| | | To save legal marijuana market in California, cut the red tape of taxes and over-regulation
Cannabis cultivators are on the brink of going out of business, and into despair
Remember when allowing the legal sale of marijuana in California was going to be such a panacea for the state?
After a century of active state-sanctioned prohibition, which harmed thousands of lives, and cost untold hundreds of millions of citizen-earned tax dollars, the underground cannabis market would finally be brought out into the sunshine in the Golden State.
The financial benefits that would be reaped for Sacramento and our cities!
The safety it would bring to the trade, with its bans on dangerous pesticides and herbicides, and its elimination of the exploitation of often undocumented workers!
The freeing-up of law-enforcement budgets to concentrate on real crime and public safety!
Formerly incarcerated Californians who had been hounded down the decades for the supposed crime of pot transactions and possession would see their records properly wiped clean, and, if they so desired, could get first in line for opening up licensed shops, like liquor stores for weed, with the same kind of regulations. Nothing too onerous. Don’t sell to the kids and don’t become a neighborhood nuisance, Easy enough to get set up in every city in the state, right?
Sadly, if that’s the way you think it’s gone for the legal marijuana business since California voters approved Proposition 64 in 2016, you’ve been smoking too much herb.
Taxes, regulations, over-regulation, the pressures of competing with the still-vibrant underground sellers — they all have driven legal cannabis cultivators to the brink of going out of business, and into despair.
“Despite the challenges of growing an illegal crop, including enforcement raids that still scar residents, the ‘war on drugs’ kept product scarce and prices high,” CalMatters reports.
As one longtime resident and veteran of the business puts it: “Everybody was making so much money it was insane.”
Not so much in the late winter of 2023.
A pound of fancy cannabis that might have fetched $1,000 or more several years ago is now selling for just a few hundred dollars — not enough to cover expenses and taxes.
Legal sales in the state fell by 8% last year to $5.3 billion, according to tax data from Sacramento, marking the first downturn since actual legal sales began in 2018.
Farms are closing down, and thousands of unemployed and under-employed cannabis workers are looking for new jobs, or are leaving the growing region entirely.
What’s the answer?
It doesn’t take a Harvard MBA to analyze the industry’s problems. If lawmakers and the governor don’t deregulate, lower or temporarily eliminate taxes and make it possible for the mom-and-pops to compete, the legal industry that Californians said they wanted to legalize seven years ago is simply going to disappear.
Gov. Gavin Newsom and the Legislature last year did eliminate one cultivation tax after farmers begged for some relief. But that was too little, too late.
Much more needs to be done. And undone.
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