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73% Of Marijuana Bought And Sold In California Is Done On The Illicit Market

By Terry Hacienda, The Fresh Toast on

Published in Cannabis Daily

Just four years into the start of operations in the state’s cannabis industry, operators are not only struggling with tax payments, they’re also competing with illegal cannabis operators to make a profit.

This article originally appeared on Cannabis.net and has been reposted with permission.

There is a crisis looming on the horizon for California’s cannabis industry. Prominent cannabis companies in California have warned against an impending collapse of the state’s cannabis industry.

In a letter dated December 17th, the group warned Governor Gavin Newsom of the strains caused by the hefty taxes imposed on operators in the industry. To prevent the impending disaster, the group says a rapid expansion of retail cannabis stores is needed to stabilize the marketplace. The letter was also sent to the legislative leaders in Sacramento, as the group understands that the executive arm needs the support of the legislative body to make changes to the industry. In addition to this, the group proposes that mandatory taxes be halted for a while or cut down significantly.

Some companies, executives, and groups that signed the letter are the California arm of the National Organization for the Reform of Marijuana Laws, the California Cannabis Industry Association, CannaCraft, Flow Kanna, and the Los Angeles-based United Cannabis Business Association. A Drastic Change Is Needed In the letter, they explained that the industry is on the verge of collapsing. The industry has been heavily taxed, and little has been done to improve the conditions of the industry, despite the vast sums of money generated by companies annually. California’s marketplace has more or less remained stagnant since it was established, and it is now deteriorating at a fast rate.

Since 2016, when the state passed Prop 64, very little has been done to steady the shaky industry. In the letter, the industry was described as a never-ending rollercoaster ride.

 

While it can’t be denied that the state has gained massive economic boosts from the legislation, it must also be stated that this current mess of an industry is not what residents expect or deserve.

The industry’s leaders praised the state government for generating significant revenue from the industry for the state coffers. However, they also said that the sector had suffered severe setbacks due to the struggles of local governments to work around bureaucratic red tape at the state level. A Collapsing Industry Just four years into the start of operations in the state’s cannabis industry, operators are not only struggling with tax payments, they’re also competing with illegal cannabis operators to make a profit.

According to the details in the letter, the group said that the current rules and regulations guiding the industry had not helped the legal operators in any way. Instead, it seems as though it was set up to ensure the industry crumbles. The group highlighted that this wasn’t the first warning given to the state government. For several months, there have been a series of complaints leveled against the state’s cannabis regulatory agency, but nothing has been done.

Industry officials and executives have reported the heavy taxes and limiting regulations on several occasions. They backed their complaints with proof of being unable to compete against the widespread cannabis blackmarket in different state regions. They added that consumer prices in illegal markets are meager; hence sales are at least double that of the legal markets. Legal cannabis products are fifty percent more expensive than unlawful cannabis products.  Some are pushing for a tax-free cannabis sector to battle the illicit market prices in California.

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