California’s legal marijuana industry is in big trouble.
Sales have dropped to their lowest point in almost four years, and experts say the market could completely collapse soon.
The main problem? California’s ridiculously high taxes and over-the-top regulations.
According to the California Department of Tax and Fee Administration (CDTFA), legal marijuana sales for the first three months of 2024 barely made it past $1.2 billion.
That’s a huge drop from the peak of $1.5 billion in the second quarter of 2021.
🚨 From California to Maine, Chinese organized crime has come to dominate much of the nation’s illicit marijuana trade. Along with the explosive growth of this criminal industry, the gangsters have unleashed lawlessness: violence, drug trafficking, money laundering, gambling,… pic.twitter.com/3jZ5QSMG6b
— Byron Wan (@Byron_Wan) March 15, 2024
Hirsh Jain, a consultant based in Los Angeles, didn’t mince words: “There’s no denying that the legal market in California is on the verge of collapse.”
So, what’s causing this mess?
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California’s leaders seem to think that taxing and regulating the industry to death is the way to go.
They’re even planning to raise the excise tax from 15% to a whopping 19% in July 2025.
Jain pointed out how absurd this is, saying, “Not only is the market really underperforming, but California continues to make policy decisions that exacerbate the problem.”
"There are no consequences when you are part of the criminal industry and have so much money the $500 fines are not going to matter."@CASheriffLaRue of Siskiyou County sheds light on why illegal #marijuana growth has been out of control.https://t.co/qvJXFGwYbz pic.twitter.com/sqeP2iDvgK
— California Insider Show (@CA_Insider) June 7, 2023
To make matters worse, other states are doing a much better job with their legal marijuana markets.
Take Michigan, for example. With only a quarter of California’s population, Michigan’s marijuana industry is now operating at a $3.5 billion run rate, getting dangerously close to overtaking California’s roughly $4 billion market.
“It is incredible that California, despite having 40 million people to Michigan’s 10 million, is in danger of being overtaken by Michigan’s legal market,” Jain remarked.
California’s situation is a perfect example of how good intentions can go terribly wrong.
By focusing too much on generating revenue and not enough on creating a sustainable market, the state has made it nearly impossible for businesses to succeed.
If California wants to save its legal marijuana industry, it needs to change course fast.
Lower taxes and simpler regulations would be a good start.
Otherwise, the state risks watching its once-promising legal cannabis market go up in smoke.
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If states can learn from California’s blunders, they might just be able to avoid the same fate.
