A House committee is backing federal efforts to track down illicit grows on public lands in California. This will become a reality if issues around cybersecurity and domestic production can be resolved so that the drones can be fully trusted to carry out their mission.
While drones looking for grows is not a new idea, the language is different this year, as newly discovered grows have brought more attention to how many cannabis farms can pop up on public land under the radar.
“The Committee is aware that trespassers illegally grow marijuana on public lands in California,” the report claimed. “These unlawful activities harmfully impact the public, water, soil, and wildlife. The Committee supports Forest Service efforts to develop tools to detect and eradicate grow sites.”
“The Committee also supports the Department of the Interior’s use of drones to conduct statewide remote-sensing surveys of federal public lands to identify grow sites and allow for the development of cost estimates for reclamation after concerns about cybersecurity, technology, and domestic production have been addressed,” it added.
So far, the report doesn’t get into cybersecurity issues, including technology and domestic production, but last year, Chinese-made drones were grounded because of the risk they cause to cybersecurity and U.S. security in general.
The committee may now be looking to get drones that are produced in the U.S., since they will be used to carry out surveillance over legal cannabis operations near public lands and illegal ones popping up on public lands. Growing communities like those in Humboldt County could be caught on the drones, as they border federal lands, so their rights have to be considered as well.
Drones as New Technology
As of now, it’s unclear exactly what is going to happen with this legislation, but drone language is new to this report and has not shown up in previous years. It also differs from past fiscal years because it focuses on California. Reports have also mentioned other states like Kentucky.
Some of the major players behind this legislation are Rep. Chellie Pingree (D-ME), who chairs the Appropriations Interior & Environment Subcommittee, and Rep. Dave Joyce (R-OH), a ranking member on the panel and a co-chair of the Congressional Cannabis Caucus. So far, none have been available for comment.
In general, the committee is seeking to control “unlawful activities harmfully impact the public, water, soil and wildlife.”
The report also fails to address the U.S. Department of Agriculture’s inspector general, who complained back in 2018 that the Forest Service is not doing its part cleaning up illicit grow sites after they finished destroying the plants they discovered. This can pose a threat to wildlife and create conditions that would start wildfires.
This year, the House is working on funding legislation to back many of the bills that have cannabis-related provisions. Some of them are like this bill, which aim to limit and clean up illegal grows, while others are more focused on regulation and legislation.
Last week, the chamber approved a transportation bill that included a provision allowing researchers access to cannabis from dispensaries in states where cannabis is legal. This will help with studying impaired driving so that strategies to actually detect high driving versus someone who has used cannabis in the past month or so can be developed.
Additionally, some spending bills were approved last week that deal with cannabis policy issues, focusing on immigration, eligibility for cannabis use, military veterans working in the industry, and other considerations around legal cannabis. Other bills were approved that deal with banking for cannabis business, cannabis use by federal employees and recreational cannabis in Washington, D.C.
California is Drowning in Cannabis, Product Prices Plummet
One thing that is sorely lacking from California’s cannabis industry is consistency. Starting with statewide pot shortages just a couple of years ago, to a $100 million bailout last year, and now insane levels of overproduction that are driving market prices into the dirt – it seems that California keeps overcorrecting at every turn, and the ‘Golden State’ just can’t seem to get it right.
A sharp rise in cannabis production to make up for prior deficits is having worrisome impacts on the state’s market, especially in the cultivation and wholesale sectors. According to numerous California farmers, flower prices are dropping substantially. On the retail side of things, concentrates and vape carts are cheaper than they have ever been. Some products and markets seem to be on better footing, but others may be in hot water.
In California, things are often complicated and convoluted – but this is especially true of the state’s cannabis industry. Check back with us to see how it all unfolds. For more articles like this one, and exclusive deals on vapes, edibles, tinctures, and more, make sure to subscribe to The THC Weekly Newsletter! We’ve also got great deals on cannabinoids like HHC-O, Delta 8, Delta 9 THC, Delta-10 THC, THCO, THCV, THCP & HHC , which you can find by checking out our “Best-of” lists!
Current state of affairs, indoor vs outdoor, top shelf vs mids
Although it does vary quite a bit regionally, we’re getting reports that wholesale prices are down about 60% for outdoor-farmed flower and roughly 10-20% for indoor and light-deprivation crops. In Northern California, for example, costs are shockingly low, averaging $200-500 for outdoor and $600-800 for indoor and light-deprivation. This down from $800-1000 and $1300-$1600, respectively, just last year.
“We are seeing flower prices in CA across a broad range, with most transactions within $550 to $3,350 per pound; with a roughly $400 spread between outdoor and greenhouse, and a roughly $700 spread between greenhouse and indoor,” New Leaf Data CEO Jonathan Rubin wrote in an interview with MJBizDaily.
“What I am hearing is … any sort of outdoor product from last year is absolutely not moving at all, and if it is moving, the price point is as low as $275 to $500 max,” said another industry insider from Mendocino County, who requested their identity be withheld. “The market is super-flooded,” the source said. “There’s a huge glut. Nothing is moving. … Talking to the old-, old-timers, no one has ever seen it this bad. And it’s on both sides, the white and black (markets).”
But down in Southern California, the situation seems a bit more stable; for now anyway, and for those growing indoor flower. Scott Raquiza, chief cannabis officer at Cream of the Crop Gardens in Perris, California, says that from what he has seen, indoor farmers are faring well at the moment, but anyone growing mids or bottom shelf buds “could be in serious trouble”.
There’s definitely price compression happening compared to what pounds were fetching on the wholesale market in 2020,” Raquiza continued. “For commercial grows, non-AAA, you’re probably at a 40% price compression. Outdoor is 50%-60% price compression, and premium indoor is only 10-20% price compression,” he added.
But it’s not just flower, prices for concentrates and carts are crumbling as well. LeafLink, an online wholesale platform for the industry, has been tracking the prices from 1,128 retailers since 2017. According to their Wholesale Cannabis Pricing Guide for 2022, the biggest year-over-year price drop was for cartridges, but they reported “consistently low pricing across most categories”.
It makes sense… because if farmers are having a hard time selling flower to anyone with the intent of reselling it, their next best option is to sell it at a low, bulk price to processors who can turn it into concentrates, which in turn drives down prices in the concentrate market as well.
What about retail pricing?
Although it does take a bit longer for these effects to trickle down to consumers, I and many others have seen a difference in dispensary pricing. Again, it varies by region, but I’ve noticed that prices for most products are lower to some degree, some only slightly (top-shelf bud) but other items dropped significantly (live resin carts).
What initially caught my attention was some quick product research I did last week in preparation for my trip to California for the Emerald Conference. I was scrolling through Weedmaps looking for dispensaries near the convention that sell the brands that I like. The search results left with sticker shock in the best possible way.
Not only were the carts I use considerably cheaper than they were last time I visited, but they’re about one-quarter of the price that I pay for the same exact brand at dispensaries in Illinois. For example, I was able to find a huge variety of full gram live resin carts for $30-40 each, whereas in Illinois I’m paying about $60 for just a half-gram!
For the most part, I looked around San Diego, San Bernardino, and Riverside counties, since that’s where I plan to be, but a quick search of Los Angeles and Bay Area dispensaries yielded similar pricing. However, because I so rarely shop in those areas, I don’t really have a baseline to compare that too. When I was at MJBizCon in October, I was told that it was difficult to find good quality flower in the Bay Area for less than $200/ounce, but that does not seem to be the case anymore.
Too much pot!
It’s all basic economics and at the root of the problem is a supply and demand issue. There is no foreseeable decline in demand for cannabis products in the near future, more people are using pot products every day. But as the industry grows and everyone scrambles to get their foot in the door, competition is incredibly fierce, and it causes the supply chain to get completely out of whack. What we’re left with is more pot than anyone can realistically sell.
“California farmers are producing four to five times more cannabis than our legal market can consume,” says Humboldt County Growers Alliance executive director Natalynne DeLapp. “Simple supply and demand demonstrates that when your supply outpaces your demand, the prices go down. And now, the question of survivability is in question.”
As of last month, there are 1,775 acres of California land that are zoned and licensed for cannabis cultivation, 435 of which are in Humbolt County, known as the epicenter of the West Coast’s cannabis production. The county has surpassed 6 million pounds of flower grown annually. Now keep in mind, that is only 24% of the state’s allocated cultivation land. Another area somewhat known for weed growing is the Coachella Valley. There are dozens of cultivation facilities in and around Desert Hot Springs, all of which can produce anywhere from 6,000 to 40,000 pounds of cannabis annually.
All that said, Californians, as pot-friendly as we are known to be, only consume about 2.5 million pounds of cannabis every year. This is a rough estimate, but regardless, when we factor in all the unlicensed grow ops, it becomes obvious that the Golden State is quite literally, drowning in pot.
“The bulk of this overproduction is attributable to large-scale farms outside the Emerald Triangle, on the Central Coast and elsewhere, where it’s common for single farms to be permitted for dozens of acres,” added DeLapp. “These areas are continuing to bring hundreds of acres of new production online despite the fact that there’s no market for new large-scale production.”
How did this happen?
It’s difficult to fully comprehend how California got to this point without understanding some key things about California’s complicated history with cannabis. Back in 1996, the state passed Proposition 215, also known as the Compassionate Use Act. The goal was to legalize cultivation, possession, and use of cannabis for medicinal purposes, but the program remained largely unregulated and over the years, it became very recreational.
To remedy the somewhat out of control situation, then-Governor Jerry Brown signed the Medical Marijuana Regulation Safety Act into law in October 2015. At the same time, Humbolt County was drafting the state’s first land use ordinance to prep for impending legalization by zoning certain areas for cultivation.
By August 2016, over 2,500 growers had registered their farms with the county and were working the steps to becoming state-compliant. When Proposition 64 passed in November 2016 and cannabis was legalized recreationally, the state also made promises to end the cultivation cap by 2023. That means that California is looking at possibly unlimited cannabis cultivation as soon as next year. To add to the problem, the state also plans to allow even larger “Type 5” cultivation licenses to be issued in 2023 also.
“When that acreage cap was eliminated, it allowed CDFA to start accepting stacked licensing which is what allowed for these very, very large farms to come online,” says DeLapp. “When we’re asking why there is an overproduction problem it is because of Prop. 64 and the removal of the acreage cap that failed to rein cannabis production in the state of California.”
Many longtime growers, like Jason Gellman, owner and operator of Ridgeline Farms in Southern Humboldt County, fear the industry as we know it, might be on its way out the door. “We got to hold the line on prices, there has to be a cap on square footage or a cap on licenses,” he said. “If the state allows unlimited cultivation come in 2023, we can just kiss this industry goodbye but right now we still have a fighting chance.”
No end in sight
Because of all the caveats mentioned above, many industry experts believe this trend will continue for months, possibly years. It’s already to the point that farmers are sitting on pounds of flower that they simply cannot move, so when their corps are ready this year, they’re not anticipating to see an early harvest price bump that has been commonplace in years prior.
Jonathan Rubin, Founder and CEO of Cannabis Benchmarks, said that in addition to other legal markets are seeing significant drops in wholesale pricing as well, especially Oregon, Washington, and Colorado. “For the West Coast states, there was a significant amount of inventory that remained unsold deep into this year from a big outdoor harvest in 2020, and in California, it seems that 2020 and 2021’s harvests were similarly robust,” he stated.
Rubin continued: “Additionally, cultivators that had spent previous years getting through the state’s stringent licensing process came online and started producing this year, including larger light deprivation operations outside of northern California, and generated a surge of supply beginning this summer, which caused prices to start to fall ahead of the autumn crop.”
A solid number of California sources, as well as a handful from the Pacific Northwest, agree that prices are likely to continue dropping. “I expect it to continue to go down, as we get closer to the start of the fall harvest,” said Adrian Sedlin, the CEO of Santa Barbara-based Canndescent, a large commercial grower with multiple locations throughout the state.. “We’re going to start from a lower place than we have in a while, and … it’s going to be interesting to see how people play it, when we get to November-December, and what are people going to do with their product?”
Of particular concern is the well-being of smaller, craft and homestead operations that don’t have the means to compete with largescale factory farms. “I think there are going to be a lot of farmers that this is not sustainable for,” said Gordon from HCGA. “Most people are buckling in and looking at the next two to three years – before we have interstate commerce – and saying, ‘How can we get through this? Can we operate at a loss for two to three years at a loss?’” he added.
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Disclaimer: Hi, I’m a researcher and writer. I’m not a doctor, lawyer, or businessperson. All information in my articles is sourced and referenced, and all opinions stated are mine. I am not giving anyone advice, and though I am more than happy to discuss topics, should someone have a further question or concern, they should seek guidance from a relevant professional.
Exploring Cannabis Culture: Los Angeles
“I love Los Angeles. I love Hollywood. They’re beautiful. Everybody’s plastic, but I love plastic. I want to be plastic” – Andy Warhol
Next up in our cannabis culture articles, we’re heading over to the land of opportunity: America. More specifically, we’re off to the home of the rich and famous: the city of Los Angeles. The USA has varying views on cannabis, mainly due to the fact that each of its 50 states has their own laws on cannabis legalization. This means that whilst one state might accept cannabis both recreationally and medically, another may not. Today we’re going to be diving into the cannabis laws and pot culture within the state of California, and more specifically, the city of LA; figuring out what cannabis really means there. Remember, cannabis culture isn’t just about laws or the government, it’s about the people. Culture is made by people. So, without more delay, let’s stroll past the Hollywood sign and into the land of LA.
Whether you’re talking about the US, Europe, or anywhere else in the world, cannabis culture can vary significantly. To learn about laws across the globe, make sure to subscribe to The THC Weekly Newsletter, your hub for all things cannabis-related. Also save big on Delta 8, Delta 9 THC, Delta-10 THC, THCO, THCV, THCP & HHC products by checking out our “Best-of” lists!
Los Angeles, or also referred to as LA if you’re especially cool, is a city in the US state of California. LA has a population of 3.8 million people and is the second biggest city in America. Often when people arrive there, they forget that, and end up having to get an Uber everywhere. LA is only beaten in size by New York. The city is known worldwide for its celebrities, film and music industry, incredible beaches and, of course, Hollywood. LA is seen probably more on TV than in real life, which makes it quite a surreal place when actually visited. Nonetheless, LA is also home to real people with real lives. In regards to politics, LA is a Democratic safe seat, and has voted in the Democratic Party every year since 1988. The governor of Los Angeles is the Democratic Party member John Bel Edwards. This highlights to liberal attitude of California as a state, which we’ll delve more into later. So is LA a nice place to live? Well, the truth is that LA is like marmite: some people love it, and some people can’t stand it. But let’s take a look at some of its major highlights.
Marilyn Monroe, one of the greatest singers, performers and actors of the 1950s, said this about Hollywood: “Hollywood is a place where they’ll pay you a thousand dollars for a kiss and fifty cents for your soul.”
Hollywood is a neighbourhood in LA, which is the home of everything related to the entertainment industry: the Oscars awards, Paramount Pictures, star-studded walk of fame and the TCL Chinese Theatre.
Hollywood became a centre of the film industry in the early 1900s because film-makers were free from suing threats there. In addition, it had warm weather and stretching landscapes that are perfect for film locations. Now, Hollywood is still the home of film, and home to some of the most famous celebrities alive.
LA isn’t just famous for its acting industry, it also is the dream location for all aspiring music artists and is home to some incredible music labels. Not only are there some incredible music companies in LA – such as Live Music, Universal and Sony – but it was also a place where the 90s rap genre really flourished. Artists like Dr Dre, Easy E, Snoop Dogg and all of NWA all came to LA to record and play some of their best music. LA is still very much a hub of entertainment opportunity.
Los Angeles may have an incredible entertainment industry, but it also has some geographic wonders too. In fact, LA has some of the best beaches in America. Santa Monica, Malibu, Huntington and Redondo are just some of the incredible sun-kissed beaches that LA has to offer. If you get bored of the stressful hustling and bustling of Hollywood, the beautiful beaches will soon calm you down.
Is Cannabis Legal in Los Angeles?
Short answer: yes. Long answer: whilst some laws are universal in America, most differ from state to state; and there are 50 of them, so that’s a lot of potentially varied laws.
“There are actually two different sets of laws; federal laws and state laws. … Constitutional law permits each state to create and enforce additional laws for their state. Each state is considered sovereign and has the power to create laws as needed. Each state is considered unique with its own characteristics.”
In America, their cannabis policy revolves around the Controlled Substance Act of 1970, which states that the use and possession of cannabis is illegal under any circumstance. However, this is not the case in some states. One of these cannabis-accepting states being: California. The act splits all drugs into five ‘schedules’.
The 5 Schedules
- This includes: cannabis, LSD, heroin and ecstacy.
- This is the most serious schedule, as the law-maker believes these are the most addictive and most likely to be abused.
- These include: cocaine and mephedrone.
- These include: ketamine and anabolic steroids.
- These include: xanax and valium.
- These include: lomotil and motofen.
However, despite cannabis being part of the Schedule I group, it’s still legal recreationally in 18 states, and medically in 37. How can this be? This is because these specific states have passed cannabis reform bills that have bypassed federal law. California is one of those states. In California, cannabis has been legal medically since 1996, and recreationally since 2021.
The Specific Cannabis Laws in LA
Since June 2021, recreational cannabis is legal in California. Since then, the law states that:
“You must be 21 or older to have, purchase or use recreational cannabis. This includes smoking, vaping and eating cannabis-infused products. You may possess 28.5 grams of cannabis plant material (about an ounce) and 8 grams of concentrated cannabis. It is illegal to give or sell retail cannabis to minors.”
As you can see, California is rivaling Amsterdam with its cannabis laws. It seems like yet another weed-topia. However, as we’ve mentioned countless times, cannabis culture isn’t about the laws, it’s about the people. So what do the people of LA think of cannabis, and what are their lives like with all cannabis now becoming legalized.
The City’s General Attitude To Cannabis
The state of California has a population of 40 million people and it was recorded that California produced 13.5 million pounds of cannabis. That’s almost half a gram for each individual living there. This just goes to show how much cannabis is being produced and enjoyed in California and, more specifically, Los Angeles. The city champions its laid back attitude and cool aesthetic, which is only improved by legal cannabis. Like Amsterdam, LA is another perfect model for any city that one day wishes to also legalize recreational cannabis. But let’s take a look at how cannabis affects day to day life.
Cannabis dispensaries, like coffeeshops in Amsterdam, are places where Americans can purchase recreational cannabis. There are now over 1000 cannabis dispensaries and definitely more on the way. This has created many jobs in Los Angeles. In fact, the cannabis industry in Los Angeles has made $3.1 billion in sales since 2019. This makes LA the highest cannabis-selling state in America. This also highlights how lucrative the cannabis dispensary industry is in America, and how much the American people utilise it.
As you’ve realised, the beach lifestyle in Los Angeles is part of the culture and the way of life. The relaxation, the water, perhaps even the surfing; it’s all part of a meditative lifestyle. As you can imagine, beach culture also goes hand-in-hand with cannabis culture. Los Angeles is full of weed-enthusiasts who chill out at the beach, converse, listen to music and promote a relaxed way of living. It’s good to know that whilst there’s the hectic entertainment industry, with its money and fame, there’s also a parallel universe of hippies enjoying cannabis with the sound of the ocean. From one extreme to the next – that’s Los Angeles for you.
Just like Amsterdam, cannabis tourism is rife in Los Angeles. That’s not just Americans escaping their state where cannabis is illegal, but also people from across the water. There are tours, cannabis crawls, multiple strains of cannabis; the place is built for weed tourism. This brings with it a traveller culture, and more diversity. Lots of people, from many walks of life, all with the same love for the marijuana plant.
There you have it, cannabis culture in Los Angeles. Places like LA are seriously testing the waters for the future of cannabis-accepting cities, and the world will thank them in time to come. Like Amsterdam did before in, LA is leading the charge and may one day be part of a United States of America where all states have fully legalised cannabis. But in the meantime, whilst we wait, why not go check out the cannabis culture in Los Angeles for yourself?
Hello and welcome… Thanks for joining us at CBDtesters.co, your #1 web source for the most intriguing and thought-provoking cannabis and psychedelics-related news of today. Stop by daily to get your fix in this constantly-changing universe of legal drugs and industrial hemp, and remember to sign up for The THC Weekly Newsletter, to ensure you’re never late on getting a story.
Disclaimer: Hi, I’m a researcher and writer. I’m not a doctor, lawyer, or businessperson. All information in my articles is sourced and referenced, and all opinions stated are mine. I am not giving anyone advice, and though I am more than happy to discuss topics, should someone have a further question or concern, they should seek guidance from a relevant professional.
California’s Cannabis Industry Is In Trouble
To say that California’s cannabis industry has not met the mark would be a monumental understatement. And unfortunately, any regulatory missteps in the golden state can be very costly, as is evidenced by the new $100 million government bailout that was recently approved to help struggling canna-businesses.
California’s cannabis bailout: Not only is California the dominant economy in the US and one of the wealthiest states in the nation, it’s also home to the largest and most boisterous cannabis market in the entire world. When it comes to cannabis trends, or any trends for that matter, look west to see where the rest of the country will end up. However, just because California is pulling in big money from nearly all directions, that doesn’t necessarily mean that everything is running as smoothly as it appears to the outside eye.
This is especially true in regard to the cannabis industry. Sure, it’s the largest market in the world and all the newest products and pot-related fads start there, but it’s certainly not always an easy ride, and it never has been. California’s cannabis industry growing pains serve as a warning to other states that have just legalized or plan on doing so and are still trying to navigate the complicated landscape of marijuana regulations, tax rates, social-equity issues, and black-market competition.
The cannabis industry can be complicated, and this California Cannabis bailout is just the beginning. It may seem like a goldmine, and it definitely has the potential to be, but it takes a lot of work, dedication, and jumping through hoops. If you’d like to learn more about the industry, make sure to subscribe to The Medical Cannabis Weekly Newsletter. If you’re looking for exclusive deals on flowers and other products, check out our CBD Flowers Weekly Newsletter. For deals on the exotic cannabinoids, such as Delta 8, Delta 10 THC, THCV & THC-O, subscribe to the Delta 8 Weekly newsletter.
More On California’s Cannabis Issues
California’s Cannabis bailout didn’t arrived out of the blue. Much of California’s pot problems are blamed on competition from the state’s expansive illicit market, which according to New Frontier Data is valued at roughly $66 million. But what exactly constitutes an ‘illegal market’ and what factors are driving consumers to shop outside of licensed dispensaries?
Let’s start with what is considered illicit in the world of cannabis. There are the obvious – illegal growers, street dealers, gangs/cartels, etc. – but a large portion of black-market sales come from unlicensed dispensaries. Customers who shop there may or may not know that the store is not above board, but regardless, these stores take a massive amount of traffic and business from legal shops.
That said, the reasons for why a store would remain unlicensed are not always clear cut. Legalization in California, made official in 2016, has been messy from the very beginning. From insanely high licensing and operating costs, to incredibly confusing tax structures, and varying rules by city and county, it’s enough to make any business owner’s head spin.
According to Steve Allan, chief executive officer of the Parent Company, which has acquired several cannabis firms in California, only an estimated 700 dispensaries out of the state’s exiting 10,000 are fully legal. “That’s left a swathe of companies in a gray area. Others have tried to make the transition but are still struggling with the process. This money tries to make up for what has been a slow, heavy red-tape process of getting these dispensaries up and going.”
Taxes, something that California is known for, impact both consumers and businesses and continue pushing everyone further into the grey/black market area. Consumers are hit by higher prices and will go searching for the best deals while business owners are stuck paying so much for absolutely anything pertaining to running their companies that, for many, the profits are negligible and even non-existent in some cases.
Additionally, the cost to even get a foot in the door in the first place is so high that it has prevented many small businesses, the mom-and-pop shops if you will, from transitioning into the legal market. Only the bigger dispensaries or people coming in with a large cash fund were able to fast-track the process and get their businesses up and running in a reasonable time frame. Everyone else was left to scramble.
“Too big of a hurdle for many smaller operators,” Allan added. “Cities and counties also didn’t roll out programs quickly enough to encourage legacy sellers to get licensed because they worried the public wouldn’t like the government helping the once illegal industry.” Ironic considering where we are now.
One thing California does better than most states is establishing safety and quality-control standards in general but this trickles down to the cannabis industry of course. California cannabis products are some of the cleanest you can find, and this is all thanks to very strict testing guidelines that prevent contaminated, low-quality products from being sold to consumers.
Unfortunately, the extensive safety regulations have also contributed to the higher sticker prices. Soaring demand for third-party laboratory testing has artificially increased the cost of the already expensive lab testing and has enticed unqualified, and even unscrupulous, players into this sector of the industry.
In this aspect, California’s legal cannabis industry fell short and is still struggling to catch up. Cannabis regulators are woefully understaffed. This has created an uneven playing field where quality labs are being undercut by inferior operations. An obvious losing situation for pretty much everyone involved except the shady labs.
California Cannabis Industry Bailout
I’m sure no one would have imagined we would get to this point. Not only because it’s so farfetched for the government to throwing $100 million at an industry that is still federally illegal, but because who could have predicted that it would ever be difficult to sell pot on the West Coast? The bailout, which was approved last month, would be dispersed in the form of grants given to local agencies who will help cannabis businesses throughout California that are stuck in the process of converting their provisional licenses to permanent ones.
As it turns out, the process was so difficult and expensive in California that roughly 82% of currently operating dispensaries still hold provisional permits, stating they are unable to afford the cost or put forth the time required to make everything official. This has led to Governor Gavin Newsome proposing a six-month extension on the deadline to finalize licensing issues.
“Gov. Newsom is dedicated to the success of the legal cannabis industry in California,” Nicole Elliott, the governor’s senior advisor on cannabis, said. “The purpose of this one-time $100 million in grant funding is to aid locals and provisional licensees, many of which are small businesses, legacy operators, and equity applicants, in more expeditiously migrating to annual licensure.”
Again, the money won’t go directly to the business owners, but will instead be provided to local agencies that hold the largest number of provisional licenses. The funds will then be dispersed at the city level and who exactly gets help from that point has yet to be determined. Regionally, the money will be split between Los Angeles, Long Beach, San Francisco, Oakland, Commerce, Adelanto, and Desert Hot Springs.
What Other Legal Markets Can Learn From California
Despite California’s status as a cannabis market leader, their road to legalization has been a cautionary tale for states that are trying to establish successful weed programs and avoid problems experienced by industry trailblazers. One of the most important lessons to be learned here is that licensing and operating costs need to be reasonable. Demand for pot will never dwindle, and if no one can afford to legally own a cannabis business they’ll find a way to sell it illegal – which means the state doesn’t get any income from these transactions.
Among these costs include taxes that are insanely high and levied at numerous different points in the seed-to-sale process. If you have ever shopped online at Weedmaps.com or similar sites, you’ve likely noticed how much extra the taxes add to your out-the-door price. Accounting for sales and excise taxes, you’re looking at up to a 40 percent markup at some stores.
California’s black market is massive and well-established, so it will be hard to compete with even if everything goes according to plan. Making it easier for legal businesses to function is definitely the first and most important step in this equation. Until the legal market can compete with the low costs and conveniences of buying from an unlicensed seller, the illicit market will continue to thrive. Although, I will say this, if you ever go to a state where cannabis is still illegal and you’re forced to buy in the black market (like me currently) you’ll realize that prices in California’s legal industry are much lower comparatively. For example, I was getting ounces for $140, tax included, at a legal shop in California, here in Indiana I’m paying an average of $200 per ounce on the street.
Regardless, a solution needs to be reached and this is why the bailout was proposed. It’s only a temporary resolution, but it’s all part of a larger plan to bring more stability to the state. Titled the “California Comeback” plan, Newsom intends to use $630 million in future tax funds from legal cannabis sales to put towards healthcare, environmental protection, and public safety.
Final Thoughts on The California Cannabis Bailout
California’s cannabis industry is not a failure, even with this new bailout, and the state is still at the forefront of progressive cannabis legalization as well as new product innovation. That said, there are many unique challenges to operating a marijuana business (or any business, really) in the golden state. From high costs to ridiculous tax codes to combating a thriving black market, it’s safe to say there are still a few threads out of place in California’s pot industry. If the state can find a way to mediate these issues, and actually enforce the new laws once they are voted on, California can come out on top once again.
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