Pubdate: Wed, 21 Mar 2018
Source: Fresno Bee, The (CA)
Copyright: 2018 The Fresno Bee
Author: Brad Branan


Three months into the start of California's recreational marijuana
market, industry leaders are voicing concerns that sales are not
meeting projections, and that high taxes, complicated regulations and
a thriving black market are having deleterious effects.

The leaders pressed government officials to make changes during
Tuesday's gathering of an estimated 600 people at the California
Cannabis Industry Association conference at the Sheraton Grand in 

"This is an industry in crisis," said Kristi Knoblich, president of
the association's board and co-founder of Kiva Confections, a
manufacturer of edible cannabis products. "This is me sounding the

Government officials who spoke at the conference said they are
committed to making the regulatory changes needed to help the industry
achieve success. Attendees also heard from state lawmakers who are
trying to make changes to the system, including some who likely would
have been antagonists just a few years ago.

Assemblyman Jim Cooper, D-Elk Grove, worked for three decades in the
Sacramento County Sheriff's Department, where his duties included
undercover narcotics work. On Tuesday, he took aim at, a
website that charges cannabis companies to advertise on its site.

"Black market businesses can advertise on Weedmaps. How fair is that?"
Cooper said, adding that he plans to introduce legislation this
session to address illegal cannabis advertisements.

State Bureau of Cannabis Control Chief Lori Ajax has sent a letter to
Weedmaps asking the company to remove ads from hundreds of cannabis
retailers without a state license, in violation of state law. Weedmaps
responded that the state's laws only apply to license holders, not

Weedmaps was one of two "platinum sponsors" of the conference, and its
logo was displayed on large video screens as conference participants
discussed controversy surrounding the company.

Assemblyman Tom Lackey, R-Palmdale, said another approach to combating
black-market retailers is to lower taxes on legal marijuana. With tax
rates as high as 45 percent in some communities, legal retailers are
struggling to compete with the black market, said Lackey, who
previously worked for the California Highway Patrol for 28 years and
was opposed to medical marijuana.

Legalization is "off to a ragged start," due to black-market sellers
siphoning off customers who don't want to pay high taxes, he said.

A new bill, which Lackey co-sponsored with Rob Bonta, D-Oakland, would
lower the state excise tax on marijuana from 15 to 11 percent for
three years and suspend a separate tax on cannabis

California's robust illegal market makes the state's pot taxes an
important consideration, according to a report released Wednesday by
Arcview Market Research and BDS Analytics.

In the states with legal recreational cannabis sales, Oregon has the
lowest tax rates, followed by California, Colorado and Washington. All
states except for Oregon have state and local taxes on marijuana. In
California, in addition to a 15 percent excise tax, a 9 percent sales
tax is added, along with any other local cannabis taxes.

But other states don't have California's huge black market, which pays
no taxes. "California has the largest and most developed illicit
market in the nation," the report states. "The vast majority of the
13.5 million pounds of cannabis grown in the state annually (according
to California's Department of Food and Agriculture) is destined for
illicit markets, either to be shipped across state lines or sold
in-state illegally."

The ability to sell legal marijuana has been blocked in much of
California because of another feature of the state's system -- local
control. Counties and cities can ban commercial marijuana activity,
and that has been the case in much of the state outside of
California's biggest cities on the coast and in Sacramento.

"The biggest obstacle is at the local level," said Assemblyman Ash
Kalra, D-San Jose. "Moral judgments about this will stop when they see
all the money coming in."

Cooper urged attendees to focus on the business and benefits of legal
cannabis, such as jobs and tax revenue, and to avoid ethical
discussions about the drug, since that debate was settled when voters
approved Proposition 64 in 2016.
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MAP posted-by: Matt