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“California versus the ...” Continued from page 35
In Oregon, growers amassed an excess of 2 million pounds of legally So if cannabis users can’t legally buy grown cannabis, far exceeding the from a local dispensary, many go to black in-state demand. With federal law still market sources. preventing interstate cannabis trade and Businesses in those cities and counties growers sitting on massive stashes of that allow recreational sales, however, excess cannabis, they turned to the black must pay local taxes (4% in Sacramento) market. That led to something authorities on top of the 15% state tax, along with the called “diversion,” or the illegal funneling costs of permits for growing, selling and of legally grown Oregon cannabis to operating legally. That’s a burden their surrounding states—and it happened a lot. competitors in the black market can avoid. Between July 2015 and January Paul Clemons, director of 2018, 14,550 pounds of licensing and compliance at Oregon-grown cannabis Florin Wellness Center, was seized on its way to told SN&R that taxes, “Although we do 37 other states, shorting fees and red tape are the state of Oregon have high hopes for driving up the price about $48 million in of legal cannabis. 2020, I still think we’re lost potential profit. “Let’s look very much so fighting these “You’re never at it like gas,” going to eliminate new industry woes.” Clemons said. [the illicit market] “Gas is a pretty Paul Clemons until most of the cheap commodity. director of licensing and compliance, states are legal,” It’s all the taxes Florin Wellness Center Adam Smith of we’re placing on it the Craft Cannabis that makes it expensive, Alliance, a group in Oregon especially here in advocating for small cannabis California.” farmers, told Politico. “As long as Phil Blurton, owner of All About half the country still can’t get it legally, Wellness in Sacramento, told KCRA in there’s a market for it illegally.” November that fees and taxes are “making Despite the seeming doom and gloom the cost of our product so expensive the around the prices, taxes and costs on black market is booming now.” both the consumer and the buyer in the Clemons cited other expenses facing Californian legal cannabis market, it’s not Sacramento cannabis businesses, such as all bad news on the horizon for 2020. HD cameras that record 90 days, required More and more states—including in dispensaries. “People don’t think of the Arizona, New Jersey and Pennsylvania— bandwidth of internet that takes, or the are making the push to legalize costs of storage,” he said. “The amount recreational use in 2020. Recreational of money that takes in general is a lot.” cannabis is supported by an overwhelming “Although we do have high hopes two-thirds of American adults. for 2020, I still think we’re very much Lifting the federal ban on cannabis so fighting these new industry woes,” would allow California’s cannabis Clemons added. industry to grow, and allowing legal So how do you compete with a black interstate cannabis trade would let market product that’s cheaper and easier California legally offload surplus to get? cannabis to Nevada and others states Many suggest handing out more short on supply. Ω licenses, allowing more people to open businesses to sell cannabis—the free market approach. With more retail competition, eventually prices for the legal product would go low enough to kill the black market.
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