Crisis in California’s cannabis industry: – Mass extinction – VG

–

–

–

previous

in this

full screen

–

– Messed up properly

Father of two Russell Perrin opens some boxes in his small business in the small town of Calpella.

He shows self-grown cannabis with names like “Forbidden Fruit” and “Bazooka Scout”.

– Wow, it’s so loud. I am interested in aromas, the incense, says Perrin.

He misses California’s previous cannabis law that allowed medical use, but was less regulatory otherwise.

– They messed it up properly with the new law. People here love the old. Then you could bring your product on selected sales days, all exchanged and sold. The new law stopped all that. Now we have to have a distributor, we can not sell directly ourselves, he says.

–

«Walmart-cannabis»

A few miles south of Perrin, in the Mendocann store in Hopland, Rahel Bel stands with samples for the hashish company Biscotti.

– They should have waited with Prop 64, instead of pushing. I do not think people understood what kind of doors they opened. Now we see big companies coming in with money and lawyers. Families who have run farms for generations are being wiped out, says Bel.

Perrin and Patricia Vargas de Gauder of Sunroots also point to the large companies that came in under the new law, which commercialized cannabis in California.

– The greenhouse cannabis is so cheap that the outlets will not relate to ordinary outdoor cannabis. They are too many, and they drive prices down, says Perrin.

In addition, it has now become common to buy shelf space in cannabis stores.

–

– Before got yours weed place on the shelf if it was good. Now it’s like regular stores. This is the way American capitalism does it, says Perrin.

– There is an overproduction of cannabis. You have those who grow thousands upon thousands of square feet of this biomass cannabis out in the desert. It has a negative effect on the environment, the market and our water supply, says Vargas de Gauder.

She calls it “Walmart cannabis.”

– They can sell at low prices because they have cheap labor, large investors. No one wants to buy high-quality products from small farmers, she continues.

–

The bottleneck

The 2017 law, called Prop 64, also allowed local authorities to ban the retail sale of cannabis.

According to the report from the Reason Foundation, around 80 percent of California has done this, which means that outlets are clumping up in cities such as San Francisco.

– I think the demand is there, but there are too few outlets to make it fly. It’s a bottleneck! says Perrin.

But worst of all are the taxes and fees. Vargas de Gauder lists a large number of them. She believes over-regulation is the cause of the problems.

– From the outside, California looks like a place where we are very progressive, but when you dive into the regulations and taxes, it’s just too much. It kills the small farms, she says.

–

The governor intervenes

The result is a situation where the illegal market now accounts for two-thirds, according to the Reason Foundation.

– High taxes on legal products, lack of legal sales in many regions, encourage consumers and producers to seek out the illegal market, they write in the report.

Governor and Democrat Gavin Newsom now appears to be intervening. In mid-May, he launched the state’s next budget proposal.

There he will iron out the biggest tax burden for cannabis farmers, an agricultural tax that follows the amount grown, not the income. Now it amounts to around 3,500 kroner per kilo.

According to Vargas de Gauder’s estimate, this tax – together with all the other taxes – means that in practice you go to zero or minus already for production costs at current market prices.

– We believe the market will change. Small farmers are making a lot of noise right now, she says.

Corrected: VG first wrote that the Reason Foundation was a “liberal” think tank. The right thing is that it is a “libertarian” think tank. This change was made on Monday 06.06.22 at 23:50.

Corrected: VG first wrote that according to the report from the Reason Foundation, 20 percent of California had introduced a ban on cannabis outlets. The correct thing is that 20 per cent had not introduced a ban. The sentence is aimed at 80 per cent having introduced a ban. This change was made on Tuesday 07.06.22 at 00:30.

–