The $100 Million Taxpayer Subsidy Of California’s Pot Industry

california pot subsidies

By Adam Andrzejewski for RealClearPolicy

When California legalized recreational marijuana in 2016, advocates cheered the progressive policy as a win for civil rights and as a money-maker for the state.

But bureaucrats created so much red tape that businesses in the industry can’t afford to keep up with the expensive regulations without the state’s help.

Now California is bailing out the marijuana industry from the regulations it created.

Growers and sellers are getting $100 million to convert their provisional licenses to permanent ones, as required by the state.

About 82% of marijuana companies have provisional licenses and can’t afford what it takes to convert to permanent ones, Fortune reported. They cite high taxes on legalized marijuana, as well as the difficulty meeting environmental regulations.

One cannabis expert estimated it costs $250,000 to open a regulated dispensary, according to Bloomberg.

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And with the expense of licensing has come an explosion of completely unlicensed — illegal — dealers. A recent estimate has the number of illegal dealers tripling that of licensed ones, Fortune reported.

Municipalities will get the $100 million in state funding and divvy it up among the marijuana sellers. Los Angeles will get about $22 million in funds to hand out.

The Institute on Taxation and Economic Policy estimates California raised $1 billion in taxes from marijuana sales in 2020.

But the Golden State is taking two steps forward and one step back by having such burdensome regulations that it must bail out the industry.

Syndicated with permission from RealClearWire.

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