Posted on 08/07/2023 5:42:00 AM PDT by Brilliant
California's cannabis industry is in the throes of a financial crisis that has left many questioning its viability.
Tales of debts skyrocketing, tax burdens weighing heavy and businesses teetering on the brink are becoming all too common. All the glitter of the so-called green rush has faded, replaced by a harsh reality check.
If the current trend continues unaddressed by policymakers, the industry might be staring down the barrel of a major collapse.
Given the severity of the situation, it may be time for the state government to seriously consider potential bailout programs for the embattled industry.
While A.B. 195, which became effective on Jan. 1, halted cultivation taxes indefinitely — a move seen positively by many — it had unforeseen adverse effects on retailers.
The bill, which suddenly shifted the burden of remitting excise taxes from distributors to retailers, posed significant challenges for retailers, particularly in terms of cash flow.
Previously, in an act of desperation, many retailers had been using excise tax collections as a way to bridge their cash flow gaps due to their limited options for traditional financing as a result of federal restrictions.
However, A.B. 195's recent tax payment change removed this financing model for cash-strapped retailers. What was initially thought to be a relief measure for cultivators ended up creating a different set of financial stressors for the industry's retail segment.
As a result, over 13% of the state's retailers were unable to meet the May 1 deadline for excise tax payments, exposing them to 50% penalties and further worsening their financial difficulties...
(Excerpt) Read more at law360.com ...
Of course, it all has to do with taxes. The whole purpose of legalizing it was to raise tax revenue. But now it turns out that taxing it just moves the business back into the black market. They need a few more gimmicks to make this work.
Newsome needs to BUY IT UP, and hand it out in the streets to the Homeless in San Francisco. That would stabilize the market. Make Nancy Pelosi get more votes..and make liberal people feel like they helped.
I guess the old joke is true. How to you destroy the drug market? Make it legal, then tax and regulate it.
/heavy sarcasm
A friend of mine from college opened a pot shop in Seattle about 5 years ago. Was out of business within 6 months. With all the overhead and taxes, just couldn’t compete with street prices.
The deal is legalize a product, tax a product and this is the important part, cut off the supply of illegal product! No reason for 1 and 2 if the government does not effectively carry out 3. Of course it does not help that for decades California turn a blind eye to Northern California’s mass grow operations, and then the cartel came in......
Is this due to all the illegal Cannabis farms and off the grid markets selling it?
So why not just have the same rules and regulations for cannabis that you have for alcohol?
Cali really thinks things through before they act on something. If Charlie Sheen was a state...
How many Cali politicians have money tied up in the industry???
Brilliant. Try to heavily tax (up to 40% of retail gross) something that anybody can grow in his back yard.
https://www.covasoftware.com/blog/california-cannabis-sales-tax
Thwre was a huge pot growing business near our town that went through all the rules, regulations etc, jump through all the hoops- promised jobs for many- only to be out of business within a year. Not sure why, but likely had to do with restrictions and such being too overwhelming.
Legalize it and tax and regulate it to death.
Then bail it out.
Then rinse and repeat.
Brilliant.
Lol.
Almost as if that is already the case. :)
California, the state with a Democrat governor, a super-majority of Democrats in the legislature, two Democrat senators, Nancy Pelosi and Adam Schiff as poster children for corruption and lies. A thing of beauty < sarc >.
So it appears that marijuana is a tough business to be in, if you are running the legal regulated marijuana business.
So are the illegal drug dealers still doing good business in places which have legalized marijuana?
Is that because the illegal drug dealers don’t have all the overhead and regulatory expenses that the operators of the legal marijuana stores have?
“Is this due to all the illegal Cannabis farms and off the grid markets selling it?”
really, this is just an ordinary black market situation where government regulation and taxes makes “legal” transactions unviable and/or produce product scarcity, therefore fostering a black market as an better economic alternative ... this kind of economic behavior has been going on for hundreds of years ... generally, thriving black markets are a good indication that government has created the problems ...
“So why not just have the same rules and regulations for cannabis that you have for alcohol?”
Distilled spirits have been regulated since the beginning of the republic, and errors in distillation can cause death, yet moonshine is still around.
But weed? A guy with a basement and grow lights can grow a first-class crop and make enough money to make it worth his while as long as the cartels don’t hear about it. And the cartels can grow huge crops and sell for less than the ‘legal’ and of course, taxed weed. Plus I’m sure they’re not at all shy about putting ‘pressure’ on the legal outlets.
“You have to laugh”
And I am.
Gleeful: “Oh, I know: if we make dope LEGAL we can tax sales! And as popular as it is, that’ll be a real haul!”
Thoughtful: “Uhhhhhh... you DO realize there’s already a well-developed, untaxable supply chain in place, right??”
G: “Wait. What? No! They won’t keep risking that once we legalize all this! With all the Laws against it? Don’t be silly! You’ll see. This’ll work.”
T: [dripping sarcasm and swirling an index finger in the air]
“Oooo, Laws. I bet they’re really scary.”
-— 5 years later -—
T: “Yo, G man! How ‘bout that illegal domestic dope trade?”
G: “Just...SHUT UP, man. Shut up.”
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