Posted 01 May 2021 by

California Weed has Become a Juggernaut


Industry Since 2016

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The weed business has been a boom for the state of California. Since its legalization in 2016, the California weed industry has grown to approximately $5 billion annually. Despite this massive growth and its significant impact on the California economy, there are those who believe that it could be so much larger if the government would get out of the way.

In fact, several would-be growers in El Dorado County are considering suing the sheriff they claim is blocking permits. Some of these prospective growers have already invested millions in efforts to establish legal cannabis farms and the refusal is costing them substantially.

As a result, one operation has been forced to close operations and lay employees off. This means lost revenue for the county, lost wages for the people, and represents a huge problem to good-faith investors who see opportunity in the area. While this is only one story, it does show the potential of a single person to put a wrinkle in even the best-laid plans for legal marijuana growth and production.

Causes for Concern Among Legalization Proponents

Legalizing marijuana in the state of California is only one hurdle as it remains illegal on a federal level. However, it isn’t the only hurdle the state needs to overcome. The problem is that despite legal dispensaries throughout the state, the bulk of California weed sales remain illicit. In fact, current estimates according to The Guardian are that 80-90 percent of the California weed market remains illicit. The problem is two-fold.

  1. Illicit weed sales are not taxed and that robs the state of important revenue that could be used to fund various community initiatives.
  2. Illegally processed and sold weed has the potential to contain contaminants and other additives that can cause serious harm, like fentanyl.

Those who purchase from legal marijuana dispensaries know they are getting a pure and safe product. However, many opt to purchase in more familiar locations for various reasons. Among the top concerns people have about using dispensaries to purchase weed in California are the following.

  • Privacy concerns. People do not want their purchases tracked.
  • Anonymity issues. People do not want others to know that they purchase or use marijuana.
  • Costs. Because of high taxes, expensive regulatory requirements, and the cost of labor in California, it is often an economic decision to purchase illegal marijuana.
  • Access. With many communities holding up potential growers, there are many in the state who do not have easy access to weed dispensaries and choose to purchase illicitly instead.

Frankly, the cartels have invested more and invested longer in the California weed industry than the five years the state has had to get in on the act. There isn’t yet a gold standard or path to success for operating a dispensary and even those on the agricultural side of things have their own paths to forge – especially those facing difficult regulatory concerns or bureaucratic wastelands of red tape in their efforts to get their businesses off the ground.

Think about the math, though. Currently, California marijuana is projected to top the $5 billion mark in 2021 and increase even more year-over-year afterward. That means massive tax revenues for the state who taxes at every turn from the growers to the dispensaries and all points in between.

However, such a large contingency of partakers choosing illicit over legal methods for procuring their selections means massive losses of revenue to the state. If, as The Guardian indicates, 80 to 90 percent of the marijuana market remains illegal, imagine what it could mean for the state if they were collecting taxes on somewhere between $400 and $450 billion in product each year.

Minding the Gap When Some Counties aren’t On Board?

The problem is that while most of the population agrees with the legalization of marijuana, many counties remain reluctant to open the floodgates of legalized marijuana within their cities and communities. Some are afraid that it will bring more crime. Others are afraid of impaired drivers, doctors, and other professionals that legalization could, in theory, create. The truth is much more complex when it comes to why some counties are holding up efforts to expand legalized marijuana growing throughout the state.

Unfortunately, that leaves the doors open for illegal weed sales to continue to flourish, a striking loss of revenue for various counties and the state of California, and the loss of countless jobs that could drive local economies and help rebuild struggling communities that are reeling, financially speaking, from the COVID-19 pandemic.

At the same time, the revenue of $5 billion (and growing) is nothing to dismiss. In fact, it is a win for the state of California and every citizen that benefits from the tax revenue these sales generate. One can only hope that eventually the rest of the state will get on board with the legalization efforts so all can share in the bounty.

 

 

 

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