California Cannabis Industry Sending SOS To State Leaders As Black Market Continues To Thrive
CBS Sacramento November 28, 2019
“They didn’t realize how strong this illicit market was going to stay,” Hunter said. “I think people really thought that it was just going to stop [after legalization]. And actually, the opposite has happened. It almost feels like the illicit market is getting stronger.
And as 2019 comes to a close, California is indeed home to the world’s largest cannabis market, totaling close to $12 billion in estimated sales. But here’s the rub: $8.7 billion of that is changing hands in the illicit market.
Now, members of California’s cannabis industry are sending an S.O.S. to the state capitol, saying they’re struggling to compete against black market operators who don’t have to meet stringent regulations or pay taxes and fees. They’re urging leaders to make swift regulatory changes or risk the collapse of their emerging industry.
“The hard truth is that until legislative changes are made, our industry will continue to wither away,” said Michael Steinmetz, CEO of cannabis distributor Flow Kana, which recently joined a growing list of California cannabis firms that have cut their workforces.
Following the job cuts, which were first reported by the Sacramento Bee and described as an an “epidemic” of layoffs, Steinmetz cobbled together an informal coalition of more than a dozen leading companies and business associations to lobby the state.
However, not all legacy businesses transitioned to licensed operations under the new laws. While some have no intention to become regulated, others believe it’s cost-prohibitive or currently operate in municipalities where cannabis sales are banned, said Josh Drayton, spokesperson for the California Cannabis Industry Association.
Fewer than 40% of California’s municipalities have cannabis regulations in place, and only one in four of those allow for regulated retail operations, Drayton said. Earlier this year, lawmakers struck down a bill that would have required municipalities to allow recreational cannabis programs if a majority of their residents voted for the 2016 measure that legalized cannabis.
“They didn’t realize how strong this illicit market was going to stay,” Hunter said. “I think people really thought that it was just going to stop [after legalization]. And actually, the opposite has happened. It almost feels like the illicit market is getting stronger.
https://sacramento.cbslocal.com/2019/11/27/california-cannabis-industry-sos-black-market-thrives/