As the first year of licensed sales comes to a close, California’s legal market hasn’t performed as state officials and the cannabis industry had hoped. Retailers and growers say they’ve been stunted by complex regulations, high taxes and decisions by most cities to ban cannabis shops. Gov.-elect Gavin Newsom, who played a large role in the legalization of cannabis, will inherit the numerous challenges as legislators hope to send him a raft of bills next year to provide banking for the pot industry, crack down on sales to minors and ease the tax burden on retailers.
“The cannabis industry is being choked by California’s penchant for over-regulation,” said Dale Gieringer, director of California NORML, a pro-legalization group. After voters legalized marijuana two years ago under Proposition 64, state officials estimated in there would be as many as 6,000 cannabis shops licensed in the first few years. But the state Bureau of Cannabis Control has issued just 547 temporary and annual licenses to marijuana retail stores and dispensaries.
State officials also predicted that legal cannabis would eventually bring in up to $1 billion in revenue a year. But with many cities banning pot sales, tax revenue is falling far short of estimates. Based on taxes collected since Jan. 1, the state is expected to bring in $471 million in revenue this fiscal year — much less than the $630 million projected in Gov. Jerry Brown’s budget. California has also issued fewer cultivation licenses than expected in the first year of legalization, with about 2,160 growers registered with the state; an estimated 50,000 commercial cannabis cultivation operations existed before Proposition 64, according to the California Growers Assn. Some have given up growing pot, but many others are continuing to operate illegally.
Van Nuys Neighborhood Council President George Thomas said he had received about a dozen complaints in the last year from residents living near pot stores who were concerned about loitering, the smell of marijuana smoke and other issues. Thomas, who is the publisher of the Van Nuys News Press and is an LAPD volunteer, passes complaints on to police officers. Industry leaders and activists said they knew it would be a slow process to establish a strong legal market, noting other states with legal pot, including Colorado, Washington and Oregon, also faced growing pains and problems along the way.
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