“Curaleaf will exit production and cultivation facilities in California, Colorado and Oregon. While these states have contributed to the growth of Select and other Curaleaf wholesale brands, the company acknowledges the difficult operating environment in these investment states…”
— from a press release from marijuana wholesaler Curaleaf, January 2023.
We don’t know exactly why Colorado voters, in 2012, approved Amendment 64 — making recreational marijuana possession, and retail sales, legal in our state. I imagine many felt, the way I did: that the War on Drugs had jailed millions of basically innocent people, merely for the possession of a relatively harmless, non-addictive alternative to the (more harmful) drug known as alcohol.
But some may have voted for Amendment 64 because they wanted state and local governments, and schools, to have yet another source of tax revenue.
We also don’t know why the Colorado legislature established draconian taxes — about 30% — on the growing and selling of legal cannabis.
Were they trying to discourage the use of cannabis?
Were they greedy for tax money?
We don’t really know. One thing we do know, is that the people actually paying out the 30% tax are consumers who buy legal weed, rather than buying it from illegal growers in Aspen Springs and other rural outlaw outposts. (At a lower price?)
When I was buying marijuana back in the early 1970s in Alaska (where weed was not yet legal, but where possession was decriminalized) the going price was about $20 an ounce (tax-free). The product was low quality, compared to what you can buy now in Colorado. (We accepted the fact that stems and seeds were included.). Based on inflation, that would be about $150 in 2023 dollars. For low quality weed. But honestly, we didn’t know it was low quality.
According to Statista.com, high quality cannabis — in states where it’s legal — vary from $590 per ounce (Washington DC) to $210 in Oregon, with the national average being about $318.
Customers are paying around $241 here in Colorado. I assume those are Denver prices.
There is a reason the name “weed” is applicable. In nature, the plant grows like a weed. In modern America — due to taxes; and requirements to grow it indoors; and bookkeeping; and pruning; and monitoring technologies; and so on — it’s relatively expensive to grow.
According to one local grower, the market potential in Pagosa has dropped off substantially over the past couple of years, as mentioned previously in this editorial series.
His actual word was, “drastically”.
And as also mentioned before, the state of Colorado also has a vested interest in the marijuana industry, because they have been collecting hundreds of millions of dollars in sales taxes and marijuana excise taxes. Taxes can, however, be a double edged sword… as we all know.
Especially, marijuana taxes appear to be a problem in another state that was one of the first to legalize recreational marijuana. California.
In a story by Lester Black, published on SFGate.com on August 30, we learned that the California Attorney General Rob Bonta is concerned that “California’s illegal cannabis industry is booming, with billions of dollars of weed produced at illegal farms and sold at illicit pot stores every year, despite voters legalizing cannabis more than six years ago….”
Currently two out of every three cannabis purchases in California are made in the black market, according to a June 2023 article by Tiffany Devitt on CalMatters.com.
Evidence suggests that disparity is getting worse. Legal sales have been on a two-year slide.
Another symptom of turbulent times is business failures. About 15% of legal cultivators have surrendered their licenses this year; others are letting fields go fallow, unable to fund this year’s harvest.
Three key problems in California. High rents and salaries. High taxes on legal sales. Lack of ‘black market’ enforcement.
Attorney General Bonta stated, in an August press conference, that the state needs to update its regulations and tax code, to reduce the costs for legal businesses… so they can compete against illegal pot sales.
“The barriers to entry are too high. The costs to stay in operation are too high. And we should be lowering taxes, at least temporarily, for our legal cannabis businesses…”
California has a 15% excise tax on legal cannabis products, in addition to a sales tax that starts at 7.25% (but can go higher depending on local sales tax rates.)
Last June, reporter John Schroyer interviewed Jon Levine — CEO of MariMed, one of the more profitable marijuana companies in the U.S. — for GreenMarketReport.com.
Mr. Levine stated:
I do feel that everybody is feeling the effects (of the economic downturn). People aren’t spending as much in their baskets when they go to their store. There’s a lot of price compression going on in every state.
Then there’s the fact that a lot of states have not put in the proper controls. New York is a mess. They’ll never have the proper controls. You’re dealing with the illicit market, and (that will) make that market very, very difficult to deal with.
But that happens everywhere. Our biggest competition isn’t just each other. It’s the illicit market.
I think Missouri is one of the lucky states where they had plenty of growers that the price went up slightly because of the fact that they have adult use and the lowest taxes around. And that’s the reason everybody’s racing over the Illinois border to St. Louis to buy that flower, is for that reason.
The lowest taxes around. Is that a good thing?
Might be.