California's government is wiping out its pot-growers
When California made pot legal, the theory was that pot had become such a normalized part of California culture that it should be treated like alcohol: adults should be able to buy and use it legally, subject to restrictions. However, California also decided to turn pot into a profit center...for California. Therefore, it imposes a cultivation tax on growers as well as a 15% excise tax rate on consumers for any legal pot purchases. California also controls the allowed mark-up rate, which stands at 80%. With the state having imposed these stringent price controls on legal marijuana, is it any surprise that pot-growers are going broke?
The Associated Press reported that the big companies are very worried about their continued viability:
Leading California cannabis companies warned Gov. Gavin Newsom on Friday that the state's legal 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 need for more retail outlets is a local issue, since local governments have the right to refuse dispensaries, and many have. According to the same article, up to two thirds of California cities don't want marijuana dispensaries in their communities.
Image: Marijuana. Piqsels.
The growers, however, know what the real problem is, and that's government interference with the free market:
The current system "is rigged for all to fail," they [the growers] wrote.
"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."
California has created one more problem for the retailers, which is the state's abandonment of anti-crime policies. Thanks to laws making thefts under $950 mere misdemeanors and Soros-funded prosecutors who will not prosecute, legal marijuana dispensaries are being robbed blind. In Oakland, California, a dispensary owner bemoaned the fact that he ever went legal:
The owner of a cannabis dispensary in Oakland, California says, "I was safer selling weed on the streets of Oakland than I am selling it legally" in the Democrat-run city.— RNC Research (@RNCResearch) December 6, 2021
"That's a problem." pic.twitter.com/fl8MumW27N
Separate from the morals of making marijuana legal (given that it seems to correlate with serious crime), it could have been a huge moneymaker in California. Instead, California killed the goose that could have laid those golden pot eggs. Between excessive taxing (far in excess of the Laffer curve's recommendations) and the breakdown of law and order, legal pot is as good as dead in the state.
For myriad reasons, I'm no fan of pot, which I consider a more dangerous drug than many will acknowledge. However, I really enjoyed this particular news report since it so perfectly illustrates how government interference warps and destroys the marketplace.
Multiply this same story by applying it to all the other goods and services in America that the government insists on taxing and micromanaging, and you'll realize that when leftists complain about capitalism, they're off by a mile. We don't have capitalism in America. We have a mostly managed economy — indeed, since COVID came along, in certain sectors, it's a completely managed economy — and it's destroying America penny by penny and dollar by dollar.
Hat tip: PJ Media.
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