Calif. Policymakers Should Aid Crashing Cannabis Market

Law360 ^

[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...

[wgmalabama]

I knew they would tax and regulations it to death so the black market price could go up and still be cheaper than the legal.

[Harmless Teddy Bear]

I remember people a few years ago, "legalize it, tax it and regulate it" it was going to provide sky high tax revenue, we would have less expense because we would not be putting people in jail for dealing and it would be so safe. Crime was going to drop off a cliff because obviously people were only mugging and shoplifting to get their weed which was totally nonaddictive.

Uh-huh.

[Rattlesnake_Snook]

Well making weed illegal and the war on drugs has been a total failure, so clearly something different needs to be done