It is well documented that the legal marijuana market in California is plagued by problems due in part to the onerous bureaucracy and high taxes that allow the black market to continue to dominate. As a result, California is once again seeking to revise its regulatory framework for adult and medical cannabis use.
The Cannabis Control Department, created last year as a result of a previous regulatory review that consolidated the efforts of three different agencies, has proposed new rules to govern the legal marijuana market.
Unfortunately, many of the changes would further complicate the legal marijuana market rather than improve its operation.
In 2019, the Office of Legislative Analysts found that California marijuana taxes were too high and that their tax mechanisms were too inefficient for licensed cannabis companies to successfully compete with the illicit marijuana market. So while the marijuana industry is thriving in most other parts of the country, a coalition of licensed marijuana companies has recently complained that the entire California industry is collapsing.
“California’s cannabis system is a mockery nationwide; a public policy lesson on what not to do, ”the coalition’s letter said. “Unable to thrive in California’s faulty system, many of us are now facing the imminent loss of our business and the ability to provide for our families.”
Among the positive changes proposed by the Cannabis Control Department, a rule would facilitate property information requirements by clarifying that passive investors with less than 10% ownership in a licensed company would no longer be considered responsible for financial interests responsible for provide comprehensive reports and background. checks to the state as a condition of license for the company.
Another positive change is the proposal to allow the delivery of marijuana products by retailers, which would expand the convenience of shopping in legal stores and allow authorized dealers to use transportation vehicles they do not own in full.
Unfortunately, however, most of the proposed changes would make it even more costly and burdensome for cannabis companies to operate in the state’s legal marijuana market. For example, the Cannabis Control Department is considering banning the use of transport containers and modular buildings on the premises of legal marijuana license holders, which would force many marijuana companies to build permanent and expensive structures.
Existing licensees are only offered a six-month grace period to erect these permanent structures and comply with the new rules, which further increases the cost of compliance and hinders competition with black market marijuana prices.
The rules of the Cannabis Control Department would also again impose a controversial requirement that applicants for legal commercial marijuana licenses with more than 20 employees send a signature page saying they will enter into a labor peace agreement with the unions. This requirement is constitutionally suspicious because federal law and U.S. Supreme Court decisions clearly reserve for the National Labor Relations Board the sole authority to impose such requirements on private employers. But now, the state’s new draft regulations would go even further by extending this requirement to marijuana business graduates with fewer than 20 employees.
Overall, the proposed changes to state marijuana regulations would do little to improve California’s dysfunctional legal cannabis market. At some point, it is up to state lawmakers and Gov. Gavin Newsom to change the permit statutes so that legal operators in the marijuana industry can compete with the thriving black market for marijuana products.
Primarily, lawmakers should do everything possible to reduce and simplify cannabis taxes by eliminating all wholesale taxes and charging only a modest retail consumption tax.
In addition, lawmakers should consider incentives such as revenue sharing to induce more jurisdictions to authorize the legal sale of cannabis so that consumers have access to legal products within reasonable distances of their homes.
The legal marijuana market is expected to be booming in California, but even the cannabis Control Department’s latest good faith efforts seem more likely to increase regulatory burdens than saving California’s experience with legal cannabis.
Geoffrey Lawrence is the director of drug policy at the Reason Foundation.
New rules add more complications to state’s legal marijuana system – Press Telegram Source link New rules add more complications to state’s legal marijuana system – Press Telegram