“The cannabis industry is being choked by California’s penchant for over-regulation”
California’s legalized pot sales not the cash cow that was promised
Legal Insurrection readers will be shocked . . . shocked . . . to learn that over-taxation and over-regulation have impacted the amount of tax generated from marijuana sales in California.
In general, holiday sales hit a six-year high in 2018.
Holiday sales grew 5.1 percent this year to more than $850 billion, making it the best season in the last six years, according to data Mastercard released Wednesday. In addition, online sales jumped 19.1 percent compared to last year.
The Mastercard SpendingPulse report tracks retail spending across all payment types, including cash and check, between Nov. 1 and Dec. 24.
And thanks to the legalization of marijuana for recreational use, California’s pot distributors have reported high Christmas sales as customers bought pot products as apparent stocking stuffers.
Kysa Butler, the assistant general manager of the Oakland-based Magnolia shop, told KTVU on Monday that lines in her store have been steady.
“From the moment we were open at 9 o’clock we had a line,” she said. “We’ve been knocking the lines out quickly but they’ve been steady, too.”
Butler added that people start stocking up on the marijuana-infused products to take away some of the stress the Christmas season has brought them.
One of the pitches made by politicians when promoting legalized marijuana was that the state could see up to $1 billion in tax revenue from sales. However, despite the solid Christmas sales, the actual numbers reveal that legal pot isn’t the cash cow that was promised.
Los Angeles Times reporter Patrick McGreevy smokes out the problems with the California rules in a detailed report and indicates California is expected to bring in $471 million in revenue this fiscal year, which is substantially less than the $630 million projected in Gov. Jerry Brown’s 2018 budget.
…Retailers and growers say they’ve been stunted by complex regulations, high taxes and decisions by most cities to ban cannabis shops. At the same time, many residents are going to city halls and courts to fight pot businesses they see as nuisances, and police chiefs are raising concerns about crime triggered by the marijuana trade.
…“The cannabis industry is being choked by California’s penchant for over-regulation,” said Dale Gieringer, director of California NORML, a pro-legalization group. “It’s impossible to solve all of the problems without a drastic rewrite of the law, which is not in the cards for the foreseeable future.”
Those of us who have been paying attention realize Golden State politicos tend to pass laws first, then find out what’s in them. I also noted recently that San Diego is trying to boost tax revenue from the city’s dozen legal marijuana dispensaries by auditing them and tightening restrictions on sales to medical cannabis patients, which are tax-exempt.
The Los Angeles Times article included an interview with Javier Montes, owner of Wilmington pot store struggling to compete with a large illicit market unburdened by the taxes he pays as a licensed business.
“Because we are up against high taxes and the proliferation of illegal shops, it is difficult right now,” Montes said. “We expected lines out of our doors, but unfortunately the underground market was already conducting commercial cannabis activity and are continuing to do so.”
Montes, who received his city and state licenses in January, says his business faces a 15% state excise tax, a 10% recreational marijuana tax by the city of Los Angeles and 9.5% in sales tax by the county and state — a markup of more than 34%.
He says there isn’t enough enforcement against illegal operators, and the hard times have caused him to cut the number of employees at his shop in half this year from 24 to 12.
No worries, however, at least for our state’s big political spenders will certainly find more items to tax in 2019 and more bureaucrats to collect them.
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Comments
That headline gave me a good laugh. Thanks!
So, the pot at the end of the rainbow isn’t filled with gold.
However, in other news, the sales taxes on munchies has gone thru the roof.
So, in part, the black market is undercutting legal sales and tax revenues. Well California, time to pass laws that ban the black market.
Tacitus…”once we were burdened with crime, now we are burdened with laws”.
Nothing is new .. but the Progressives always believe they are better and smarter than anyone else, especially anyone from the days of wax and stylet , or ink, quill and paper.
And pretty quick we’re gonna end up at the rev’noo cops out in the hills chasing down the moonshiners (growers), just like we’ve been doing in another context for at least 100 years already.
Message to the youth: Drugs are fine as long as the right people get paid off, and they usually call it “taxes”. Pay the right people, and you can do what you want. And if you don’t – well that’s what cops are for, to see that the “Right People” keep on being paid, like they expect.
Personally, I find lower-than-expected marijuana sales are a feature, not a bug. (And this is coming from someone who used to light up a doobie or two in the 70’s.)
This is me, laughing.
And if anybody ever proves that pot is useful to treat a disease, it will be as a pill or topical cream, and available by prescription only.
Scotts Miracle-Gro, which has invested heavily in the cannabis industry, plans to cut jobs and consolidate partly because of how the legal marijuana program has rolled out in California and elsewhere.
Columbus Business First said Scotts hasn’t yet settled on the number of jobs or locations that will be affected.
Scotts CEO Jim Hagedorn said Hawthorne’s sales suffered during the first half of 2018 because of the “completely botched legalization” of adult-use marijuana in California.
What caught my attention was the credit card processors who are perfectly willing to handle business for a product that is federally illegal but want to prohibit sales of a perfectly legal products known as firearms.
I do not believe that the banking system can have any involvement with money from pot sales, either legal or illegal. This is why the stores are staying small and department chains are not a force in the market. I still love a local shop with has signs up for $10/eighths and $90/ounces. Yeah, pot doesn’t make you stupid, NOT AT ALL.