California legalized weed 5 years ago, but illicit market still thrives

> Businesses frequently pay an effective tax rate of 70%, in part because they are breaking federal law and therefore aren’t able to take tax deductions, but also because politicians see the industry as a source of tax revenue and set higher rates

Massive taxation on legal dispensaries combined with relatively lax enforcement of illegal distribution is, of course, going to make the legal operations a tough sell.

What I didn’t realize is that some of these illegal dispensaries are apparently operating out in the open, out of actual storefronts according to this article. If enforcement is that lax and the legal route is taxed to an extreme then the outcome isn’t really surprising.

Leave it to California to fuck up an industry with regulation. Seems that leadership wants to have their cake and eat it too.

You can either destroy the illicit market or you can make insane amount of money off regulation, pick one. Destroying the illicit market will require making dispensaries competitive with illicit shops so taxes and other regulations will have to come way way down. California seems to have chosen the latter option of just making a ton of tax revenue off the industry rather than using the industry as a way to crush the illicit market.

No one in the legislature must have taken economics or they must have a "Dan Btlzerian" outlook on business, because all they seem to want to do is milk the industry for everything it's worth.

Pretty soon they are going to have neither, because the solution was crushed under the weight of everyone wanting to have their hand in the pie and take their share. California leadership is still under the delusion that they can just keep taking and taking from this industry but somehow that industry will still stay afloat and thrive.

One problem is that cannabis is still not legal at the federal level. One can't buy legal cannabis product anonymously in CA at any of the legal stores and they keep track of what you buy as far as I know. So, feds can easily get a court order to get all transactions, then charge/arrest all customers. I wanted to try some in pill or tincture form for health reasons, but decided not to because of this. I understand that one needs to prove one's age at the door, not sure why they need to track whether and what one purchased. If I buy alcohol at the store, I don't get asked for ID (I am more than 42 years old) or if when I see peopled asked for ID, the store does not record the name and so forth. Also, think about potential identity theft if all of the front one one's ID is copied...

Back 20 years ago, the line from legalization advocates was, "Legalize it, and tax the hell out of it." But now that it's legal it's just so much easier to grow and sell mass quantities because law enforcement doesn't care anymore. I think the only way around this is to have dedicated tax enforcement agents whose mission it is to track down illicit weed.