California’s Legal Pot Industry ‘Collapsing’: ‘Pushed To A Breaking Point’

The legal marijuana industry in California is allegedly “collapsing” amid the state’s regulatory regime.

In a letter to California Governor Gavin Newsom, State Senate President pro Tempore Toni Atkins, and State Assembly Speaker Anthony Rendon, a group of cannabis industry leaders wrote that “we have been pushed to a breaking point” because of the regulatory system put in place after voters in the state passed Proposition 64, which decriminalized marijuana use and cultivation for adults over the age of 21.

“Prop 64 was not passed simply to raise tax revenue, but to end the illicit market, protect public health and safety, and
create an accountable legal industry,” the leaders wrote. “Yet today, four years after the start of legal sales, our industry is collapsing, and our global leadership and legacy is at the brink of disappearing forever.”

“It is critical to recognize that an unwillingness to effectively legislate, implement, and oversee a functional regulated
cannabis industry has brought us to our knees. … Despite decades of persecution by the government, we have been willing and adaptable partners in the struggle to regulate cannabis,” the group lamented, adding that repeated pleas to lawmakers have allegedly gone unanswered.

“We have collectively reached a point of intolerable tension, and we will no longer support a system that perpetuates a failed and regressive War on Drugs,” they said.

The letter alleges that the regulatory environment in the state threatens the state’s established pot growers, arguing that the mandatory system is “rigged for all to fail.” The letter also alleges that the harms inflicted on minority communities by the War on Drugs have still not been resolved. The groups allege further that the state’s taxation regime is hindering the legal market by driving up costs, and facilitating the growth of the “unsafe” illegal marijuana market. Finally, the groups complain that despite a statewide legalization of marijuana, about one-third of the state has access to legal dispensaries, while the rest of the state has imposed local bans that effectively recriminalize pot.

The groups demand a series of policies to rectify the system’s shortcomings: eliminating the tax on cannabis cultivation, a three-year excise tax holiday and a scaled approach to taxation in an effort to overtake the illicit marijuana industry, and a retail expansion mechanism that forces local governments to put a retail program in place by 2022, or allow the state to take control of the initiative.

“Without meaningful change, many, if not most licensed cannabis companies, will face a desperate choice: pay exorbitant taxes into a system designed for failure or pay employees so they can feed their families. None of us want to make this choice,” the groups said.

“We need you to understand that we have been pushed to a breaking point and we will not remain on our knees,” the letter concludes. “We will not stand for political interests to the detriment of our own livelihoods, the health of our citizens, the prosperity of our families and the state of California’s economy. For some of us, this has been our craft since back when the world thought it was a crime. This industry is California’s to lead globally.”

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