California Wants To Throw $100 Million at Its Mismanaged Retail Marijuana Sector

California’s nascent legal recreational marijuana industry is so heavily taxed and regulated that the black market still dominates. It’s so burdensome to try to get conventional permission to grow and sell marijuana the “legal” way that thousands of dispensaries operate without proper licenses. Government officials have been attempting to crack down on the problem and force them to close their doors.

On Monday California lawmakers attempted to address this problem in a very California way: Assembly members authorized a $100 million subsidy to help potential marijuana vendors get properly licensed.

As the Los Angeles Times explains, the subsidy isn’t going to the dispensaries or growers themselves—not that it should. The $100 million is instead going to local government agencies and cities so they can “hire experts and staff to assist businesses in completing the environmental studies and transitioning the licenses.”

California’s environmental regulations, most specifically the California Environmental Quality Act (CEQA), make it extremely expensive (and sometimes even impossible) to build anything new or improve anything in the state. CEQA requires businesses, entrepreneurs, and developers to pay for extensive environmental impact studies. It also permits pretty much anybody to file suit to try to stop construction using any sort of claim of potential environmental harm, no matter how tenuous. It is being used by opponents of marijuana operations (typically neighbors who don’t want them around) to try to block cannabis operations.

In order to give marijuana dispensaries and growers time to arrange these complicated studies, the state launched a provisional licensing system after recreational marijuana was made legal in California in 2016. Five years later, 82 percent of marijuana dispensaries in the state are still operating with just the provisional licenses, according to the governor’s office.

Rather than confront the regulations that make it impossible for cannabis entrepreneurs to comply with state law, lawmakers are essentially rewarding bad governance. Jerred Kiloh, president of the United Cannabis Business Association tells the Times that even that might not be enough, because cities have been slow to organize their own local cannabis policies. That’s exactly what happened in Los Angeles, where one of the major reasons the city had so many unlicensed dispensaries was because the city’s own bureaucracy could not get its act together. Two years after marijuana legalization, the city still had not been able to actually roll out business licenses to new dispensaries.

Los Angeles will get $22 million of this new state funding, essentially a financial reward for its bureaucratic failures.

Gov. Gavin Newsom also wants to add a six-month extension to the compliance deadlines for full licensing. This is being resisted by a coalition of environmental organizations, including the Sierra Club.

Environmentalists have been complaining about the potential impact of large marijuana grow operations, particularly in matters like pollution and water and energy consumption. The resistance here is comically misguided. A piece from the Sierra Club from 2017 notes the massive scope and impacts of illegal grow operations and drug cartel operations on public lands as part of a call for tight regulations of the legal industry.

But those massive illegal grow operations are still happening because of how difficult California and CEQA make it to operate a legal cannabis business. This is much, much worse for the environment than the prospect of the state being more flexible on environmental regulations for the benefit of those who are actually trying to follow the rules. After all, the drug cartels don’t care about restrictions on pesticide use.

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  1. Really??? says

    Promised huge tax hauls that have not happened.

    Promised this is a begin drug that now is being exposed for compromised immune issues, brain changes, and hormonal problems. It is amazing, now that the science is being reveled they are continuing to protect weed.

  2. Don Brown says

    Nothing but Political Theater , just a show………

  3. tremors1 says

    In typical Kommiefornia fashion, all the Kommie Demon-Rats saw with the legalization of recreational marijuana was dollar signs. Just one more way to pull millions and billions from its citizens to feed their unending thirst for more OPM to spend to keep themselves on perpetual power. They are so greedy that they tax marijuana to the point it is cheaper to buy it on the black market. Figures.

  4. Chris Renner says

    “Los Angeles will get $22 million of this new state funding, essentially a financial reward for its bureaucratic failures.”

    This is the very definition of government. Every time they fail (and they fail all the time), they get rewarded with bigger budgets or bailouts. Take every government worker and have them count of 1, 2, 3, 1, 2, 3, and then tell the 3’s they can all go home….. permanently. I guarantee no one would miss them.

  5. Kathy Farmer says

    As the insanity continues….. Legal marijuana is an all cash business so even if they were given the legal license/permits do you really expect them to fully report all the cash received and pay their fair share of income taxes on it? There is no way CA or even the FEDS would be able to track all the $$. So the underground economy continues to grow as usual. BTW that is how all the underlings survive in a socialistic/communistic governments. Do what you need to do to survive.

  6. The democrat corner stones are lies and failure.

  7. Supply and demand are a concept avoided by the left. Weed is simple to grow and cheap to harvest.
    Now that many states have made consumption OK, they fail to comprehend that pot heads will nearly always buy the cheapest and least complicated alternative. They do not care if every leaf has a government inspection stamp on it.
    The disappointing tax revenues fail to motivate the lessening of micro managing and regulatory stupidness.
    Sacramento will continue to thrive however, counting on the dumbing down of our citizens by requiring public schools to teach useless wokness instead of economics and unrevised history.

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