How California can enhance its hashish rules

California has legalized cannabis for good reasons – but it’s not reaping any significant rewards because its regulations aren’t as practical as they could be.

Despite its reputation as the center of the cannabis revolution, California is struggling to run a successful legal recreational cannabis industry. Since the state first enacted regulations in 2016, California’s cannabis industry has stagnated – although the number of regular cannabis users continues to grow.

Although California lawmakers blame the persistent black market for cannabis for the relative failure of its legal industry, the truth is that a black market for cannabis would not exist if state regulations were better tailored to the needs of the public. Here are some ways California could change its laws and regulations to kill the criminal cannabis industry and help legal businesses thrive:

Cannabis taxes are too high

A compelling reason for states to enact recreational regulations is to increase tax revenues. Just as alcohol and nicotine products are typically subject to additional tolls such as luxury taxes, sin taxes, and excise taxes, recreational cannabis is subject to additional taxes. Most states are taking full advantage of the opportunity to increase tax revenues – but California is definitely going a little too far.

Rather than levying an additional tax or two on cannabis, California aggressively taxes every stage of the cannabis sale, from cultivation to sale. Consumers typically see three types of taxes on their pharmacy receipts: an excise tax, a sales tax, and a local tax. Tax rates can change according to the whims of state, county, and local governments. Currently, the excise tax is 15 percent, the sales tax is 7-10 percent, and the local tax is typically 10 percent.

How much consumers pay, however, depends on the base price of the weed, which in turn is influenced by the taxes and fees the government imposes on cannabis companies. Cultivators are also subject to taxation and pay a flat rate per ounce of flowers, leaves, and / or clippings they sell or transport. Retail stores constantly have to make various payments to the state in order to maintain their licenses. To recoup that cost, pharmacies set the price of California weed much higher than the rest of the country, and the taxes levied on purchase only add to the cost to consumers.

Most recreational users can find cannabis on the street at a much cheaper price from black market vendors. California must consider lowering its taxes, at least for the end user, if not overall, to get more traffic into pharmacy doors.

There aren’t enough dispensary licenses to go around

To keep cannabis use under control and keep it out of communities of children and families, California and its cities have limited the number of recreational pharmacies that can be opened in certain areas. It does this by controlling the availability of retail cannabis licenses and zoning restrictions to restrict pharmacies to specific parts of cities.

Unfortunately, this disrupts the free market and has a negative impact on supply and demand. When there are too few pharmacies to serve a certain population, those pharmacies must raise their prices, which means legal weed is only available to Californians who can afford it. As a result, most Californians look for weeds from less legal sources.

Photo by Add Weed on Unsplash

Additionally, a limited number of licenses usually means that only wealthy, white and well-connected entrepreneurs have the opportunity to capitalize on the lucrative cannabis industry and keep BIPOC out of the black market. By increasing the number of licenses available and investing in social justice programs that ensure greater diversity of leaders in the cannabis industry, California can break the black market for weeds and build stronger BIPOC communities.

Interstate cannabis trafficking is illegal

California has been a world leader in cannabis producers for decades, but world-class breeders are unable to fully utilize their crops thanks to federal law making interstate cannabis trafficking illegal. While many states could benefit from California’s potential cannabis surplus with medical and recreational programs, the fear of prosecution by the Fed prevents states and corporations from working together for mutual benefit.

The change in state cannabis regulations is a good step towards improving the California cannabis industry, both for producers and consumers. However, California could also choose to sign an interstate treaty such as the one currently being developed by the Alliance for Sensible Markets. There are some precedents where an interstate pact could override federal law and open up trade between states without federal government interference. This would encourage job creation and relax regulations across state lines, which would give more freedom to Californians who use cannabis.

California has legalized cannabis for good reasons – but it’s not reaping any significant rewards because its regulations aren’t as practical as they could be. By paying closer attention to how the population is responding to the existing cannabis law, California can become a more productive and profitable state for pots.