4 ms·

California really needs to get a grip on the Legal Market of Marijuana. The State Governments effort to extract as much money as it can from legitimate business

California really needs to get a grip on the Legal Market of Marijuana. The State Governments effort to extract as much money as it can from legitimate businesses (growers/dispensaries) has made the cost of buying and selling so costly that the illegal market is 3 times the size of the legal one. These legitimate businesses are going broke, do to the high cost of regulation and taxes. Until the state government can control their appetite for gouging the industry and creating as much red tape as they can, they encourage the illegal operation of these cartel grow ops.

KingMachiavelli 7y ago
The issue goes far beyond the taxes. Last I read, even without taxes/overhead California produces far more cannabis than it's domestic market can consume. The only long term solutions seem to be; crack down on illegal growers or wait out until it's legal at the federal level and interstate commerce is allowed. Cracking down on illegal growers seems unsavory since the government was looking the other way for decades while it was completely illegal plus (my theory at least) the tax revenues on (one day) being the largest producer of cannabis in the US are too appetizing to warrant constricting the industry.
- asdff 7y ago
  As long as legal is taxed 30%, unlicensed dispensaries that sell the same exact product for 30% cheaper or more will continue to flourish and thrive, and the legal market will never grow. Cracking down is playing expensive whack a mole with how trivial it is to set up a grow anywhere and everywhere.
- Melting_Harps 7y ago
  Actually, the bigger issue is Banking. If most businesses had to deal with the myriad of weekly/monthly legal changes and expenses that those grower/dispensary owners do most would just pack it up and exit, add to that they have no real choice in banking and remain largely a cash based business. The thing is, as we have seen with Canada, even if it is legalized at the Federal Level access to banking will still not be a sure thing. Most dispensaries still cannot have normal bank accounts to pay vendors/staff/bills etc... this kills their productivity. Honestly, their is no cure-all to it, unless you see a massive resurgence in community based gardens specifically for cannabis, which would be my personal ideal situation. But, Career politicians backed it despite having a very good Medical system in place, in order to get as much tax revenue from what was otherwise an illegally sourced substance. If anything, I think they'll continue to tax more as they will have to pay for 'task forces' to monitor and stomp out these 'illegal' grows. Businesses will have to continue to add Value Added services to compensate for the added expenses and you'll have am eventual race to the bottom and consolidation (like in Colorado) of Market Share from a handful of players/cartel which may fall into the hands of a Phillip Morris type conglomerate--think juul vape. CA had proposed a novel system in place that would, on paper anyhow, protect the Mom and Pop shops; but the taxes and regulatory framework and legal landscape is not hospitable to a small business venture unless you have substantial financial backing anymore. I was against recreational being legalized for that reason in CA, and I preferred it stay Medical only. It wasn't a perfect system, but it allowed for competition with existing and mature legal framework enabled by the Compassion Act in 1996. The only thing it seemed to offer was some degree of protection from the DEA raiding a legal and compliant business, but I'm doubting this may be the case anymore as these task forces will need something to do to justify their existence.

KingMachiavelli 7y ago

The issue goes far beyond the taxes. Last I read, even without taxes/overhead California produces far more cannabis than it's domestic market can consume. The only long term solutions seem to be; crack down on illegal growers or wait out until it's legal at the federal level and interstate commerce is allowed. Cracking down on illegal growers seems unsavory since the government was looking the other way for decades while it was completely illegal plus (my theory at least) the tax revenues on (one day) being the largest producer of cannabis in the US are too appetizing to warrant constricting the industry.

asdff 7y ago
As long as legal is taxed 30%, unlicensed dispensaries that sell the same exact product for 30% cheaper or more will continue to flourish and thrive, and the legal market will never grow. Cracking down is playing expensive whack a mole with how trivial it is to set up a grow anywhere and everywhere.
Melting_Harps 7y ago
Actually, the bigger issue is Banking. If most businesses had to deal with the myriad of weekly/monthly legal changes and expenses that those grower/dispensary owners do most would just pack it up and exit, add to that they have no real choice in banking and remain largely a cash based business. The thing is, as we have seen with Canada, even if it is legalized at the Federal Level access to banking will still not be a sure thing. Most dispensaries still cannot have normal bank accounts to pay vendors/staff/bills etc... this kills their productivity. Honestly, their is no cure-all to it, unless you see a massive resurgence in community based gardens specifically for cannabis, which would be my personal ideal situation. But, Career politicians backed it despite having a very good Medical system in place, in order to get as much tax revenue from what was otherwise an illegally sourced substance. If anything, I think they'll continue to tax more as they will have to pay for 'task forces' to monitor and stomp out these 'illegal' grows. Businesses will have to continue to add Value Added services to compensate for the added expenses and you'll have am eventual race to the bottom and consolidation (like in Colorado) of Market Share from a handful of players/cartel which may fall into the hands of a Phillip Morris type conglomerate--think juul vape. CA had proposed a novel system in place that would, on paper anyhow, protect the Mom and Pop shops; but the taxes and regulatory framework and legal landscape is not hospitable to a small business venture unless you have substantial financial backing anymore. I was against recreational being legalized for that reason in CA, and I preferred it stay Medical only. It wasn't a perfect system, but it allowed for competition with existing and mature legal framework enabled by the Compassion Act in 1996. The only thing it seemed to offer was some degree of protection from the DEA raiding a legal and compliant business, but I'm doubting this may be the case anymore as these task forces will need something to do to justify their existence.