4 ms·

So I work in this industry. A few of the problems: - Taxes and really tough regulations. As mentioned by the article, taxes are stupid high, upwards of 40% in

So I work in this industry. A few of the problems: - Taxes and really tough regulations. As mentioned by the article, taxes are stupid high, upwards of 40% in some counties in California (CA). - Lax enforcement. The risk of growing illegally has diminished significantly. Other non-legalized states provide a giant market. People grow at scale where it's safer in CA/OR/WA and then send nationwide. - The transition has been more or else outright reckless. Before 2018 in CA, most dispensaries and growers operated under medical licenses. Regulations were pretty relaxed. Taxes were low. Customers just had to spend $25 and 20 min on a website to get a medical card. On Jan 1, 2018, something like 85% of dispensaries went out of business. They couldn't handle the change in regulations. Everything from taxes, building renovations for security/fire, re-zoning. Lots of problems. Do you think these people just gave up? They had customers and supply chains and then you take away their legal way to sell. You also took away enforcement for selling illegally. - Time. Weed was 100% underground (or at least medical) before 2018 in CA. Now it's like 75% underground. It's going to take time for the transition to happen. Like if you're in college and you buy weed from a friend. It's good stuff and he sells it cheaper than the dispensaries, are you going to stop? Probably not. You were doing it before it was legal. Why change now? Most new customers use dispensaries. You have to provide the existing people a reason to switch.

wpietri 7y ago
Yeah, time/inertia strikes me as a huge one. I'm impressed that the business is already 25% legal; that sounds like a huge transition to me. I don't know the specifics of the regulation, and I'm sure there's a lot that can be improved. But I'm ok with toughness in general. The weed stores in my area are clean, orderly, well-run businesses. I'd love to see the liquor stores brought up to a similar level, as some of those are sketchily-run trouble magnets.
johnisgood 7y ago
http://reason.com/reasontv/2018/04/02/californias-new-recreational-marijuana-m http://reason.com/reasontv/2018/04/02/californias-new-recrea... California's Legal Weed Is So Heavily Taxed and Regulated That the Black Market Might Survive I am not surprised by this.
- Scoundreller 7y ago
  The same thing is happening in Canada too, particularly in the provinces that are taking their time in distribution network setup (looking at you Ontario).
  - johnisgood 7y ago
    Another: FDA approved ketamine for the treatment of depression, but the costs are through the roof. If I remember correctly it was somewhere around $7000. You can get more or less pure ketamine on the black market for $30-$50 per 1 g. That 1 g will last ages if used for depression. Edit: Found it: > Ketamine treatments usually cost a few hundred dollars per infusion, but the expense comes not from the generic drug, which is cheap, but from the doctors’ time and the clinic space. In contrast, just the Spravato drug alone can cost almost $900 per session, which would bring a monthly cost — at the recommended two sessions a week —to nearly $7,000, according to Stat News.
    - Scoundreller 7y ago
      Because they’re doing the ketamine infusions really expensively. Do the first infusion at a proper clinic, then send a travelling nurse to do it at a patient’s home. Putting in a peripheral line and mixing and running a bag is nursing 101. Or do it at a nurse/operated infusion clinic to further reduce nursing time. At least that’s how my jurisdiction does outpatient IV antibiotics, which are riskier than ketamine. Dunno why MD supervision would be required for a ketamine infusion. The recipient is unlikely to crash or have an anaphylactic reaction. Maybe they could have a fall, but we don’t put doctors in bars or dangerous intersections.
      - DanBC 7y ago
        Spravato is a nasal spray.
        Scoundreller 7y ago
        But sold as an alternative to infusions which are done cheaper, and have lots of opportunity to be done even cheaper because patents aren’t involved.
jlarocco 7y ago
Any thoughts on why it went so badly compared to Colorado? I think your first and third points are the key to it. CO has lower taxes, and as far as I know, when rec dispensaries were legallized it didn't change much for the med businesses. Dispensaries that wanted to sell recreational had some extra work to do, but they were able to keep their med business going while they added rec.
- dumbfoundded 7y ago
  A few thoughts: - CA is just a much bigger state. You have a more diverse population, more diverse interests. Everything gets harder with scale. For example, in many CA counties, growing became illegal where it was previously medically legal. I talked with farmers in Nevada County who couldn't grow anymore. Farmers in Humboldt loved this and tried to create Agricultural Associations (I forget the specific legal name). These were legally mandated dues you would have to pay if you were a farmer and then Humboldt tried to give themselves all the board seats and solidify their position over Nevada County. I'm going a bit deep into the weeds here but I'm trying to demonstrate how complicated and messy the interests are with larger states. CA is also actively preventing the hemp industry from developing in the same. Cannabis seems to be the industry pushing hardest against hemp in CA. Crazy, right? - The laws were poorly written. Too much was left up to counties. Counties that were frankly totally unprepared for writing regulations and enforcement. The equivalent is dry alcohol counties. - The underground market was much more developed in CA than in CO prior to legalization. CA/OR/WA supplied much of the US. Even supplying itself, CA developed complex supply chains before legalization. These don't just go away. - The culture. Smoking weed in CA seemed much more widely accepted when it was illegal than it did in CO. For actual people, most didn't really notice when weed became legal. If you wanted to smoke it, you were probably already smoking it. Of course, it was a huge delta for the industry but the average person doesn't care much. As an example, I used to work in the tech industry as a software engineer. One time a coworker visited from another office out of town, bought some weed, had some left over, and gave it to me by leaving it on my desk overnight. I came in the next morning, my room and desk smelled like weed. I made a joke about it and no one cared. I've smoked weed with my boss's boss on the roof of the office building. When I started a cannabis company, I visited my old office and brought samples. People went outside to try it at like 11am. The culture is just so insanely different.

wpietri 7y ago

Yeah, time/inertia strikes me as a huge one. I'm impressed that the business is already 25% legal; that sounds like a huge transition to me. I don't know the specifics of the regulation, and I'm sure there's a lot that can be improved. But I'm ok with toughness in general. The weed stores in my area are clean, orderly, well-run businesses. I'd love to see the liquor stores brought up to a similar level, as some of those are sketchily-run trouble magnets.

johnisgood 7y ago

http://reason.com/reasontv/2018/04/02/californias-new-recreational-marijuana-m http://reason.com/reasontv/2018/04/02/californias-new-recrea... California's Legal Weed Is So Heavily Taxed and Regulated That the Black Market Might Survive I am not surprised by this.

Scoundreller 7y ago
The same thing is happening in Canada too, particularly in the provinces that are taking their time in distribution network setup (looking at you Ontario).
- johnisgood 7y ago
  Another: FDA approved ketamine for the treatment of depression, but the costs are through the roof. If I remember correctly it was somewhere around $7000. You can get more or less pure ketamine on the black market for $30-$50 per 1 g. That 1 g will last ages if used for depression. Edit: Found it: > Ketamine treatments usually cost a few hundred dollars per infusion, but the expense comes not from the generic drug, which is cheap, but from the doctors’ time and the clinic space. In contrast, just the Spravato drug alone can cost almost $900 per session, which would bring a monthly cost — at the recommended two sessions a week —to nearly $7,000, according to Stat News.
  - Scoundreller 7y ago
    Because they’re doing the ketamine infusions really expensively. Do the first infusion at a proper clinic, then send a travelling nurse to do it at a patient’s home. Putting in a peripheral line and mixing and running a bag is nursing 101. Or do it at a nurse/operated infusion clinic to further reduce nursing time. At least that’s how my jurisdiction does outpatient IV antibiotics, which are riskier than ketamine. Dunno why MD supervision would be required for a ketamine infusion. The recipient is unlikely to crash or have an anaphylactic reaction. Maybe they could have a fall, but we don’t put doctors in bars or dangerous intersections.
    - DanBC 7y ago
      Spravato is a nasal spray.
      - Scoundreller 7y ago
        But sold as an alternative to infusions which are done cheaper, and have lots of opportunity to be done even cheaper because patents aren’t involved.

jlarocco 7y ago

Any thoughts on why it went so badly compared to Colorado? I think your first and third points are the key to it. CO has lower taxes, and as far as I know, when rec dispensaries were legallized it didn't change much for the med businesses. Dispensaries that wanted to sell recreational had some extra work to do, but they were able to keep their med business going while they added rec.

dumbfoundded 7y ago
A few thoughts: - CA is just a much bigger state. You have a more diverse population, more diverse interests. Everything gets harder with scale. For example, in many CA counties, growing became illegal where it was previously medically legal. I talked with farmers in Nevada County who couldn't grow anymore. Farmers in Humboldt loved this and tried to create Agricultural Associations (I forget the specific legal name). These were legally mandated dues you would have to pay if you were a farmer and then Humboldt tried to give themselves all the board seats and solidify their position over Nevada County. I'm going a bit deep into the weeds here but I'm trying to demonstrate how complicated and messy the interests are with larger states. CA is also actively preventing the hemp industry from developing in the same. Cannabis seems to be the industry pushing hardest against hemp in CA. Crazy, right? - The laws were poorly written. Too much was left up to counties. Counties that were frankly totally unprepared for writing regulations and enforcement. The equivalent is dry alcohol counties. - The underground market was much more developed in CA than in CO prior to legalization. CA/OR/WA supplied much of the US. Even supplying itself, CA developed complex supply chains before legalization. These don't just go away. - The culture. Smoking weed in CA seemed much more widely accepted when it was illegal than it did in CO. For actual people, most didn't really notice when weed became legal. If you wanted to smoke it, you were probably already smoking it. Of course, it was a huge delta for the industry but the average person doesn't care much. As an example, I used to work in the tech industry as a software engineer. One time a coworker visited from another office out of town, bought some weed, had some left over, and gave it to me by leaving it on my desk overnight. I came in the next morning, my room and desk smelled like weed. I made a joke about it and no one cared. I've smoked weed with my boss's boss on the roof of the office building. When I started a cannabis company, I visited my old office and brought samples. People went outside to try it at like 11am. The culture is just so insanely different.