As we enter the new year, the cannabis industry is struggling to transition from a previously-unregulated network of collectives in constant fear of criminal prosecution to a highly taxed and regulated system involving numerous state and local agencies. The rollout of the licensing system has been plagued with problems, with most of the state being extremely slow to issue commercial cannabis licenses, and many business owners losing substantial sums of money attempting to comply with burdensome regulations and taxes. Recent events in Los Angeles and Santa Barbara have brought to light common frustrations with the new licensing system, and have taught lessons that can be applied to future public policies to improve the outlook for cannabis businesses, consumers, and the state. In both Los Angeles and Santa Barbara, many operators have become disillusioned by the local licensing process and how difficult it is to obtain and keep licenses to operate their businesses. Policy makers should look at what is happening in these places, and take steps to fix the problems that have developed which are driving people toward illicit markets and away from the regulated market.