Medical cannabis and recreational cannabis are legal in California. In 2020, California raked in an estimated $4.4 billion dollars in sales from legal cannabis. This is a rather impressive number to most people. It represents a large number of legal cannabis purchases in the state of California. However, this truly is only the tip of the iceberg when it comes to what could be for the legal cannabis industry.
Information on the web says the illicit black market for cannabis in California is worth almost double the legal market. Current projections estimate the black market in California to be worth around $8 billion dollars annually. With legal cannabis available for adults in California, why is the black market still making so much money there? The answer to that question rests in federal cannabis prohibition and taxes.
Cannabis taxes for the legal industry are ridiculous. Lawmakers dug holes so deep that they could not find a way to still these financial sinkholes. Suddenly the idea of legalizing cannabis and taxing it excessively became a reality. The American people were so anxious for legal access to cannabis they agreed to pay absurd taxes for this freedom. Politicians reluctantly began to agree state by state. Currently, 19 states have legal access to recreational adult-use cannabis and 37 states have legalized medical cannabis in some form.
There are still many states in which American citizens do not have legal access to cannabis. This allows the black market to thrive. However, cannabis is a huge industry in California. The legal side is worth billions, and the illegal side pulls twice that of regulated cannabis. One of the biggest contributing factors supporting the illicit black market for cannabis in California is price. The next is quality. When you can get better quality bud on the street for a lower price than you can from a legal dispensary, it makes the legal dispensary a hard choice.
The cost of living is skyrocketing. Groceries are costing more, gas costs more, utilities cost more, commodities cost more, and you get less of everything. It’s like some evil mad person is up there trying to collect all the coins on the planet with no care for what happens to anyone in the process. It’s pure evil. Fortunately, some people see through this evil plan of financial prosperity.
It Shouldn’t Take a Think Tank to Point Out the Obvious
California Governor Gavin Newsom knows that taxes like the cultivation tax for cannabis businesses are a nuisance. An American libertarian think tank by the name of The Reason Foundation, founded back in 1978, put out a tweet on Twitter saying, “Eliminating the cultivation tax would allow farmers and licensed cannabis retailers to lower prices, making California’s legal marijuana market far more competitive with illicit markets.”
This think tank tweet shows the obvious problem, the price of cannabis. Current estimations say the wholesale pricing of cannabis averages between $300 to $450 a pound (roughly $29 an ounce at $450 per lb.) for small popcorn nugs of medium quality and upwards of $750 to $1,100 (roughly $69 per ounce at $1100 per lb.) per pound for higher quality and bigger buds. Ten years ago, a pound of top-quality California black market bud would set you back on average between $1,500 to $2,500 per pound unless you were buying substantial weight.
If you can score even a medium quality pound of bud by California standards at $450, it can be worth substantially more in states that still support outdated cannabis prohibition. A single ounce of cannabis alone in a state like Tennessee or South Carolina will average you between $200 to $450. This means a $450 pound from California could easily return $3,200 in profits in a state such as Tennessee. When people purchase cannabis to traffic between states, it rarely is one pound at a time. It’s usually 10 lbs., 100 lbs., or more. If you do the math, you will quickly see why the illicit market could be worth much more.
End Cannabis Cultivation Tax and Give the Legal Market a Chance to Compete
California Governor Gavin Newsom has proposed ending the cannabis cultivation tax. If this happens, it will increase legal cannabis sales and further restrict the black market from thriving. The policy director of Good Farmers Great Neighbors, Sam Rodriguez, was quoted telling media sources, “California farmers are pleased that the governor has taken a leadership role in addressing the hills of the illicit market with a starting point on tax relief. We look forward in working the legislative budgetary process to obtain more tax relief necessary to stabilize the supply chain. The legal market in our state needs a real bootstrap approach from our state. Anything less will potentially devastate the newly created cannabis economy. And that would be a travesty.”
Taxes from cannabis sales are helping infuse finances into places politicians were previously dipping their hands into. A great example of how some of California’s cannabis taxes are used would be the $401.8 million allocated to education, school retention, and youth substance misuse treatment.
Eliminating the cannabis cultivation tax would be a great thing to help slow down the success of the black market for cannabis. Eliminating federal cannabis prohibition would ultimately be the best way. Everywhere that cannabis is legal, it is expensive. The tax on cannabis in some places is almost as much as the purchase itself, it seems.
The reason the taxes are so high is that state lawmakers made it this way. They did this, so they need to work at undoing this before they end up with legal businesses selling low-quality cannabis at high prices like too many of them are already doing today. This isn’t just a problem in California; this is a problem that stretches across the nation.
Taxing cannabis shouldn’t be the solution for fixing the misappropriation of public funds by political representatives. But it is. I say we end all cannabis taxes! Tax cannabis the same way you tax tomatoes, lettuce, or grain. The American people are just so happy for cannabis legalization; many of them just pay the tax. For everybody paying the tax, though, it appears there are two people saying no to the man and their plan, turning to the cannabis black market for higher quality and lower prices, whether it is cannabis consumers or cannabis patients.
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