California Republican Assemblyman Thurston “Smitty” Smith wants to turn the clock back to Reefer Madness. On January 27, 2022 he introduced AB-1725 which would “amend AUMA to make it a felony, punishable by 16 months or 2 or 3 years in county jail, for a person over 18 years of age to plant, cultivate, harvest, dry, or process more than 6 living cannabis plants. By increasing the penalty for a crime, this bill would impose a state-mandated local program”. For those readers who forgot what AUMA is; it is the Control, Regulate and Tax Adult Use of Marijuana Act which legalized weed for adult use in California, otherwise known as Prop 64. AUMA is what allows you to shop those trendy weed shops which look very much like Apple stores and leave with branded reusable shopping bags stuffed with goodies and logoed sweatshirts.
So what is his problem? Why is he rolling back a tsunami of progress that has been overtaking the country and Congress? He is “fed up with enormous illegal grows that keep proliferating in his rural Southern California district”. So, of course, have a tantrum and make weed illegal again. That’s mature. But he is reacting to what has been an ongoing problem with Prop 64. He’s unfortunately reacting negatively and not proactively.
The passage of Prop 64 in 2016 was seen as a watershed moment for the booming cannabis industry nationwide. In 2018, when retail stores opened, California became the world’s largest legal marketplace and now five years later California is a public policy lesson in what not to do.
What happened in the five years from being a booming multibillion-dollar cannabis industry to a legal market teetering on the verge of collapse and an illegal cannabis market that has grown significantly since legalization in 2018?
California always had an illegal market. But the illegal market continues to dwarf the legal one. The problem with California’s legal marketplace is that it is so tightly controlled it makes entry almost impossible.
“While California’s legal market tightly controls how and where pot is sold, the illegal industry is easy to access and offers a doorway into a vast and profitable national market.”
In December 2021 cannabis industry leaders, in a letter, warned Governor Newsom that the state’s legal cannabis industry was on the verge of collapse and “needed immediate tax cuts and a rapid expansion of retail outlets to steady the shaky marketplace”.
“The letter signed by more than two dozen executives, industry officials and legalization advocates followed years of complaints that the heavily taxed and regulated industry was unable to compete with the widespread illegal economy, where consumer prices are far lower and sales are double or triple the legal business.”
“The industry leaders asked for an immediate lifting of the cultivation tax placed on growers, a three-year holiday from the excise tax and an expansion of retail shops throughout much of the state. It’s estimated that about two-thirds of California cities remain without dispensaries, since it’s up to local governments to authorize sales and production.”
“The opportunity to create a robust legal market has been squandered as a result of excessive taxation,” the letter said. “Seventy-five percent of cannabis in California is consumed in the illicit market and is untested and unsafe.”
“We need you to understand that we have been pushed to a breaking point,” they told the governor.
Two-thirds of California municipalities prohibit marijuana businesses from setting up shop for a state that allows legal cannabis; the localities that are trying to deter cannabis businesses from moving in are encouraging just the opposite with an underground market.
“Only 161 of California’s 482 municipalities and 24 of the 58 counties have opted to allow commercial cannabis activity of any sort, according to data from CannaRegs, a website that tracks local marijuana rule developments in the state.”
In addition, those counties that do allow cannabis businesses are selective about the type of business they allow. Some may allow a test lab but not an adult use shop for instance. Many business operators are left with no choice but to find themselves driven into the illegal market.
“Left with no option, independent growers are turning to illicit operations. One grower told Vice that the reduced punishment and barriers to entry to the legal market have created a “low-risk, high-reward business opportunity.”
“The high price of doing business in the legal market also means that many licensed dispensaries aren’t turning a profit. That has driven some licensed businesses to dive into the black market weed business.”
So if “Thirsty Thurston” would really like to propose valuable and passable legislation he can address the demands laid out in the letter industry leaders sent to Governor Newsom:
“Their demand can be summed up in three parts: They are calling for the permanent elimination of the state’s cultivation tax on cannabis, a three-year tax holiday for the cannabis excise tax, and for the Legislature to pass a law requiring local jurisdictions to allow retail commercial cannabis activity.”
And if he needs any ideas on how to go about that he can enlist the aid of those in the know like legendary cannabis attorney and publisher of this blog, Allison Margolin, who had this to say about his egregious and reactive and politically motivated stunt:
“The answer to illegal marijuana is not allowing counties in California to be “dry” as well as federal legalization which will allow for exports which the CA industry needs to survive. As it is now California growers can barely move either their legal or illegal weed because the easy access to commercial cannabis in Oklahoma has disrupted the illegal market as well. Prison and felonization is not the answer.”
Author: Sherri Margolin (Dark Matters)