5 Problems Facing California’s New Cannabis Economy

The post 5 Problems Facing California’s New Cannabis Economy appeared first on High Times.

The harvest is in and the first day of legal commercial sales of adult-use marijuana has passed. But the California cannabis industry is not saved. There are problems facing California’s new cannabis economy

Uncertainty and speculation take the place of facts and figures. Many of the same problems that plagued us way back in December, when everything was “still just medical,” harry us still. And they demand answers.

Lost in nearly all of the heady coverage from Jan. 1, when crowds lined up in the darkness a few hours into the New Year to buy a taxed-and-(somewhat)-regulated gram of legal marijuana, are the unfinished business and unresolved questions looming in the shadows. They’re too big to ignore and could make the marijuana industry too unwieldy, problematic, or expensive to succeed.

In terms of problems facing California’s new cannabis economy, here’s what’s keeping us down:

Legal Marijuana Is Really Expensive—Too Expensive?

It didn’t take long after the first legal sales on Monday morning for the joy and novelty to clear. And once those vapors dissipated, the sticker shock to set in. 

The first gram sold at Oakland’s Harborside—sold to Harborside’s lawyer—cost $20 and change. At Berkeley Patients Group, once state and local taxes factored in, top-shelf eighths were $75 out the door. In cannabis-growing country in Sonoma County, the asking price for an eighth of Sapphire Kush was $70. Before taxes.

Admittedly, this is for the best (and, ergo, priciest) cannabis on the market. But these price points are rightfully stoking fears of a black market lingering around for quite a while after legalization. And, quite possibly, becoming a permanent fixture, unless prices can become competitive.

Once you add in all the various levies, there’s an effective rate of around 40 percent. California’s pot taxes may be the highest in the nation. Marijuana sellers know they’re not the only game in town even if they’re the only licensed operation. And they are absolutely aware that consumers won’t cheerfully fork over 40 percent more money for the same product forever.

As it always does, time will tell if these open and serious concerns prove prophetic warnings, but consumers don’t typically react well to sudden, sharp increases in prices (but, just as often, markets don’t care). And high prices is just one of the problems facing California’s new cannabis economy.

Legal Marijuana Is Not Everywhere

Far from it—and to use some major cities as a case study, legal marijuana may be smaller in footprint than medical cannabis.

In order for the open sale of cannabis to happen in California, local lawmakers have to decide they want it. As of Jan. 3, only a select few major cities and cannabis-friendly counties have done so.

The first adult-use sale in the city of Los Angeles is still a month or more away. Businesses wishing to join the new pot economy could start applying on Wednesday, and processing their paperwork could take weeks. Using LA as a further case study, only 390 out of more than 1,400 existing businesses are expected to qualify for state licenses. (Every retailer open on Jan. 1 was in business on Dec. 31 as a medical-marijuana dispensary.) It will take a long time and much legislating for California to be truly inundated with legal weed.

Even When It Is, There’s Nowhere To Smoke It

5 Problems Facing California’s New Cannabis Economy

Ninety minutes after they’d made history on Monday morning by purchasing the first prerolls at Berkeley Patients Group (Jack Herer, named after the late legendary legalization activists), legalization was still a half-intellectual, half-commercial exercise for Mikki Norris and Chris Conrad. They hadn’t smoked any because there was nowhere to do so. They were still on dispensary property, where consumption is not allowed—and walking onto the sidewalk would put them on public property, where consumption is also not allowed.

The question of where to allow cannabis users to congregate and consume seems like a simple one. Yet it has vexed policymakers in Colorado for nearly five years. Prop. 64 does allow for cities to license consumption lounges, yet most have not. They should—and in the meantime, users should take heed and remember that lighting up in public could earn them the attention of authorities and a citation.

Marijuana is legal, yet prohibition-era problems persist.

One of the problems facing California’s new cannabis economy is that everything that was wrong and broken and unfair in December is still thus. Cannabis outfits still can’t use banks like normal businesses, forcing customers to use cash or their debit cards only. Cannabis businesses still can’t claim expenses on their taxes. Employers can still fire marijuana users and deny them jobs solely for using cannabis under state and federal drug-free workplace laws. Stigma around cannabis use remains as strong as ever. Out in Sebastopol, California on Monday—a “more progressive than thou” stronghold in an already more-liberal-than-most state—several buyers in line at SPARC declined to give names or give consent to photographers who wanted to snag a shot. 

All this is very much the beginning stages of a new era, the nature of which is very much up to question, but it’s clear that the strictures of prohibition are still with us, and will take a while yet to escape.

More Problems Facing California’s New Cannabis Economy

Ready for a quick thought exercise? Tell us: What do you know about California’s regulated cannabis marketplace? The only right answer is “between nothing and very little,” since that’s all anyone really knows. The unknown is one of the more insidious problems facing California’s new cannabis economy.

Will the millions of Californians who’ve managed to live in a state that produces 13.5 million pounds of marijuana annually without ever touching a gram themselves become daily consumers, now that cannabis is legal? We don’t know. Nobody knows. The cannabis industry certainly hopes so—that’s what they’re telling their investors—but nobody really knows.

We still have no idea what kind of products a regulated adult-use marketplace will produce. After all, everything on the shelves on Jan. 1 was there on Dec. 31, when everything was “still medical.” Nothing’s been tested for contaminants yet, put in the track-and-trace system, or ferried around the state by licensed distributors. Dispensaries can still sell stock that hasn’t gone through testing and edibles that exceed the 100 milligrams-of-THC threshold until July 1.

In other words, we’re still in a netherworld, an amalgam of what we’ve known under medical marijuana and what we may experience in the future. 

There’s plenty of potential and reason to celebrate. Things aren’t getting worse in this area, which is more than can be said for almost everything else. But a bright and verdant future is far from guaranteed considering these problems facing California’s new cannabis economy.

The post 5 Problems Facing California’s New Cannabis Economy appeared first on High Times.


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