California based cannabis growers are finding that the taxes and regulations imposed by the Democrats at state level are pushing small companies out of business.
The state was one of the first to legalise cannabis and as a result the taxes of cannabis earned the state $300 million in revenue.
However, far-reaching regulations have meant that small cannabis businesses are struggling to compete with the larger, industrial scale growers.
There are multiple taxes imposed across the supply chain harming those small growers. Not only does the state impose a tax, but the cities do as well. This can mean in certain regions’ cannabis can be subject to five different taxes.
For comparison, Oregon has just a single sales tax on cannabis of 17%.
Licensing fees, which are renewed annually can cost tens of thousands of dollars. Added to this the state initially announced that they would offer more licences to farmers before backtracking.
All of this has played into the hands of the large cannabis companies. Another unwanted effect is that it has allowed the black market to continue to thrive despite the legalisation within the state.
The Covid-19 pandemic which initially caused a boom in sales has since subsided, production has continued and inflation has begun to set in.
With cannabis being illegal under the federal government laws then California growers are unable to shop across state lines which would be one way to help the industry.
As further nations and island states continue to look at the legalisation process perhaps California is one to be wary of.