Collapse of Goleta-based cannabis business shows need for reform

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OPINION by HIRSH JAIN The recent collapse of HERBL is a warning signal to state policymakers about how urgently reform is needed to prevent a collapse in the California cannabis market. HERBL is a …

The recent collapse of HERBL is a warning signal to state policymakers about how urgently reform is needed to prevent a collapse in the California cannabis market.

How well these causes or groups have actually been served by a certain policy has become almost irrelevant. In March 2020, California Governor Gavin Newsom issued an Executive Order designating cannabis an essential medicine and retail cannabis outlets as essential businesses. California taxes cannabis more than any other state. Cannabis is subject to a 15% state excise tax. And generally a 5-10% local excise tax.

If so, California is driving its own citizens to seek medicine that is untested, through illegal channels. Hardly honoring the legacy of Dennis Peron. As a result, social equity applicants often go bankrupt trying to open their businesses. Scarce business opportunities are then captured by the well-resourced, who — unlike social equity applicants — can endure these years-long delays.

California espouses a vision of a competitive market, in which small businesses can succeed. But it adopts policies that enable further consolidation in the cannabis market. California allocates millions of dollars to local jurisdictions to achieve critical policy goals like increased retail access and expedited local permitting. But there is limited accountability in how this money is spent.

 

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