With the legalization of cannabis, it was thought that cannabis edibles would be the next best thing. Experts predicted that such industry would thrive to meet the demand for smokeless marijuana, but they have been proven wrong.
The CEO of Harborside in Oakland, Steve DeAngelo, says that an “extinction event” for 75% of the existing edibles industry is happening. This is due to those makers or bakers are in a hostile territory. Cooks are finding it hard to get licenses for their businesses and if they are in a cannabis-friendly city, rents are expensive. There are also new fees and taxes to contend with.
Industry consultant, Sean Donahoe, believes that California is following other states like Colorado where only a few controls the bulk of businesses. What local counties and cities can do to stop this is by making rent cheaper and less taxes.
The medical marijuana approval in California was an ideal scenario for these makers. However, small kitchens ran into problems like packaging, appropriate doses and labelling. These edibles sometimes get into the wrong hands with underage people and out of state shipping.
Local and state regulations control distribution through retail outlets called dispensaries. In 2017, there were around 2,000 but to this day 300 dispensaries are surviving. Cannibis edible products are 40% higher than the black market with the added state, local and excise taxes.
Here is a breakdown of legal cannabis taxes which makes up for 46% of the price:
|State Sales Tax||7.25%|
|State Excise Tax||15%|
|Local Sales Tax||0-4%|
|Local Excise Tax||0-20%|
|TOTAL||22.25% – 46.25%|
Oakland has the highest cannabis tax system in California. It takes 10% of every dollar that makers get. Oakland has 15% state excise tax, 7.25% state sales taxes and other fees.
Other cities and the state are continuing to approve licenses per week even if the industry may not thrive. Some manufacturers are willing to wait until bans are lifted, lower taxes, rents to be cheaper, more retails outlets to open and less stringent regulations.