Hey hey. It’s been just about two months since California has legalized recreational cannabis. How is it going?
Eh. It’s going… okay, I guess? I mean, there are hiccups to be expected with any sort of statewide regulatory rollout. The fact that you can’t be arrested for carrying around an ounce of weed is great. The fact that people are getting their marijuana “crimes” expunged from their records is awesome. But it seems to me that the state (and the counties and the cities, with a few exceptions) have gone out of their way to cater to moneyed interests at the expense of smaller businesses. Surprise.
Down in Monterey, smaller farms aren’t even allowed to apply, because Monterey only allows giant greenhouse grows. It costs just under $1 million to start a large grow like that, so if you are a small (one acre or less) farmer in Monterey, there’s no way you can become legal.
Up here in Sacramento, the application process is hella slow. They are supposed to allow microbusinesses, but they won’t even start discussing that program until April. A recent report from the California Growers Association estimates that fewer than 1 percent of growers have been approved so far. If you are fortunate enough to be in one of the 13 counties that allow cultivation, it will still take hundreds of thousands of dollars and up to six months to get a permit. Until you have a permit, the clubs can’t buy your product, but you still have to pay rent and your employees and feed your family. You might as well stay underground. The way it is set up right now, California isn’t doing anything to entice outlaw growers away from the black market. I have said this before, and it is still true: Cannabis has been a decentralized industry for decades, allowing thousands of small farms to make a little money and provide a popular product. Capitalism loves big businesses and monopolies. Proposition 64 was pitched as a way to give the smaller businesses a head start, but it isn’t happening that way, and it’s a shame.
Also: Cannabis taxes are way too high. In some places, after the excise tax, the state tax, the sales tax and the city tax, people are paying a 30-40 percent tax rate. These high tax rates create a disincentive for cannabis users. The weed man has comparable prices and doesn’t charge tax. If the goal of cannabis legalization is to move growers and sellers from the black market into the legitimate business space, it isn’t doing a very good job of attaining the goal. If the goal is to allow rich dudes in suits to push small farmers out, then they are doing just fine. Until the state (and the 25 counties that have enacted total bans on cannabis-based businesses) stops treating cannabis like yellowcake uranium, the black market will continue to exist, and California will miss out on millions in tax revenue while doing nothing to stop the black market.