Excessive taxes, local control allows California illicit cannabis market to thrive

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Guest commentary: By allowing municipalities to opt-out of legalization, the state has essentially ceded two-thirds of the market to criminals. In these dry zones, unregulated, untaxed and untested cannabis is king... 📝 Tiffany Devitt

For all the talk of equity and “righting the wrongs” of the drug war, all of this is taking place in an industry without bankruptcy protections, where individuals carry personal liability for business taxes, and where businesses are barred from writing off normal expenses.

Proposition 64, the 2016 initiative to legalize cannabis, began with the statement: “It is the intent of the People … to take marijuana production and sales out of the hands of the illegal market … to tax the growth and sale of marijuana in a way that drives out the illicit market …”industry’s distressWith the benefit of hindsight, it’s clear that Prop. 64 had two fatal flaws: high taxes and local control.

These taxes compound the supply chain, resulting in an aggregate burden that’s 50% or more of the original price. , cracking down against illegal cannabis will continue to be a losing game of whack-a-mole.

 

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