Why Isn’t The Marijuana Industry Booming In California?

PUBLISHED: March 21, 2019

California residents were more than excited when marijuana was made legal in 2016. Business owners were ready to cash in on the industry since it was projected to soar. However, that cash has been coming in slower than expected.

Growers and cannabis shopowners blame it on complex regulations, high taxes and the decision to ban marijuana shops in numerous cities. Law enforcement has also been concerned about crime growing around the marijuana trade. These issues are top priorities for state governor-elect Gavin Newsom when he takes office in January. Pro-legalization groups don’t think the problems will be solved. “The cannabis industry is being choked by California’s penchant for over-regulation,” director of California NORML Dale Gieringer said. “It’s impossible to solve all of the problems without a drastic rewrite of the law, which is not in the cards for the foreseeable future.”

After Proposition 64 was voted on, the law estimated close to 6,000 cannabis shops would be licensed in the first few years but the state Bureau of Cannabis Control fell short, issuing only 547 temporary and annual licenses to marijuana stores and dispensaries. They were also off on their money count, estimating $1 billion in revenue sales. But with cities banning pot sales, tax revenue is falling far short of those estimates. “I think we all wish we could license more businesses, but our system is based on dual licensing and local control,” Alex Traverso, spokesman for the state Bureau of Cannabis Control said. With taxes collected as far back as January 1, the state is expected to bring in $471 million in revenue this fiscal year.

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Even though the voters have spoken, they are a major cause as to why marijuana hasn’t risen to the states projected standards. Eighty-two of Los Angeles County’s 88 cities bans retail sales of recreational marijuana and some voters don’t want shops in their communities at all. Some voters in Malibu approved pot shops, but in Simi Valley, residents voted for an advisory measure against allowing retail sales. One shop owner, Sky Siegel, said he recently stopped trying to open another store in Santa Monica because of its restrictions on such businesses.

The whole industry has caused a lot of tension in areas where cannabis growers operate close to residential areas. Some state there are safety concerns, and others just don’t like the smell. “The smell is horrific,” Sanjay Bagai, said. “It’s like rotting flesh. And the traffic is insane.” Bagai, who lives next door to a cannabis farm, started a group called Save Our Sonoma Neighborhoods, which has taken measures to get a preliminary court ruling against one cannabis-growing operation.

With the new taxes and fees that business is starting to accrue, the cost of legal cannabis in parts of California could increase by 45 percent.

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