California is experiencing a significant decrease in revenue from medical cannabis sales than what state officials originally predicted. Some cannabis industry analysts point to adult recreational use as the primary factor. However, patients and providers will tell you that over-taxation and the added costs of testing, packaging and licensing fees have pushed patients to seek unregulated sources for their medical cannabis.
Cannabis retail providers will tell you that it’s not only patients that have stopped coming in, but local adults, that frequented dispensaries a year ago, also stopped coming in after the new taxes went into effect January 1, 2018. So, who’s buying from licensed and permitted cannabis shops in California? Tourists.
This benefits cannabis retailers fortunate and/or foresight-full enough to secure a permitted location in a major tourist thoroughfare, such as the Haight-Ashbury or the Venice Boardwalk. Boutique providers in lesser known communities report that they are having a tough time business-wise – daily visits are low, unregulated options are plentiful, and the cost of doing business is too expensive – unreasonably so.
Many boutique cannabis business owners see California’s current regulatory system favoring large, wealthy corporations over smaller, local mom-and-pop businesses. Investment money is nearly mandatory these days to keep up and stay afloat. However, this has always been the way of capitalism and big money and business regulations. Big money gets what it wants from the rule makers. The little guy gets hit the hardest. The consumer ends up paying more in the end.
Except most California cannabis consumers refuse to pay more and there are plenty of more affordable options outside of the licensed industry. If smaller cannabis businesses in California want to survive, they are going to have to demand more affordable rules and lower taxation. The price out of the door has to match or beat the price on the street and right now “black market is king” according to social commentary.
The $35 affordable eighth to the $65 premium eighth has been the standard on and off the streets for many years. If regulations can’t meet this consumer demand, then the consumer is going to get it at that price elsewhere. Does the legislature realize that the excessive taxation and cost of regulation has caused the unregulated market or ‘black market’ to explode? Do they already know and this is by design? Why?
Always follow the money.
1 comment:
Yes, it was by design, and heavy lobbying / consultations from the League of California Cities and other law enforcement associations. The "local option" has allowed the banned jurisdictions to set up administrative kangaroo courts and local abatement squads (ex drug taskforce), to terrorize all home farmers with outrageous fines and property liens. The prohibition industry is making more money on so called legalization than the Government is from taxes and fees. And they're all making out like bandits, while local bans and sin taxes force more consumers to the black market, which only feeds the prohibition industry more. It's a self sucking straw. Californians need to fix this mess...
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