Pot Industry in California on Verge of Collapse

(AP Photo/Ted S. Warren)

Potheads who thought government legalization of pot would lead to heaven on earth forgot about one tiny detail: getting the government involved in anything either makes it more expensive or ruins it completely.


In the case of legal pot in California, it’s both.

Many pot smokers in California probably wish they were still buying from the cartels, given how expensive their marijuana has become. And with the dearth of legal pot shops in much of the state, potheads are bypassing the high taxes and spotty service in the existing stores to keep buying on the street.

Also, since California’s progressive establishment decriminalized pot, industry officials can’t ask the state to crack down on enforcement to protect their investments.

More than two dozen industry executives signed a letter to Gov. Gavin Newsom, pleading for relief.


Four years after broad legal sales began, “our industry is collapsing,” said the letter, which also was sent to legislative leaders in Sacramento.

The industry leaders asked for an immediate lifting of the cultivation tax placed on growers, a three-year holiday from the excise tax and an expansion of retail shops throughout much of the state. It’s estimated that about two-thirds of California cities remain without dispensaries, since it’s up to local governments to authorize sales and production.

The current system “is rigged for all to fail,” they wrote.


The cannabis officials don’t ask for much. All they want is for Newsom to overturn the state constitution that grants control over such matters to local government, cut or eliminate their taxes, and help them drive the illegal pot trade out of California.

But that’s not going to happen when legal pot is twice the price of the alternative.

In a conference call with reporters, Darren Story of Strong Agronomy said tough market conditions forced him to cut loose more than half his staff. He said taxes that will increase next year make it an easy choice for shoppers. With prices in the underground half of what they see on legal shelves, he said “most consumers are going to take off.”

The companies asked Newsom to include their proposals in his upcoming budget proposal, which will be released early next year.

“The solution to these issues and the possibility of saving this industry lies in your hands,” they wrote.

With the government micromanaging the industry in order to squeeze every last dime in taxes out of it, California pot growers’ current difficulties were entirely predictable.


Related: West Coast, Messed Coast: A Weed ‘State of Emergency’

The state government has tried to drastically limit the supply of legal weed in order to keep prices high, but at the same time, they are easing up on enforcement due to racial justice concerns. While crackdowns on cultivating pot continue, authorities face the same problems they’ve always faced: finding the pot growers.

The pot industry in California is worth $8 billion, half of it illegal. But with 68% of California cities banning the sale of legal cannabis, most legal pot sellers are left out of the bonanza and won’t last much longer without help from the state.


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