California cannabis industry sending SOS to state leaders

[IronLionZion]

https://www.cnn.com/2019/11/26/business/california-cannabis-industry-layoffs/index.html

San Francisco (CNN Business)About 170 years after California's gold rush came the promise of the green rush.

California's legalization of cannabis for adult recreational use was expected to be massive. In 2016, industry investors claimed sales could top $6.5 billion by 2020.

And as 2019 comes to a close, California is indeed home to the world's largest cannabis market, totaling close to $12 billion in estimated sales. But here's the rub: $8.7 billion of that is changing hands in the illicit market.

Now, members of California's cannabis industry are sending an S.O.S. to the state capitol, saying they're struggling to compete against black market operators who don't have to meet stringent regulations or pay taxes and fees. They're urging leaders to make swift regulatory changes or risk the collapse of their emerging industry.

"The hard truth is that until legislative changes are made, our industry will continue to wither away," said Michael Steinmetz, CEO of cannabis distributor Flow Kana, which recently joined a growing list of California cannabis firms that have cut their workforces.

Sounds like much of the illegal market is from local governments making it difficult to get licenses or banning it. So it is still prohibition at the local level in many areas. With illegal sellers come all sorts of other problems like safety or selling to kids.

[Cartoonist]

1. Lack of licensing

The whole county of Marin won't allow a single dispensary. My new town has at least five shops. My favorite gives a 15% senior discount. Even with taxes I'm paying one third of street.

Sadly, I hear they are going to raise the tax.

[IronLionZion]

4. San Francisco?

You're saying legal with taxes is cheaper than illegal?

Sounds like there is opportunity to increase revenues from licensing more legal dispensaries instead. Since the black market is willing to pay 3 times the price, there is plenty of consumer demand for the legal stuff.

[BigmanPigman]

2. Check this out!

Increase in taxes in CA will be 50% Jan 2020
Currently I am paying 30% is San Diego. It has increased at least three times in two years. This will make people go buy it illegally. Bad idea CA! They are now being too greedy and it will backfire on the state and hurt the industry as well as those who need it for medical reasons.

https://mjbizdaily.com/california-marijuana-taxes-will-increase-new-years-day/

https://www.latimes.com/california/story/2019-11-22/california-pot-taxes

https://www.dailymail.co.uk/news/article-7716217/California-boosts-pot-taxes-shocking-unsteady-industry.html

I wish I had my old connections since I can't afford the taxes! State, city and county already was 30%! I can afford to stock up for only a few months into 2020 before I will have to pay 50%. Shit!

[IronLionZion]

3. They don't get tax revenue from the black market

So they are losing out on a massive amount of revenue. Having sensible taxes and regulations/licensing would get them more revenue from having more legal dispensaries, along with the safety and not selling to kids.

Big Alcohol or Pharma must be lobbying against it at the local level.