Was prop 64 a death wish for California's Cannabiz?
When prop 64 legalized cannabis in California, many were excited. But the ones who knew what was going on knew this may have been the end of an era, and not in a good way.
This year's legalization of marijuana in California through prop 64 has many business owners and investors worried. Sure, it's great that we can all smoke pot legally now, but the new laws have really shaken up the cannabis industry—and not necessarily for the better.
Here are some of the ways prop 64 has turned our world upside-down:
1) Taxes are through the roof! In most cases they're 10% higher than they were before legalization, which means consumers will be paying double or triple what they used to pay
2) All medical marijuana users (except those under 21) will have to pay sales tax on their products. This is because medical users won't have their purchases covered by Medi-Cal anymore—which is how so many already-struggling people with chronic illnesses were able to afford their medicine in the first place.
3) There are so many regulations and regulations about regulations that a lot of small business owners and investors are getting squeezed out of the game entirely. for example, every plant has a barcode / identity and is tracked seed to sale. someone has to pay for that..
4) Black Market is winning. Well, ehm, traditional / legacy market. or free market if you will. bottom line, it's winning big time, prices are in an all-time low and taxes in an all-time high
When prop 64 legalized cannabis in California, many were happy to see the end of the black market. However, those in the know knew that it wasn't all sunshine and rainbows.
Prop 64 was not just a legalization measure; it was also a licensing measure. When we passed prop 64, we also gave local governments the power to license cannabis businesses. That turned out to be a huge mistake for many reasons:
The first is that local governments have the ability to charge incredibly high fees for licenses. For example, in Oakland, CA, you can apply for a new dispensary license for $5,000. In Sacramento, though? That same license will set you back $20,000—plus another $5,000 every year after that. And then there's San Francisco: they don't take applications until they have enough applicants to fill their quota of spots. They're currently taking applications now (at a cost of $10,000), but they'll start charging an annual fee of $25,000 per spot next year. These rates are so high that some people have been forced to move out of town just so they can afford them—and now these cities are missing out on tax revenue from these businesses!