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Some industry watchers say they predicted a crash would eventually come after Californians voted to legalize cannabis three years ago. They foresaw the rush to invest in fledgling marijuana companies with unrealistic revenue targets. They warned against hefty taxes from state and local governments angling to gain from those promised returns.
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“Everything was going really well. Then all of a sudden we weren’t hitting our target — and everybody was retracting,” said Dennis Hunter, founder of Santa Rosa-based CannaCraft. “We had to make the responsible decision to cut our costs.”
Burdensome taxes, complex regulations and not enough legal dispensaries to get products in front of consumers in California have created a tough economic atmosphere, according to many cannabis business leaders.
Then Friday, California announced it will increase taxes for cannabis businesses starting Jan. 1.
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Consumers in California are expected to spend $8.7 billion on illegal cannabis in 2019, compared to legal sales forecast to hit $3.1 billion this year, according to BDS Analytics cannabis industry research firm.
Same as always, tons jump into a new industry, it gets saturated, the extra costs associated with regulations and big government drives the smaller as well as the least productive businesses to close.
Oh look... California government has figured out that taxes play a part in the decline of marijuana business. Now they want to cut taxes to keep them in business. I thought tax cuts were evil...
California lawmakers on Friday revived a proposal to temporarily cut taxes on marijuana to boost a legal market that one official said is “on the brink of collapse,” drawing encouragement from Gov. Gavin Newsom as he seeks to overhaul state pot regulators.
The bill would cut the state excise tax on marijuana sales from 15% to 11% for three years while eliminating a cultivation tax for that period. Similar legislation has been shelved in the last two years, with Newsom saying he felt it was too soon after legalization to make changes to the law.
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California’s legal market has not grown as expected, a problem the cannabis industry and some state officials have attributed to factors including high taxes, bureaucratic red tape and the fact that three-quarters of California cities have banned pot shops.
Oh look... California government has figured out that taxes play a part in the decline of marijuana business. Now they want to cut taxes to keep them in business. I thought tax cuts were evil...
California lawmakers on Friday revived a proposal to temporarily cut taxes on marijuana to boost a legal market that one official said is “on the brink of collapse,” drawing encouragement from Gov. Gavin Newsom as he seeks to overhaul state pot regulators.
The bill would cut the state excise tax on marijuana sales from 15% to 11% for three years while eliminating a cultivation tax for that period. Similar legislation has been shelved in the last two years, with Newsom saying he felt it was too soon after legalization to make changes to the law.
...
California’s legal market has not grown as expected, a problem the cannabis industry and some state officials have attributed to factors including high taxes, bureaucratic red tape and the fact that three-quarters of California cities have banned pot shops.
At least they are doing something to try to tackle their black market issues. Why is that so bad?
With marijuana, there's such cognitive dissonance because the parties take the opposite position from what they do on most other issues. Bring up marijuana and Republicans turn into authoritarian nanny-staters and Democrats turn into libertarians.
Yep. They are selling less pot now than they did before recreational pot became legal.
Now they are trying to legalize pot nation wide, which would add another layer of tax on top of all the other taxes, and people will turn to black market even more.
This whole "market" is a short term house of cards no matter how you cut it. When you can grow this weed in any back yard for almost zero cost, why would anyone pay hundreds of dollars for an ounce?
Meanwhile, Republicans in Oklahoma are trying to make the state less friendly to mom and pot med pot stores by raising the license fee for a dispensary from $2500 to $10,000. Republicans also want to make it illegal for a dispensary to locate closer than 1000 ft. from a church. Currently no distance restrictions exist for churches.
The medical marijuana program in Oklahoma is famous for being the only one originated and advanced strictly from the heart of the grass roots level without any corporate support. That is why the license fee is only $2500.
Meanwhile, Republicans in Oklahoma are trying to make the state less friendly to mom and pot med pot stores by raising the license fee for a dispensary from $2500 to $10,000.
The fundamentalist Christians, who are currently the dominant political force in the USA, believe that marijuana consumption is sinful and destructive to the moral fabric of our society. In places where they've been forced to accept legalization, they want to make it as tough as possible for dispensary owners.
This whole "market" is a short term house of cards no matter how you cut it. When you can grow this weed in any back yard for almost zero cost, why would anyone pay hundreds of dollars for an ounce?
I agree that it's a house of cards, but that's because of the Christian Right's current power and influence in our society and the fact they believe that cannabis is the devil's lettuce and a threat to the moral fabric of our society. If we can get through this current era of Republican/fundamentalist Christian dominance without going back to full 50-state prohibition, I think the market is poised to boom.
Growing marijuana isn't as easy as just planting it by the way. It's expensive and time consuming to do it right and some people don't have the time or resources to devote to it.
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