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Local Marijuana Bans In California Keep Illicit Market Alive And Block Revenue, Study Shows

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Local bans on marijuana businesses in California are helping the illicit market to thrive and are depriving the state and municipalities of tax revenue that could help offset economic losses caused by the coronavirus pandemic, according to a new study.

The report analyzes the financial impact from the 75 percent of cities and counties that have implemented cannabis market bans despite the 2016 statewide vote to legalize the plant for adult use.

“Inconsistencies between different jurisdictions, particularly with tax rates, licensing procedures, and land use regulations” have created a situation in which “the illegal market continues to make up a large majority of the cannabis sales in California,” it concludes.

The analysis shows that while there’s strong demand and potential for revenue, California is far behind other legal states because of the widespread localized prohibitions.

“In benchmarking California’s legal cannabis sales performance against other states that have legalized recreational cannabis sales, the state generally does not fare well,” it says, noting that “California’s per capita taxable cannabis sales of $51.77 in 2019 is less than half the per capita sales in Washington, Oregon, and Colorado.”

Via ADE.

The analysis—which was conducted by the financial consulting firm Applied Development Economics and commissioned by the California Hispanic Chambers of Commerce and Weedmaps (which, by way of full disclosure, is a longtime sponsor of Marijuana Moment)—used three jurisdictions with varying marijuana regulations to underscore the potential for local tax revenue that comes with allowing cannabis businesses. Those areas are Stockton, San Bruno, and unincorporated Sacramento County.

Stockton, which just last year developed a licensing system and established a five percent local tax on marijuana sales, could net anywhere from $824,500 to $3.9 million annually in revenue once it approves enough retailers meet demand.

Via ADE.

San Bruno is “an untapped cannabis market with no existing cannabis retailers operating within the city limits,” the report notes. While the City Council approved a measure to put a proposed 10 percent sales tax on cannabis on the November ballot, it has yet to implement licensing regulations.

Via ADE.

The analysis estimates that, if voters approve the Council-passed initiative and businesses are allowed to operate in the city, “local tax potential for the City of San Bruno ranges from about $235,300 to $1.1 million.”

The unincorporated areas of Sacramento County provide the most restrictive example in the report. While some local jurisdictions, including the city of Sacramento, allow cannabis businesses and impose local taxes, the county itself does not and doesn’t have any plans in the works to establish a licensing system.

Via ADE.

Given the estimated range for demand, analysts said that if the county adopted Sacramento’s four percent tax rate, it stands to generate anywhere from $1.2 million to $5.8 million annually.

“Based on our independent and objective analysis, cannabis businesses show significant market potential for additional legal sales throughout California,” the report concludes. “This would result in substantial increases in tax receipts for state and local governments if the number of retail cannabis establishments expands to meet local demand in those communities that do not currently have legal retail cannabis sales.”

“Because of the state’s underperforming retail cannabis market, the range of potential market support has significant upside. The market demand already exists, with most of the demand currently met through illicit sales channels that generate no tax revenues. As local governments struggle with meeting their budget needs and providing essential services to their residents, legal cannabis sales represent a source of revenue that has remained untapped by most California jurisdictions.”

Julian Canete, CEO of California Hispanic Chambers of Commerce, said in a press release that local bans on marijuana businesses “have hampered opportunities for cannabis entrepreneurs for almost four years since California voters passed Prop 64.”

“In the wake of COVID-19, there’s never been a better time for local governments to embrace the potential for more tax revenue that fund critical services, and we hope this study encourages many to rethink their opposition,” he said.

Read the full study on California’s cannabis market below: 

ADE Cannabis Report by Marijuana Moment on Scribd

New Initiative To Legalize Marijuana Sales Filed In D.C.

Photo courtesy of Philip Steffan.

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.

Kyle Jaeger is Marijuana Moment's Los Angeles-based associate editor. His work has also appeared in High Times, VICE and attn.

Politics

DEA Seeks Contractor Capable Of Burning Four Tons of Marijuana Per Day

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The Drug Enforcement Administration (DEA) recently reached out for help burning “at least” 1,000 pounds of marijuana per hour for eight hours straight.

Every year, DEA seizes millions of marijuana plants and literal tons of raw cannabis, which eventually end up being destroyed. The successful contractor in Arizona would be responsible for burning marijuana and other controlled substances seized as evidence in drug cases “to a point where there are no detectable levels, as measured by standard analytical methods, of byproduct from the destruction process.”

“DEA shall inspect the incinerator to ensure no drug residue remains,” the agency said.

DEA posted the work description earlier this month in what’s called a “sources sought notice,” an initial step before a formal request for proposals is sent.

“This is not a request for proposals and does not obligate the Government to award a contract,” the post says. “The Drug Enforcement Administration (DEA) is conducting market research, and is encouraging all businesses, including small businesses, to respond to this notice.”

An accompanying statement of work gives a behind-the-scenes look at the DEA’s process of destroying seized drugs. Typical boxes weigh between 40 and 60 pounds, for example, but can weigh up to 200 pounds. Contraband might come in on “semi-trucks, tractor trailers, cargo vans, fork lifts, etc.,” the work description says.

“The drugs are usually tightly compressed ‘bricks’ or ‘bales,’” it continues, and are packaged in all sorts of materials: cardboard, wrapping paper, plastic wrap, aluminum foil, packing tape, “duct tape and derivatives,” plastic evidence bags, “grease/oil” and others. Contractors will be expected to burn that stuff, too.

To avoid potential contact highs, there must be ”proper ventilation” and “no smoke buildup” will be allowed. Other mandates include closed-circuit cameras that capture the entire process, which DEA reserves the right to access, as well as background checks and regular drug tests of all personnel.

Armed DEA agents and contractors will be present during scheduled burns.

The work is also very hush-hush, so whoever gets the job shouldn’t expect to regale friends with stories of the latest large-scale federal weed burning sesh.

“The contractor and its personnel shall hold all information obtained under the DEA contract in the strictest confidence,” the work description says. “All information obtained shall be used only for performing this contract and shall not be divulged nor made known in any manner except as necessary to perform this contract.”

The work would start January 1 of next year and the contract would expire in 2026 unless terminated sooner. The deadline to send information for would-be contractors was Friday.

DEA Seized More Marijuana Plants In 2019, But Arrests Fell

Photo courtesy of Chris Wallis // Side Pocket Images

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Harris Will Give Biden ‘Honest’ Input On Legalizing Marijuana And Other Issues As Part Of ‘Deal’

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Democratic vice presidential nominee Kamala Harris says she has a “deal” with Joe Biden to candidly share her perspective on a range of progressive policies he currently opposes, including legalizing marijuana. Separately, she also recently discussed cannabis reform in a private meeting with rapper Killer Mike.

During an interview on 60 Minutes that aired on Sunday, the senator was pressed on marijuana and numerous other issues where she and Biden disagree. In response, while she didn’t specifically commit to proactively advocating for comprehensive cannabis reform, she pledged in general that she would always share her views with the would-be president if the pair are elected next week.

“What I will do—and I promise you this and this is what Joe wants me to do, this was part of our deal—I will always share with him my lived experience as it relates to any issue that we confront,” she said after the interviewer listed cannabis legalization among a handful of issues on which she and Biden depart. “I promised Joe that I will give him that perspective and always be honest with him.”

Asked whether that perspective will be “socialist” and “progressive,” Harris laughed and said “no.”

“It is the perspective of a woman who grew up a black child in America, who was also a prosecutor, who also has a mother who arrived here at the age of 19 from India, who also, you know, likes hip hop,” she said.

The senator’s taste in music also came up during her own 2020 presidential bid, when she said in an interview that she listened to Snoop Dogg and Tupac while smoking marijuana during college despite graduating before those artists released their debut albums.

Music culture has played a key role in this election cycle, and one of the strongest voices for criminal justice reform in the industry is Killer Mike, who worked as a surrogate for Sen. Bernie Sanders (I-VT) when he was running for the Democratic presidential nomination. The artist said he met with Harris on Friday and the two discussed cannabis business opportunities for communities of color.

As she’s done repeatedly since joining Biden’s campaign, Harris also reiterated at a rally in Pontiac, Michigan on Sunday that the administration would pursue marijuana decriminalization and expunging prior cannabis convictions.

She made similar comments during a campaign event in Atlanta last week, stating that the “war on drugs was, by every measure, a failure, and black men were hit the hardest.” That said, while the senator has come to embrace broad cannabis reform, she’s faced criticism over her past opposition to legalization and role in prosecuting people for marijuana offenses as a California prosecutor.

In another interview released last week, Harris said she and Biden “have a commitment to decriminalizing marijuana and expunging the records of people who have been convicted of marijuana offenses.”

“When you look at the awful war on drugs and the disproportionate impact it had on black men and creating then criminal records that have deprived people of access to jobs and housing and basic benefits,” she said.

There’s been some frustration among cannabis reform advocates that Harris has scaled back her reform push since joining the Democratic ticket as Biden’s running mate. During her own run for the presidential nomination, she called for comprehensive marijuana legalization but has in recent weeks focused her comments on the more modest reforms of decriminalization and expungement.

Harris, who is the lead Senate sponsor of a bill to federally deschedule marijuana, said last month that a Biden administration would not be “half-steppin’” cannabis reform or pursuing “incrementalism,” but that’s exactly how advocates would define simple decriminalization.

In any case, the senator has repeatedly discussed cannabis decriminalization on the trail. She similarly said during a vice presidential debate earlier this month that she and Biden “will decriminalize marijuana and we will expunge the records of those who have been convicted of marijuana.”

In addition to those policies, Biden backs modestly rescheduling the drug under federal law, letting states set their own policies and legalizing medical cannabis.

Musician John Legend Endorses Drug Decriminalization Ballot Measure In Oregon

Photo element courtesy of California Attorney General’s Office.

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.
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GOP Tennessee Senator Calls For Medical Marijuana Legalization In New Campaign Ad

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A Tennessee senator touted his support for legalizing medical marijuana in a campaign ad released on Friday.

In the 30-second spot, which has notably high production value for this kind of local race, state Sen. Steve Dickerson (R) talks about both the therapeutic benefits of cannabis and the consequences of broader marijuana criminalization.

“As your state senator, I’ve led the fight to legalize medical marijuana so our veterans and sickest Tennesseans can deal with chronic pain,” he said. “But this same life-saving plant has led to mass incarceration, with nonviolent marijuana possession resulting in lengthy prison sentences.”

“I think that’s wrong. That’s why I’ve been pushing for criminal justice reform,” the senator added.

Dickerson, who sponsored a medical cannabis legalization bill that cleared a Senate committee in March, said in a Q&A published earlier this month that the policy change would be among his top three legislative priorities if he’s reelected.

His Democratic opponent, former Oak Hill Mayor Heidi Campbell, is in favor of “fully legalizing marijuana,” with her campaign site stating that cannabis crimes “disproportionately impact people of color and it’s time to end marijuana prohibition.”

But while Dickerson has earned a reputation as a moderate Republican given his positions on issues like cannabis reform, he’s faced backlash after declining to denounce an independent ad taken out on his behalf that some, including the LGBTQ rights organization Tennessee Equality Project (TEP), called racist.

The ad, which was paid for by Lt. Gov. Randy McNally’s (R) political action committee MCPAC, hits Campbell over her support for a nonprofit organization that is designed to keep young people out of prison, and it frames the group as “radical” and “extremist.” TEP rescinded their endorsement of Dickerson over his refusal to condemn the ad.

In the Tennessee legislature, marijuana reform has yet to pass—but there’s growing recognition that voters are in favor of the policy change. For example, former House Speaker Glen Casada (R) released the results of a constituent survey last year that showed 73 percent of those in his district back medical cannabis legalization.

Another former GOP House speaker, Beth Harwell, highlighted her support for the reform proposal during her unsuccessful bid for governor in 2018, and she referenced President Trump’s stated support for medical marijuana on the campaign trail.

In other Tennessee drug policy politics, a lawmaker in June blocked a resolution to honor murdered teen Ashanti Posey because she was allegedly involved in a low-level cannabis sale the day she was killed.

New York Will Legalize Marijuana ‘Soon’ To Aid Economic Recovery From COVID, Governor Cuomo Says

Photo courtesy of Philip Steffan.

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.
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