South Coast Cannabis Industry News

2 Cannabis Quarterly Event SRO at IHub

With it becoming an $8 billion industry in the next several years, the cannabis industry is at the tipping point of coming onto its own as a legal industry, a Santa Barbara-based real estate consultant told a crowd of more than 100 on April 18. 

Collin Dvorak spoke at the Quarterly Cannabis Networking & Workshop Event at the downtown Impact Hub, which drew more than 100 members of the Santa Barbara-area cannabis industry. 

Dvorak is the founder and CEO of San Marcos Consulting, a cannabis operations and real estate firm. The law firm of Brownstein Farber Hyatt Schreck again sponsored the event as it did in January. 

“It’s not a matter of if, but when” cannabis will be legalized across the United States,” Dvorak told the standing-room-only crowd. Federal law still classifies it like heroin or cocaine.  

Cannabis is “the next Coca-Cola” and touted for many things like the next cure for cancer, he said. And, Santa Barbara is the perfect place for the entire cannabis industry, he said. 

Another speaker, Chelsea Sutula from the Sespe Creek Collective cannabis dispensary in Ojai, discussed the variety of cannabis products on the market today. She also talked about using the proper dosage when taking cannabis. 

And, Sutula said, there is a push to use more plant-based packaging for cannabis products so that less plastic and other non-biodegradable material goes into landfills. 

Some of the co-sponsors of the event included Santa Barbara-based Botanical Veterinary Products, which sells cannabis products for animals online, and BudBuddy, the Cannabis Nexus, which seeks to the “the Amazon” of the paraphernalia and CBD industry. 

Amy Steinfeld, attorney at Brownstein Farber Hyatt and Schreck, closed the gathering with a head-ups to industry members and proponents. She said a “very loud” group on anti-cannabis advocates is trying to take down the budding industry. 

She said proponents should stand their ground.

Posted April 18, 2009.

Carl’s Jr. Tests ‘Rocky Mountain High’ Cheese Burger

The formerly Carpinteria-based parent company of Carl’s Jr. announced April 18 that it will sell hamburgers in Denver on April 20 with CBD in the sauce.  

CKE, which include the Carl’s Jr. And Hardee’s brands, moved its headquarters from the South Coast to Tennessee several years ago. 

A company spokesperson told CNN Business the “Rocky Mountain High Cheese Burger Delight” is not a stunt, but a test of demand that is limited to one Carl’s Jr. in Denver on one day, for now. 

Carl’s Jr. and Hardee’s have 3,800 locations in 44 states. Hardee’s operates mostly west of the Mississippi River. The burger chain is trying to attract younger customers with meatless burgers and other new products such as the CBD burger, CNN Business reported. 

CBD has little if any of the active ingredient in found marijuana, THC. CBD comes from hemp, which is largely grown in this country in Kentucky where tobacco was once cultivated. 

It is legal to grow marijuana in California, but not hemp. 

As in California, recreational marijuana as well as CBD are legal in Colorado. However, cannabis products are still outlawed by the federal government and other states such as Texas where CBD oil can be confiscated by police.

Posted April 18, 2009.

Lawsuit Aims to Nip Pot Deliveries in the Bud

No cities in Santa Barbara or Ventura counties are among the more than two dozen municipalities that have sued California cannabis regulators to prevent deliveries to towns that don’t want now-legal pot drop-offs.

After Californians approved a referendum in 2016 that made recreational marijuana sales legal, some retailers began plans to deliver in such towns as Santa Maria and Ventura, which have banned pot. 

The lawsuit was filed last week in Fresno County Superior Court by Santa Cruz County, the cities of Agoura Hills, Angels Camp, Arcadia, Atwater,
Beverly Hills, Ceres, Clovis, Covina, Dixon, Downey, McFarland, Newman, Oakdale, Palmdale, Patterson, Riverbank, Riverside, San Pablo, Sonora, Tehachapi, Temecula, Tracy, Turlock and Vacaville.

The suit pits the power of the state vs. local control. However, some civic leaders even in Santa Barbara have said local governments should follow “the will of the people” who voted for Prop. 64 to legalize pot sales. 

The California Bureau of Cannabis Control wrote the delivery rule, which went into effect in January. All cannabis deliveries must be done by employees of a licensed retailer and there are 311 state licenses to deliver marijuana. 

Police oppose the pot deliveries along with the California League of Cities. 

Cannabis supporters said deliveries are vital because the elderly and sick will have to find a way to travel to dispensaries that are not close to their homes.

Posted April 9, 2019.

Kop Sun LLC to Screen ‘Reefer Madness’ on 4/20

Carpinteria-based KopSun LLC will host a screening of the propaganda movie “Reefer Madness,” coupled with a short study of the film at 7 p.m. April 20, at The Alcazar Theatre, 4916 Carpinteria Ave.  

“Reefer Madness” was produced by the U.S. government in 1936 as a cautionary tale of the evils of marijuana and its inevitable addiction. It mixes scare tactics, lurid details and melodrama to tell the story of three drug dealers, who introduce marijuana to high schoolers.

Wild parties, jazz music and life-shattering events unfold.  
 
The one-hour, eight-minute film is not rated. Louis Gasnier directed it, and actors include Dorothy Short, Kenneth Craig and Lillian Miles. 

“Cannabis is a very misunderstood plant,” said Tina Fanucchi-Frontado, CEO of KopSun LLC, a cannabis health and wellness company. “We thought it would be interesting to look at a source of the misrepresentation.” 

She said the event should appeal to film buffs as well as the general public. 

Tickets are $15 and available at www.thealcazar.org. For questions, email info@kopsun.com.   

To view the film’s trailer, click here.  

No cannabis products will be sold at the event. Carpinteria is a smoke free city, and the Alcazar Theatre strongly enforces this ordinance.  

 KopSun supports the cannabis lifestyle with education, a curated product line and the KopSun Seal of Approval, its principals said.  For more information, visit www.KopSun.com, email info@KopSun.com, or call (805) 881-1218. 

Posted April 2, 2019

Report: CVS Plans to Add More CBD Products

The online publication Leafly posted several interesting reports this week regarding the CVS drug store chain and trends that show marijuana legalization is growing among the U.S. public – especially among Republicans – while Congress is awash with bills calling for some kind of end to pot prohibition. 

In California and seven other states, CVS already sells CBD products in the face of federal prohibition. However, CVS plans to add CBD products from Curaleaf soon, according to Leafly.  

CVS has five Santa Barbara-area stores. Curaleaf sells its products in licensed dispensaries in 11 states. 

By contrast, police recently raided two north Texas GM Tobacco stores and confiscated $50,000 in CBD products, but no arrests were made, Leafly reported. 

Leafly posted an Associated Press story based on a General Social Survey that found 54 percent of the nation’s Republicans favor pot legalization in some form, an increase from 45 percent three years ago, while 76 percent of Democrats have a similar view.  

Meanwhile, Congress is looking at six bills aimed at having the federal government stop the prohibition of cannabis products nationwide. 

To date, it appears only one of those bills has a hearing, but experts say this Congress is the most likely to move toward ending pot prohibition, even though many similar measures have been proposed in years past. 

To see the most recent Leafly posts, see newsletter@leafly.com

Posted March 25, 2019

Planning Panel Seeks Public Comment on Cannabis Law at April 3 Hearing

A 9 a.m. April 3 public comment session on proposed changes in the county cannabis ordinance will be held before the Planning Commission on the first floor of the Engineering Building, 123 E. Anapamu St., Santa Barbara. 

Proposed changes include banning commercial cannabis growing on small parcels of land zoned for farming in inland areas. 

After public comments are heard, county supervisors want the planning commissioners’ thoughts on possible ordinance amendments before deciding what to do about complaints from residents and other agricultural industry members who say the smell of cannabis ruins their lifestyle or business.

On Jan. 29, county supervisors heard from many Carpinteria residents and North County wine grape growers who said the smell of cannabis is ruining their neighborhoods and enterprises.

County officials might expand requirements for letting residents know when permit applications are filed by cannabis growers in neighborhoods in rural areas and near the coast. 

Planning staff will draft an ordinance for commissioners to consider at a later hearing. 

A week before the April 3 hearing, a staff report will be available on the Planning Commission website: http://sbcountyplanning.org/boards/pc/cpc.cf

Report: Temporary Licenses Might Soon Expire

The North Bay Business Journal this week reported that thousands of temporary California cannabis business licenses might expire before provisional annual licenses or extensions can be issued. 

“Ultimately, this will have a domino effect on the supply chain,” Josh Drayton of the California Cannabis Industry Association told the business journal. 

The journal also posted a photo of cannabis growing at Glass House Farms in Carpinteria. See https://www.northbaybusinessjournal.com/northbay/sonomacounty/9367393-181/california-cannabis-business-regulation-supply?artslide=0 

Some 9,000 applications in December surprised regulators, such as those at the California Department of Food and Agriculture, which issues permits to cannabis growers, the journal reported. 

“Towards mid to late 2018 there was a real rush of folks filling out their temporary applications and to get those in before January first of 2019,” which was the deadline to apply for temporary licenses, Drayton told the journal. 

It was reported that of the almost 5,000 cannabis licenses issued by the state, 1,806 of them could expire this month or next. 

However, the journal said lawmakers are rushing a bill to the governor that might solve the problem. 

Medical Cannabis Confab & Expo Set for May 11

The Santa Barbara Medical Cannabis Conference & Expo, “Science, Healing and Hope” is planned for 7:30 a.m. to 6 p.m. May 11 at the Veteran’s Memorial Building, 112 W. Cabrillo Blvd. 

Early bird registration ends March 27. Register online at https://www.sbindytickets.com/events/92249152/santa-barbara-medical-cannabis-conference-expo 

Keynote speakers include Uwe Blesching on “Breaking the Cycle of Opioid Addiction: Supplement Your Pain Management with Cannabis” and Dr. Joe Goldstrich on “How to Treat Cancer with Cannabis.”

Thie conference is for adults 18 and older. It includes sessions from expert speakers, question-and-answer sessions, a documentary presentation, book signings, exhibitors offering non-THC giveaways, music and food vendors.  

Organizers said the primary theme is the life-saving benefits of including cannabinoids and derivatives to heal many debilitating ailments. Case-studies will be presented on how to adopt a cannabis health care plan to help prevent and reverse chronic diseases including cancer, autoimmune diseases, debilitating pain, multiple sclerosis, Alzheimer’s, insomnia, inflammation, depression, anxiety and trauma. 

The day will feature seven workshops and a multimedia documentary presentation that will cover a range of topics including: 

• evidenced-based science of medical cannabis vs. pharmaceuticals; 
• CBD and medical cannabis types, derivatives and dosages for specific ailments; 
• growing organic medical cannabis and delivery methods;  
• and, how medical cannabis and CBD is used in treating cancer, chronic illness, debilitating pain, MS, Alzheimer’s, insomnia, inflammation, depression, anxiety and trauma. 

Workshops include: 

  • “Medical Cannabis and Your Health: From Improving Your Day to Saving Your Life,” by Stacy Shymansky; 
  • “Cannabis 101: The Plant, Your Body & How It All Works” by Liz Rogan; 
  • “How to Grow and Prepare Your Own Organic Medicinal Cannabis” by Seth Matrisciano; 
  • “Cannabis Kitchen: How to Make Your Own Delicious Infused Edibles” by Matthew Vieth; 
  • “Your Roadmap to Transition from Pharma to Cannabis Healing” by Registered Nurse Karen Mankins; 
  • “CBD: What Every Consumer Needs to Know for Maximum Therapeutic Benefit” by Robbin Lynn; 
  • “Medical Cannabis: Healing Mind, Body and Spirit” by Michael Scott; 
  • and, “How to Successfully Navigate Your Medical Cannabis Buying Experience” by Harry Rose. 

For more information, see https://cmcsb.org/

AP Pot Team Reports Prez Hopefuls Lean Toward Legalization

One of the oldest and most trusted news organizations has a “marijuana beat team.” 

The Associated Press has reporters not just covering the arrests and pot confiscations nationwide, but also reporting on the blooming legal industry in more and more states. Team member Michael R. Blood’s most recent report, with two other AP reporters, discussed the growing number of Democratic presidential candidates who support pot legalization. 

For example, the AP reported, U.S. Sen. Kamala Harris, D-CA, a former criminal prosecutor, said legalization is a “smart” thing to do.  

In a radio interview, Harris said she smoked pot in college. She was a supporter of medical marijuana, but in 2010, when she was elected state attorney general, she opposed an initiative to legalize pot. 

Declared presidential candidate Sen. Cory Booker, D-N.J., says the war on drugs was a “war on people.” He has introduced a federal pot legalization bill. 

Presidential candidates in the Senate who have co-sponsored Booker’s bill include Kirsten Gillibrand of New York, Elizabeth Warren of Massachusetts, Bernie Sanders of Vermont and Harris. 

U.S. Sen. Amy Klobuchar, D-Minn., backs legalization and wants states to decide how to deal with marijuana. She hasn’t backed Booker’s bill. 

When Democrat Jay Inslee, governor of Washington state, entered the presidential race he said it’s “about time” to legalize pot. 

Former punk rocker congressman and presidential hopeful Beto O’Rourke in Texas is in favor of national pot legalization.

Former President Barack Obama once said about smoking pot, “When I was a kid, I inhaled. Frequently. That was the point.” Contrast that with former President Bill Clinton who said he smoked it, but didn’t inhale. (It appears he still hasn’t exhaled.) 

On the fence is former Colorado Gov. John Hickenlooper, who was in office when his state legalized recreational pot use, even though he opposed it in 2012. 

While he said he accepted the voters’ will, Hickenlooper considers the system better than when the drug was illegal. He wants pot to no longer be a federal Schedule 1 controlled substance so it can be studied. 

For more from the AP marijuana team, see https://apnews.com/Marijuana 

Colleges Try to Keep Up With Demand for Pot-Trained Graduates

It used to that many college students spent a great deal of time studying cannabis, even though it was not on any curriculum. 

Times have changed. Since marijuana is legal for medical purposes in 33 states in this country and as a recreational drug in 10 others, a growing number of public and private educational institutions, are offering its study in some of their courses of study. 

According to a CBS Philly TV report in Philadelphia, with a contribution from the Associated Press, almost a dozen U.S. institutions are either offering majors, minors or some type of course related to the cannabis industry, even though marijuana still is federally illegal. However, last year’s federal farm bill widespread most legal hemp growing. 

While it’s difficult to estimate exactly how much revenue can be generated in a state from cannabis product sales, since much production still is done illegally, experts say about half a million good-paying jobs will need to be filled in the next few years in that industry. 

Many graduates will be trained to work as analysts in the growing number of labs needed to test cannabis. 

The UCLA Cannabis Research Initiative bills itself as one of the first academic programs in the world dedicated to the study of cannabis, according to its website. It has studied cannabis health risks as well as therapeutic values. 

The broadcast report from CBS Philly noted that a new four-year degree program is under way in medicinal plant chemistry at Northern Michigan University.  

The report also said, “Colorado State University offers a cannabis studies minor focusing on social, legal, political and health impacts. Ohio State University, Harvard, the University of Denver and Vanderbilt offer classes on marijuana policy and law.” 

CBS Philly said, “Stockton University in New Jersey began an interdisciplinary cannabis minor last fall and now has an academic partnership with Thomas Jefferson University in Philadelphia that gives students the opportunity for internships and research work in medical marijuana and hemp.” 

The University of Connecticut is starting a cannabis horticulture program soon, and a similar program is being launched at Minot State University in North Dakota. 

This interesting because marijuana still is illegal in New York, New Jersey and Connecticut, where schools appear to be ready to offer classes on pot when it is legalized in those three states.

Free ‘Leaf Learning’ Offered Feb. 27 in Carpinteria

Carpinteria-based Kop Sun LLC will present the company’s free monthly “Leaf Learning” session from 5 to 6 p.m. Feb. 27 at the Carpinteria Woman’s Club, 1059 Vallecito Road. 

The session will include a panel of industry experts such as Dr. Margaret Peterson, Dr. Connie McLaughlin-Miley , Liz Rogan and Autumn Shelton. 

The 60-minute presentation is a guide to the health and well-being applications of cannabis, Kop sun officials said. It will teach how and why cannabis works, the conditions and illnesses it helps remedy, along with dosing and legalities.  

Also to be discussed will be the difference between hemp and marijuana, the endocannabinoid system, how CBD and THC differ, dosing options and methods. 

To register, see https://www.eventbrite.com/e/leaf-learning-tickets-55940217697?aff=eivtefrnd#tickets 

Kop Sun founder Tina Fanucchi-Frontado is one of the women at the forefront of the cannabis movement in California. She is described as an unyielding proponent of cannabis. 

Fanucchi-Frontado lost her brother to AIDS in 1994, her mother to cancer in 2006 and her father in 2016. She was a lead caregiver in all three cases. 

When her father’s sleep and anti-anxiety medications were making him miserable, she started dosing him with medical marijuana edibles. She said relief came without all the sickening side effects of the pharmaceuticals. 

For more information, see www.KopSun.com, or email info@KopSun.com, or call (805) 881-1218. 

Supervisors Blasted by Anti-Cannabis Wine Grape Growers, Carpinterians

The first round in the “Weed vs. Wine” battle Jan. 29 ended without smelling like a rose before the Santa Barbara County Board of Supervisors.

After hearing nasty public remarks all afternoon, the board basically told county staff to come back with more information, which could take months. 

However, the bruhahha did not just pit grapes and pot against each other. Many cannabis opponents who voiced their opinions were elderly residents of the Carpinteria Valley where they say pot growing has really raised a stink. Some Carpinteria residents worn clothes pins to protest the odor, which has been a sore point for months. 

Cannabis backers tried in vain to convince their foes that their product in it various forms has many medical and theraputic benefits, which California voters made legal for recreational use several years ago. 

But opponents said the odor gave them asthma, headaches and emotional stress. 

Carpinteria-area residents were joined by wine grape growers in telling the supervisors that cannabis odors are “toxic,” harmful to children and would ruin the wine-tasting experience. 

Pro-cannabis attendees at the meeting said they hoped something can be worked out so that growers can co-exist and odors can be contained. 

“How dare you,” one woman scolded the supervisors for allowing cannabis to be grown in Santa Barbara County while Ventura and other municipalities have banned it. 

She claimed only cannabis growers profit from the sale of their product, even though it raises needed tax revenue. She also claimed cannabis growers put money into the supervisors’ election campaign coffers.

A man who said he wants to build a multi-million-dollar winery in Santa Ynez said he is waiting for the county to amend its land-use policy on cannabis. 

“You will kill business if you can smell cannabis,” he said loudly. 

Public comments grew testy as five sheriff’s  deputies showed up in or near the hearing room where usually only one stands guard. 

At one point, a contractor told the supervisors how cannabis growing was bad for business around Carpinteria. Supervisor Das Williams, snapped, “You stole water from the Carpinteria Valley.” 

The contractor snapped back, “You’re a sell-out.” 

Before leaving the four-hour hearing early, Supervisor Peter Adam said he’s no fan of pot, but he respects the will of state voters who approved the marijuana referendum. 

Adam also said, “Anyone who thinks we’re going to get through all this today is delusional. No new hearing date has been set.

Wine vs. Weed’ Battle Brewing in Santa Ynez Valley

A “wine vs. weed” battle of sorts seems to be shaping up in the Santa Ynez Valley, a Santa Barbara attorney told about 100 cannabis business people Jan. 24 at the downtown Impact Hub. 

Brownstein Farber Hyatt Schreck attorney Amy Steinfeld said while many wine grape growers in the valley oppose the use of prime farmland for growing cannabis, she said she thinks “they will find synergy” in the coming year. 

Steinfeld was speaking to the Quarterly Cannabis Workshop and Networking Event. She also pointed out that Santa Barbara County has more cannabis licenses that another municipality in California, where recreational use of marijuana became legal in the state last year. 

But more than just pot growers attended the Thursday evening session. Others included: Drew Hunter who just started an online cannabis oil business this month: Paul Costello whose Mary Jane Services Network provides industry professional resources: Shuli Suman whose True Science Laboratories test marijuana; and Magda Arroyo from Brown & Brown Insurance. 

Steinfeld said those in the industry face a “patchwork of regulations” as well as different municipal reactions. For example, she said Carpinteria-area residents are reacting based on fear while Lompoc is embracing cannabis wholeheartedly. 

Valley grape growers and pot growers face a showdown Jan. 29 in front of the county Board of Supervisors over use of “hoop houses” used to grow cannabis and other crops. Vineyard owners say the hoops are unsightly and are bad for farmland. 

Meanwhile to the south, Ventura has completely banned cannabis production. She said it appears Ventura is waiting see what is happened in neighboring Santa Barbara where she sees the cannabis industry as a boon to future tourism growth. Santa Maia also banned commercial pot growing in 2015. 

Another Brownstein attorney, Dan Ackerman, discussed the need for cannabis businesses to register and protect their trade names since hundreds of cannabis applications have been filed in California. 

One of the key organizers of the Thursday event, SBVerde,  said more similar gatherings are planned this year to bring together the fastest-growing industry in the state. Organizers said the Central Coast is a perfect area for this since it’s great for growing most anything and it’s situated between the huge Los Angeles and Bay area markets. 

SBVerde is developing a printed business directory that will be distributed at more than 148 locations, primarily in hotels and car rental businesses, and include recreational dispensaries on the Central Coast and local brands. For more information, seehttps://www.sbverde.com/ 

Cannabis Sales, Taxes Not Meeting Expectations in California

Licensing for Cultivation
California launched legal recreational marijuana sales and began licensing all other industry businesses including cultivation for the first time on Jan. 1, 2018.

Permits for licensed cannabis cultivation have been issued throughout California over the last 11 months. To date, 5,871 outdoor and indoor permits have been issued and as of Dec. 1, 2018, 3,432 are currently active.

It is the large scale cultivation operations that have emerged in California this year, acquiring dozens of licenses for smaller growing sites which they can combine into a single cultivation area. While there have been nearly 6,000 permits issued to grow cannabis, the total number of unique growers is only 1,830.

Each small cultivation license enables a growing space of up to 10,000 square feet. But a grower can obtain an unlimited number of these licenses.

This is especially true in Santa Barbara County, where more licenses have been issued than anywhere else in California, and the ratio of licenses to unique growers is 10.8 to 1.

Legal Participation in Cannabis Cultivation is Seriously Low
A recent study estimated the number of total growers in California at 68,150 in 2017.1 Consequently, if 1,830 unique growers have applied for and received cultivation licenses in 2018, this represents a statewide grower participation rate into the legal regulated market of just 2.7 percent.

In other words, the black market where most of the growers remain is seriously thriving despite the ability to become legal.

Tax Revenues in 2018
In January of this year, Gov. Brown predicted annual tax revenues going to California at $643 million for the first year of legal cannabis production and retail sales. Taxes on cannabis pertain to both growing and retail sales of marijuana and derivative products.

However, during the first three quarters of 2018, total tax revenue collection has fallen short of expectations. At the current rate of tax receipts realized through September, it’s likely that just over half of the governor’s tax revenue goal for calendar 2018 will be realized.

Why? The lack of grower participation to date is the biggest reason, along with a scarcity of recreational use cannabis shops in California. So far, there are 416 storefronts that have been licensed to sell cannabis and derivative products for recreational use in California. Thirty five percent of these are located in the greater Los Angeles metro area. The Coachella Valley is number 2 with 32 stores in Palm Springs, Cathedral City, and Desert Hot Springs. San Francisco is third but with much fewer outlets.

Along Interstate 5 between San Francisco and Los Angeles, adult-use shops are nearly nonexistent. There are no stores in Fresno, Kern, San Joaquin, San Luis Obispo, Placer or Nevada Counties. And there are only a few shops operating along the Central Coast of California.

In general, there are not enough establishments that are now open to conveniently serve the state’s population and generate tax revenues for the state. Why? Local prohibitions on adult use marijuana stores are a principal reason. You can only buy legal cannabis products in legally sanctioned retail outlets if they are permitted in your city or county. Even though Proposition 64 was approved in 2016 by about 57 percent of the state’s electorate, most cities in California still refuse to permit marijuana businesses. About 84 percent of cities in the state have banned adult-use retailers, whether storefront or deliveries. Right now, only 77 cities in California allow recreational sales of cannabis.

Prices
And then there is the price. Regulation and taxation is having a large impact on consumer prices. Though the wholesale price for leaf and flowers has fallen precipitously in the last year, prices for retail cannabis products in stores have not.

New packaging and testing regulations went into effect on July 1, 2018 and this has created confusion for regulated store owners, reduced product and increased prices.

And according to industry sources, the unlicensed (or black) market sells cannabis products for lower prices. In August, a marketing survey found that one in five Californians bought marijuana from black market sources and were “highly likely” to purchase again due to cheaper priced products, greater selection, and no tax.2

According to PriceOfWeed.com, this week’s average price per ounce for high quality marijuana is $256.63. For medium quality, the price drops to $207.13.3

The State of California has the second highest tax rate on cannabis growing and sales in the country, behind the State of Washington. Together with city and county taxes, the gross tax rate of cannabis products can go as high as 45 percent in California.

There was a proposal in the state legislature, Assembly Bill 3157, that would have lowered the state’s excise tax imposed on purchasers of cannabis from 15 percent to 11 percent for about three years. It also would have suspended the cultivation tax until June 1, 2021. But it did not have the support of Democrats and unions.

Last Word
The first year for the industry has been bumpy as the regulatory issues become institutionalized and applied. Combined tax rates on cultivated product and on retail sales are comparatively high and compliance standards onerous. For this reason, most California growers remain in the unregulated market.

More regulations on packaging, product uniformity and testing and fewer retail storefronts throughout California (due to local city and county bans) are pushing final product prices to the upside. Consumers are still seeking out less costly products and the black market is still thriving.

California cannabis industry conditions are evolving and it’s likely that the environment for growers and retail sellers will improve, together with tax revenue collections for the state and for municipalities. But currently, the regulated market is struggling with grower licensing, retail product shortages due to testing delays and distribution issues, and higher product prices (than the black market). So as the first year of legal cannabis growing and sales sunsets on California, the industry is still in a state of flux.

__________

1 California Growers Association, “An Emerging Crisis: Barriers to Entry in California Cannabis,” February 19, 2018, page 6.

2 Investor’s Business Daily, https://www.investors.com/news/marijuana-stocks-california-cannabis-tax-revenue-q2/

Also see https://mjbizdaily.com/higher-prices-and-barer-shelves-california-cannabis-retailers-face-frustrated-customers/

3 For a sample size of 21,179 transactions. See the home page of http://www.priceofweed.com

Reprinted by permission

Mark Schniepp is head of the Goleta-based California Economic Forecast, an economic consulting firm that produces commentary and analysis on the U.S. and California economies. The firm specializes in economic forecasts and economic impact studies, and is available to make timely, compelling, informative and entertaining economic presentations to large or small groups.

Posted Dec. 10, 2018