California’s legal weed industry can’t compete with illicit market

Local government opposition, high taxes and competition from unlicensed businesses are complicating the state’s push to build a thriving legal market.

LOS ANGELES — California’s cannabis market is booming nearly five years after voters legalized recreational weed. But there’s a catch: the vast majority of pot sales are still underground.

Rather than make cannabis a Main Street fixture, California’s strict regulations have led most industry operators to close shop, flee the state or sell in the state’s illegal market that approaches $8 billion annually, twice the volume of legal sales.

Local government opposition, high taxes and competition from unlicensed businesses are complicating California’s push to build a thriving legal market. Many of those factors are baked into California law, including rules allowing city leaders to shut out licensed cannabis enterprises. Meanwhile, the state has relaxed penalties against illegal operations in the name of racial justice.

Infighting between industry groups and lobbying dysfunction in Sacramento have stalled potential legislative fixes, with no clear end in sight. The scale of those problems has California’s iconic cannabis industry — the legal side, at least — lagging behind other states that have regulated the market.

“You don’t have a real cannabis industry if the dominant portion of it has no interest in being legal,” said Adam Spiker, executive director of the Southern California Coalition, a cannabis trade association. [Read More @ Politico]