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"These growers are trying undercut the legal market by about 50 percent and of course a lot of the product that they're growing is filled with these poisons," M

"These growers are trying undercut the legal market by about 50 percent and of course a lot of the product that they're growing is filled with these poisons," McIntryre says, "and it's likely finding its way into the market in various forms - flower, oils and vape pens." The legal market in California is too expensive (due to taxation) and this is a symptom. California’s illegal market prices are equivalent to legal prices in Colorado.

jstanley 7y ago
If the overhead of keeping an entire real-world manufacture & sales operation secret over the long-term is less than the overhead of simply paying taxes, then something is seriously wrong with the taxes.
- pjc50 7y ago
  Remember that it's still federally illegal, which has all sorts of awkward consequences for structuring the business. It may be difficult or impossible to get a bank account, for example.
  - dillonmckay 7y ago
    This has not been an issue for awhile. Most places take debit cards. In Colorado, there is a chain that takes actual credit cards.
    - Melting_Harps 7y ago
      'Most places take debit cards. In Colorado, there is a chain that takes actual credit cards.' Again... not true, at least not in a legal sense. What Industry do you work in? Yes, they accept debit cards, but they function on a whack-a-mole model. There are only a handful of Startups, one actually a YC backed company, operating out of CA that do so, but other than its done under the guise of other businesses. Most have several bank accounts setup in different entities to keep that alive, all of which are subject to confiscation and withholding of funds which compound the cost of doing business. What's even more skewed is how some players in this space get access to banking but most do not; case in point, Helping Hands in Boulder, CO. The owner, colloquially known as Crypto Mom in our circles, has access to banking but still explores other options by accepting Bitcoin and other Cryptocurrencies. Her situation is VERY unique, but her son became a LN developer in the process, too, which was a funny caveat.
- callmeal 7y ago
  If by "real-world manufacture & sales operation" you mean an operation where there can be no guarantees of the quality of ingredients and processing/storage, you would be right. Like some pesticides or mold with your bud? How about some vitamin e in your vape juice? Those taxes pay for something, and as a consumer I want to know I'm getting what I paid for and nothing more. We will see a lot these articles ranting against California taxes in the lead up to the elections by the conservative media because they are beginning to hate how much better the state does towards its residents with funding to provide services. Don't forget that almost all the social progress we're seeing in this country is from that state.
  - thrower123 7y ago
    California sure can wag the rest of the dog. > how much better the state does towards its residents with funding to provide service This is surely a joke, however, right?
    - microcolonel 7y ago
      No really, some people actually think Californian government institutions and politicians are doing a good job, but being undermined by forces outside their control. It is ludicrous, but you can tell if somebody has remained in California, they like the taste of boot, and in many parts of California, boot covered in human faeces.
      - callmeal 7y ago
        >No really, some people actually think Californian government institutions and politicians are doing a good job, but being undermined by forces outside their control. The truth is probably somewhere in between. There are just as many good people working in government institutions as there are people who're there on the corporate merry-go-round. And ignoring the fact that yes, the good people are being undermined (whether deliberately or through inaction/inattention) is not conducive to finding solutions to these problems. See this for instance: https://www.sfgate.com/bayarea/article/Homeless-patients-bused-from-Las-Vegas-mental-12771252.php https://www.sfgate.com/bayarea/article/Homeless-patients-bus...
- mc32 7y ago
  That doesn’t make any sense. Lots of people could make OTC medicines in their basements at much lower costs than regulated pharma. Doesn’t mean regulation and taxation of pharma is overbearing. I mean that’s the whole proposition of black markets, to subvert the state.
- avs733 7y ago
  As a counterpoint, lots of high school / college students do a chemistry lab where they produce acetaminophin. I'll bet that is a way cheaper unit price than if it were produced in a regulatory compliant factory. Not all of the costs in manufacture/sales are taxes and almost all of the regulatory costs are build on the backs of death or harm to people.
  - undersuit 7y ago
    Exactly, the student isn't even paying for the use of the location, just like the illegal grows.
- ohithereyou 7y ago
  I believe the taxes are functioning as intended. The entire reason California legalized marijunana wasn't some high minded criminal justice reform, and they certainly did not want to remove a tool for social control from the use of law enforcement. Legalized marijuana was to pacify white, rich pot smokers. It was never the intent of California to encorage the use of marijuana, to make it avaliable at a lower price than the illegal market, or to allow non-white, non-rich people to benefit from its sale and use.
  - Melting_Harps 7y ago
    Sadly this is truer than anything else I've seen in this thread, as CA had a really good program in place. Medical MJ cards were easy to acquire, dispensaries were plentiful, quality was always rather good due to the decades of good genetics and breeding etc... But, they saw the obvious cash grab and decided to move forward with it all costs to pacify their main voting constituency. Some good intentioned people may have played a part in trying to get to where it is, but I think it was mainly to consolidate Market Share for a mega corp to take it over.
bitcurious 7y ago
Let’s imagine there was no marijuana tax. You’d still have this: abusing pesticides + free land - potency tests - health tests = lower cost.
- asdff 7y ago
  Forget about overhead because this is a cheap product to produce, about as cheap as growing tomatoes. The illegal market doesn't really respond with lower cost, but higher profit. Good weed at a steep steep discount (ie gray market) is going to be $150. That's not because of overhead, but market price. Overhead is very low. You can grow six plants yourself in CA legally outside all year round in socal. A single good harvest of six autoflowering plants will yield you 6-24oz in 3-4 months for probably $100 on your end if you didn't have any supplies, maybe another $50 for good seeds. So you yourself can grow pot for ~$6-25$ an ounce. Imagine what the wholesale price can fall down to if you take advantage of economies of scale. But it doesn't, because in the legal market taxation and licensing add huge costs to what otherwise should be the business of selling tomatoes, and the illegal market rides the profit off of the established market rate that customers are used to paying.
TheHypnotist 7y ago
They undercut to compete, it's not paying a premium due to taxes. CA's legal market, while not the cheapest in the country, is still VERY reasonable. Just to state the obvious, the real problem is the fact that it's not more widely available, so you still have high illegal demand in surrounding states.
- dillonmckay 7y ago
  Reasonable compared to what? California black market? Colorado recreational market?
- asdff 7y ago
  Paying north of $50 for 1/8oz might be reasonable if your last purchase was being ripped off in high school, but compared to the market in Portland or other legal areas and it's over double the price.
Melting_Harps 7y ago
'California’s illegal market prices are equivalent to legal prices in Colorado.' That's absurd! What basis are you supporting this on? I just went back home to SoCal in the Summer and I bought 2 pre-rolled joints of high end CBD dominant strains for $6/each in Downtown LA before a show. Which is a really good price. I live in Boulder and a single pre-roll of whatever will cost you about the same if not more as CBD has been put on everything to make it more expensive here. So anything that has a higher number than 0% of CBD will command a higher price. The truth is, once you're in the Industry paying for weed itself becomes absurd as you get to know too many growers (pros and amateurs alike) who just want you to experience their harvest and are too happy to just give it to you, in addition to growing your own you may exchange for fun. Your statement is an outright lie, though; yes, CO MJ Industry already went through its saturation period, and prices have adjusted, but the taxes are upwards of 50% for the Dispensary owners and that is reflected in the price. Personally speaking: I honestly thought more people would have gotten their hands dirty and grown with the advent of legal recreational in both states, but most who do use seldom do. Its odd dilemma, I was never a stoner so growing it was always the most fun of the entire process. Source: I live and work in Colorado, and I was in Fintech within the Industrial Hemp Industry for the past 4 years. But I grew up in SoCal all of my Life, where weed was always more accessible than alcohol or cigarettes.
- Melting_Harps 7y ago
  Oh, I forgot, last time I was in the hot springs in Idaho Springs I paid $22 for 2 joints and a lighter. I pretended I didn't work in the Industry and asked about the credit card and debit card POS and all the bud-tender could say is that it works for now.
- dillonmckay 7y ago
  I was referring to THC-laden flower, not pre-rolled ‘hemp’.

jstanley 7y ago

If the overhead of keeping an entire real-world manufacture & sales operation secret over the long-term is less than the overhead of simply paying taxes, then something is seriously wrong with the taxes.

pjc50 7y ago
Remember that it's still federally illegal, which has all sorts of awkward consequences for structuring the business. It may be difficult or impossible to get a bank account, for example.
- dillonmckay 7y ago
  This has not been an issue for awhile. Most places take debit cards. In Colorado, there is a chain that takes actual credit cards.
  - Melting_Harps 7y ago
    'Most places take debit cards. In Colorado, there is a chain that takes actual credit cards.' Again... not true, at least not in a legal sense. What Industry do you work in? Yes, they accept debit cards, but they function on a whack-a-mole model. There are only a handful of Startups, one actually a YC backed company, operating out of CA that do so, but other than its done under the guise of other businesses. Most have several bank accounts setup in different entities to keep that alive, all of which are subject to confiscation and withholding of funds which compound the cost of doing business. What's even more skewed is how some players in this space get access to banking but most do not; case in point, Helping Hands in Boulder, CO. The owner, colloquially known as Crypto Mom in our circles, has access to banking but still explores other options by accepting Bitcoin and other Cryptocurrencies. Her situation is VERY unique, but her son became a LN developer in the process, too, which was a funny caveat.
callmeal 7y ago
If by "real-world manufacture & sales operation" you mean an operation where there can be no guarantees of the quality of ingredients and processing/storage, you would be right. Like some pesticides or mold with your bud? How about some vitamin e in your vape juice? Those taxes pay for something, and as a consumer I want to know I'm getting what I paid for and nothing more. We will see a lot these articles ranting against California taxes in the lead up to the elections by the conservative media because they are beginning to hate how much better the state does towards its residents with funding to provide services. Don't forget that almost all the social progress we're seeing in this country is from that state.
- thrower123 7y ago
  California sure can wag the rest of the dog. > how much better the state does towards its residents with funding to provide service This is surely a joke, however, right?
  - microcolonel 7y ago
    No really, some people actually think Californian government institutions and politicians are doing a good job, but being undermined by forces outside their control. It is ludicrous, but you can tell if somebody has remained in California, they like the taste of boot, and in many parts of California, boot covered in human faeces.
    - callmeal 7y ago
      >No really, some people actually think Californian government institutions and politicians are doing a good job, but being undermined by forces outside their control. The truth is probably somewhere in between. There are just as many good people working in government institutions as there are people who're there on the corporate merry-go-round. And ignoring the fact that yes, the good people are being undermined (whether deliberately or through inaction/inattention) is not conducive to finding solutions to these problems. See this for instance: https://www.sfgate.com/bayarea/article/Homeless-patients-bused-from-Las-Vegas-mental-12771252.php https://www.sfgate.com/bayarea/article/Homeless-patients-bus...
mc32 7y ago
That doesn’t make any sense. Lots of people could make OTC medicines in their basements at much lower costs than regulated pharma. Doesn’t mean regulation and taxation of pharma is overbearing. I mean that’s the whole proposition of black markets, to subvert the state.
avs733 7y ago
As a counterpoint, lots of high school / college students do a chemistry lab where they produce acetaminophin. I'll bet that is a way cheaper unit price than if it were produced in a regulatory compliant factory. Not all of the costs in manufacture/sales are taxes and almost all of the regulatory costs are build on the backs of death or harm to people.
- undersuit 7y ago
  Exactly, the student isn't even paying for the use of the location, just like the illegal grows.
ohithereyou 7y ago
I believe the taxes are functioning as intended. The entire reason California legalized marijunana wasn't some high minded criminal justice reform, and they certainly did not want to remove a tool for social control from the use of law enforcement. Legalized marijuana was to pacify white, rich pot smokers. It was never the intent of California to encorage the use of marijuana, to make it avaliable at a lower price than the illegal market, or to allow non-white, non-rich people to benefit from its sale and use.
- Melting_Harps 7y ago
  Sadly this is truer than anything else I've seen in this thread, as CA had a really good program in place. Medical MJ cards were easy to acquire, dispensaries were plentiful, quality was always rather good due to the decades of good genetics and breeding etc... But, they saw the obvious cash grab and decided to move forward with it all costs to pacify their main voting constituency. Some good intentioned people may have played a part in trying to get to where it is, but I think it was mainly to consolidate Market Share for a mega corp to take it over.

bitcurious 7y ago

Let’s imagine there was no marijuana tax. You’d still have this: abusing pesticides + free land - potency tests - health tests = lower cost.

asdff 7y ago
Forget about overhead because this is a cheap product to produce, about as cheap as growing tomatoes. The illegal market doesn't really respond with lower cost, but higher profit. Good weed at a steep steep discount (ie gray market) is going to be $150. That's not because of overhead, but market price. Overhead is very low. You can grow six plants yourself in CA legally outside all year round in socal. A single good harvest of six autoflowering plants will yield you 6-24oz in 3-4 months for probably $100 on your end if you didn't have any supplies, maybe another $50 for good seeds. So you yourself can grow pot for ~$6-25$ an ounce. Imagine what the wholesale price can fall down to if you take advantage of economies of scale. But it doesn't, because in the legal market taxation and licensing add huge costs to what otherwise should be the business of selling tomatoes, and the illegal market rides the profit off of the established market rate that customers are used to paying.

TheHypnotist 7y ago

They undercut to compete, it's not paying a premium due to taxes. CA's legal market, while not the cheapest in the country, is still VERY reasonable. Just to state the obvious, the real problem is the fact that it's not more widely available, so you still have high illegal demand in surrounding states.

dillonmckay 7y ago
Reasonable compared to what? California black market? Colorado recreational market?
asdff 7y ago
Paying north of $50 for 1/8oz might be reasonable if your last purchase was being ripped off in high school, but compared to the market in Portland or other legal areas and it's over double the price.

Melting_Harps 7y ago

'California’s illegal market prices are equivalent to legal prices in Colorado.' That's absurd! What basis are you supporting this on? I just went back home to SoCal in the Summer and I bought 2 pre-rolled joints of high end CBD dominant strains for $6/each in Downtown LA before a show. Which is a really good price. I live in Boulder and a single pre-roll of whatever will cost you about the same if not more as CBD has been put on everything to make it more expensive here. So anything that has a higher number than 0% of CBD will command a higher price. The truth is, once you're in the Industry paying for weed itself becomes absurd as you get to know too many growers (pros and amateurs alike) who just want you to experience their harvest and are too happy to just give it to you, in addition to growing your own you may exchange for fun. Your statement is an outright lie, though; yes, CO MJ Industry already went through its saturation period, and prices have adjusted, but the taxes are upwards of 50% for the Dispensary owners and that is reflected in the price. Personally speaking: I honestly thought more people would have gotten their hands dirty and grown with the advent of legal recreational in both states, but most who do use seldom do. Its odd dilemma, I was never a stoner so growing it was always the most fun of the entire process. Source: I live and work in Colorado, and I was in Fintech within the Industrial Hemp Industry for the past 4 years. But I grew up in SoCal all of my Life, where weed was always more accessible than alcohol or cigarettes.

Melting_Harps 7y ago
Oh, I forgot, last time I was in the hot springs in Idaho Springs I paid $22 for 2 joints and a lighter. I pretended I didn't work in the Industry and asked about the credit card and debit card POS and all the bud-tender could say is that it works for now.
dillonmckay 7y ago
I was referring to THC-laden flower, not pre-rolled ‘hemp’.