cannabis cards to more than 60,000.
While the industry in Utah created 119 million dollars in net sales last year, individual growers are still navigating how to make it more profitable.
"Most people assume that cannabis everyone's just making money hand over fist, right," explained Taylor Heyland, Senior Vice President at WholesomeCo.
The industry is also starting to attract people you might not expect to make a living from growing cannabis.
Heyland believes that as people begin to accept medical cannabis as legitimate, their business will continue to expand and adapt with the pharmaceutical industry.
"You have to have a lot of endurance and energy to kind of fight and battle through this to provide medicine to the patients," he said.
