California voters legalized recreational marijuana in 2016. However, the illegal market is still alive, in part because consumers can avoid paying taxes on their cannabis. Industry experts say the legal market is struggling to compete with the illegal market for other reasons.
Oh yes! We've been saying it for years.
A preponderance of top-line management in the legal business learned their trade as illegal purveyors. Hemp and marijuana have emerged from the ashes of being illegal for over one hundred years. The consequences are a lack of research and development programs, academic studies and a mature management presence. A majority of skilled and auxiliary workers have been recruiting from the illegal marijuana sector and are not equipped to conform to the rigorous regulations or understand the basic principles of cost management and execution. The upshot --- not one Canadian or USA public company has functioned in the last three years with a positive cash flow from operations. Because of the millions of dollars pumped in by investment bankers and the other kind to "shore-up" glaring errors is the only reason they are still in business. A cohesive approach would be to step back, recruit a new generation of workers and build experience from the ground up in a highly regulated environment.
ISSUE REQUIRES SOLUTION:
"Regulators are ambivalent, publicly supporting the value of moving cannabis out of the illicit market and redressing the harms prohibition has done—such as over-incarceration of minorities for minor possession offenses—but they have often proved unwilling to allow enough stores and keep regulatory and tax costs low enough to make the legal market competitive," according to our SPM algorithm.
NOW FOR THE REST OF THE STORY....
California authorities announced they seized more than $1.5 billion worth of illegal marijuana in the fiscal year 2019, or the rough equivalent of the state's legal market for cannabis. More than 953,000 plants were seized from 345 raided grow sites around the state. Authorities arrested 148 people and confiscated 168 weapons under California's Campaign Against Marijuana Planting program. "Illegal cannabis grows are devastating to our communities. Criminals who disregard life, poison our waters, damage our public lands, and weaponize the illegal cannabis black market will be brought to justice," said Attorney General Xavier Becerra.
The value of the seizures was based on the estimated wholesale price of $1,600 per plant. If recreational marijuana was legal in New Jersey, our subsidiary Greenmark Corporation can produce the same product for $275.
A cannabis industry expert said that wholesale costs are doubled for the retail marijuana market, so the state seizures would be worth $3 billion of illegally grown marijuana. California's seizures are "equal to our entire regulated market," said Jerrod Kiloh, president of the United Cannabis Business Association.
Although cannabis has been legalized for use in California, "there is still a large unlicensed black market," said Robert Paoletti, coordinator colonel, California National Guard Counterdrug Task Force. "Our participation works to prevent this illegal market in order to promote a fair marketplace for those growers, producers, and vendors who choose to operate within the system that the voters approved."