Seems the illegal’s, who don’t have to give the state a cut , or spend money for infrastructure and local codes are just rolling along with the majority of the business still….
Legalising the trade seems to be a problem within itself as pockets of resistance , of all sort, still exist…..
California’s cannabis market is booming nearly five years after voters legalized recreational weed. But there’s a catch: the vast majority of pot sales are still underground.
Rather than make cannabis a Main Street fixture, California’s strict regulations have led most industry operators to close shop, flee the state or sell in the state’s illegal market that approaches $8 billion annually, twice the volume of legal sales.
Local government opposition, high taxes and competition from unlicensed businesses are complicating California’s push to build a thriving legal market. Many of those factors are baked into California law, including rules allowing city leaders to shut out licensed cannabis enterprises. Meanwhile, the state has relaxed penalties against illegal operations in the name of racial justice.
Infighting between industry groups and lobbying dysfunction in Sacramento have stalled potential legislative fixes, with no clear end in sight. The scale of those problems has California’s iconic cannabis industry — the legal side, at least — lagging behind other states that have regulated the market.
“You don’t have a real cannabis industry if the dominant portion of it has no interest in being legal,” said Adam Spiker, executive director of the Southern California Coalition, a cannabis trade association. “There’s no other regulated industry in the world that I know of that operates like that.”
Licensed cannabis shops offering legal goods are sparsely scattered across the state — there are roughly 2 per 100,000 people, one of the lowest rates in the nation among states that support legal recreational sales.
By comparison, Oregon has 17.9 retail shops for every 100,000 residents. Colorado boasts a similar ratio, and Washington state’s rate is more than triple California’s….
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“Local control has, let’s just be honest, crippled the California market and prevented it from reaching its potential,” said Hirsh Jain, founder of cannabis consulting firm Ananda Strategy.
Industry leaders say there is little chance state lawmakers will take away that power, largely due to fierce support for local control from law enforcement and city and county officials.
Citizen initiatives and Covid-related budget deficits have spurred some jurisdictions to open their arms to weed. By Jain’s count, 28 cities will open their first dispensaries in 2022 and 37 more that will pass a retail ordinance.
Businesses that manage to secure a license have another problem: competing with their unregulated competitors.
The price of cannabis products sold in legal dispensaries can be two to three times higher than nearly identical items sold in unlicensed shops, which aren’t subject to cultivation or excise taxes that drive up costs for retailers.
Some buyers see little incentive to pay more for a legal product…..