
One year into legal pot sales California doesn’t have expected bustling industry - petethomas
https://www.latimes.com/politics/la-pol-ca-marijuana-year-anniversary-review-20181227-story.html
======
aphextron
It all comes down to local control of licensing. To even operate a 100% mobile
business, you have to be licensed out of a specific city. This involves all
the associated cronyism, NIMBYism, and the like which goes along with local
politics, and grinds the whole system to a halt. We need to adopt a statewide
system like Oregon or there will be no room for smaller distributors left and
we will be stuck with monopolized pricing.

~~~
wpietri
I'm personally fine with local control, and despite the negative tone of this
article, it all sounds pretty normal to me.

I live in SF, where there are a variety of shops. The ones I walk by all seem
clean, orderly, and well run. Certainly more so than some liquor stores I can
think of. So I'm happy to have them as neighbors. That said, I understand why
other cities would have been more reluctant to license. Not everybody needs or
wants to be a pioneer.

If we're still having the same problems 5 years out, I'll be more concerned.
But personally, I'm a big fan of subsidiarity, the principle that decisions
should be made as low down in the power structure as possible. [1] That
different people are deciding differently right now is how we'll learn the
best ways to do it. There's no urgent problem here that requires a centralized
solution.

[1]
[https://en.wikipedia.org/wiki/Subsidiarity](https://en.wikipedia.org/wiki/Subsidiarity)

~~~
trhway
[IANAL] if my city and all the others around prohibit such stores it is de-
facto equivalent to Prohibition in that area while the state level amendment
granted that right to all the people in the state, and no local government has
the power to exclude it own particular local area from the amendment.

The same principle as with for example right to vote with no voting place in N
(for sufficiently large N) miles radius.

~~~
shams93
Yeah ultimately you're being stripped of your state given rights by a locality
run by cronies where it takes millions jus to win a seat on the local board of
supervisors. Even though we do have ballot initiatives, a non-democratic,
corrupt local process can ultimately strip you basically of all your rights.
This also impacts criminalizing poverty by local governments where basically
being low income and being there is a crime.

~~~
mark212
The City of San Diego is the second largest city in California and the eight
largest in the United States. For the latest election cycle the City Council
fundraising was in the low $100,000 — hardly “millions.”

I think the total across all races in the entire county (school boards, ballot
measures, multiple city councils, water districts, everything) was about $33
million for all candidates. SD County is so big that if it were a state it
would be about 20th.

See for example — [https://www.kpbs.org/news/2018/aug/10/latest-fundraising-
num...](https://www.kpbs.org/news/2018/aug/10/latest-fundraising-numbers-san-
diego-city-council-/)

~~~
shanghaiaway
So at less than an programmer salary, what you're saying is that there's ample
opportunity for enterprising software artists to take over and automate the
whole thing.

~~~
mark212
Have to take a pay cut though because council members only get paid $75,000
currently though it’s set to rise significantly by 2020.

[https://www.sandiegouniontribune.com/news/politics/sd-me-
san...](https://www.sandiegouniontribune.com/news/politics/sd-me-sandiego-
measures-20181119-story.html)

------
0x4d464d48
Maybe this article overstated things and someone will clear it up in the
comments but that was painful to read.

I live in Vancouver and weed's been officially legal throughout the Canada for
several weeks now. It's still relatively new but nothing noticeable has
changed aside from fewer people discussing such a frivilous and previously
mishandled issue. It's not perfect but far, far, far better than strict
prohibition with draconian sentencing laws.

What bothers me the most about this story is how marijuana is supposedly
'legal' yet some locals seem Hell-bent on treating it like an illegal and
necessarily dangerous. Instead of vocferiously refusing shops to open in a
municipality you'd think the free market would be enough to determine where
there's not enough demand for a product.

I guess if some people prefer being judgemental and pious to actually getting
a handle on social issues that's their prerogative. It's a frustrating
position to reason against, in fact that almost never enters the equation, but
it sure seems to resonate with a lot of people.

~~~
brianwawok
> What bothers me the most about this story is how marijuana is supposedly
> 'legal' yet some locals seem Hell-bent on treating it like an illegal and
> necessarily dangerous.

It is still illegal at the federal level. There is nothing that stops the
federal US government from throwing someone in jail for growing / transporting
/ using / processing payment for marijuana.

I cannot think of anything else that is illegal at the federal but legal at
the state level, and has weird hand wavy aspects in front of it.

~~~
0x4d464d48
"There is nothing that stops the federal US government from throwing someone
in jail for growing / transporting / using / processing payment for
marijuana."

I always wondered about that. Has there been any chatter about someone trying
to get a federal court to nullify the law? I have no idea how that can work.

~~~
jcranmer
> Has there been any chatter about someone trying to get a federal court to
> nullify the law? I have no idea how that can work.

The US has signed up to a treaty that requires us to treat marijuana as an
illegal controlled substance. That requires an explicit act of Congress to
abrogate, and no court is going to find otherwise.

~~~
solidsnack9000
Which treaty is that?

~~~
barry-cotter
[https://en.wikipedia.org/wiki/Single_Convention_on_Narcotic_...](https://en.wikipedia.org/wiki/Single_Convention_on_Narcotic_Drugs)

This was the first result for both “drugs treaty” and “Narcotics treaty”.

~~~
fromthestart
That page doesn't mention marijuana. I don't think marijuana is classified as
a narcotic, despite the vagueness of the definition.

~~~
jcranmer
Cannabis is explicitly listed as a Schedule I drug on that page.

------
itslennysfault
Probably because it's been "legal" in CA for years. The "medical" cannabis was
a joke. There were people on the beaches holding signs "$50 medical cannabis
card". Being legal recreationally didn't really make it any more accessible.
Anyone that wanted a medical card could get one in a few minutes.

~~~
jaxn
Except that you had to have a California drivers license. Marijuana tourism
seems to be a big thing in CO.

~~~
scythe
You didn't need a CA license, just an address. I actually got my card the day
after I moved in to my apartment. (In my defense, I have scoliosis.)

------
KingMachiavelli
For perspective Colorado has 549 retail establishments and 574 medical
establishments (although many overlap) while having ~3/20 the population of
California. While obviously Colorado has had retail cannabis since 2012/13,
both states have areas strongly for and strongly against legalization.

Considering that the cities that do allow rec cannabis include Los Angeles,
Oakland, San Francisco and San Diego, the number of retail establishments
seems very low even if they were limited to only these cities. Whats
interesting is that California's licensing is done through their Food and
Agriculture Department while Colorado's is done through the Department of
Revenue.

~~~
jngreenlee
Reporter from CO here. I think this is the crux of the matter. If the points
about a strong underground market in the article are true, it's (IMO) due to a
weakened attempt at decriminalization. Very much like bittorrents before
netflix/prime were widely available with large catalogs.

Here in Sunny CO, the prop was a _Constitutional Amendment_ , guaranteeing the
right of each state citizen to grow and possess their own Marijuana, which
lead to sales. -Only two cities (Colorado Springs and a mountain town IDK)-
created local exemptions against retail sales. They are now suffering with
badly damaged roads and limited tax revenues to fix them, compared to cities
right next door that capture all the sales.

Hampered decriminalization does not rid us of the black market. The [THC]
black market is _gone_ in CO because who needs it? Questionable products,
limited availability, difficult logistics...no, you go to the local store and
five minutes later can be higher than 5280'.

EDIT: As CP says, there were more than two cities banning sales. Actually a
lot more than I knew. I'll stand by my conclusion though. The full list is
here:
[http://webcache.googleusercontent.com/search?q=cache:11yRzRk...](http://webcache.googleusercontent.com/search?q=cache:11yRzRkVAJgJ:www.cml.org/rmj-
action-visual/+&cd=1&hl=en&ct=clnk&gl=us)

~~~
briandear
Bad roads have nothing to do with pot taxes, it has everything to do with
local priorities.

~~~
jngreenlee
It does have _something_ to do with it, at least in the reflective case where
surplus $$ allows street repair projects (among other things)

------
cbanek
The other factor not talked about is that in general the prices seem to be
going down due to a lot of supply (both on the retail/licensed market, and the
grey/black market). About ten years ago, a really good pound (in bulk) could
go for $3k-$4k to a dispensary. Now the high end seems to have fallen out and
you're maybe lucky to get half of that. I think a lot of people ran their
business plan numbers where they were, but now that there's a lot more supply,
just the raw numbers are going down. There's also a lot more low quality
product on the market, which pushes down prices on higher quality things
slowly. And yes, the licensing, taxes, and testing are just insult to injury
on top of that.

Overall I think it's a good thing though. Since real medical patients never
get their pot on medical insurance, the reduction in cost really helps
consumers.

Source: anecdotal data from friends that were in the industry, and prices at
Harborside back in "the day."

~~~
treis
>could go for $3k-$4k to a dispensary. Now the high end seems to have fallen
out and you're maybe lucky to get half of that.

For comparison, bulk price of tobacco is a few bucks a pound. Admittedly I am
not an expert in marijuana vs tobacco cultivation, but I doubt it's 1,000
times more expensive. Ultimately, the problem with profiting in a legal
marijuana industry is that people simply don't smoke that much pot.

Say that there's 260 million adults in the US and they all smoke 1 joint per
day. Assuming:

1 joint = 1 g of marijuana 1 lb = 454g 1 acre can yield 600 lbs of marijuana 1
farm is 1000 acres

If you do the math, that means we need roughly 350 farms worth of marijuana.
Or in terms of acreage, roughly 0.04% of all the acreage in the U.S. under
cultivation. In other words, even if we assume a ridiculous level of smoking
there's simply not a huge demand for pot. Using more realistic amounts, a
handful of large farms could produce all the marijuana consumed in the
country.

~~~
sda2
Consider that a lot of mass-produced flower is used for production of
concentrates. The yield weight of cannabis extracts might be 10-20% of plant
matter input.

------
dgzl
> Retailers and growers say they’ve been stunted by complex regulations, high
> taxes

I can't say I'm surprised. As someone who grew up on the Oregon border of
California on i5, locals here complain about California's influence on the
local economy and politics. (E.g. buying expensive land, driving taxes up)

However in Oregon, I believe our problem is with oversaturation of the market.
From what I understand (not rehearsed in the subject), we literally have to
give the stuff away because there's so much. For anyone who knows/cares, it's
not unheard of for places to sell quality marijuana for as low as $48/ounce,
which is _very_ cheap.

~~~
verbify
> it's not unheard of for places to sell quality marijuana for as low as
> $48/ounce, which is very cheap

When I look at other dried herbs on amazon, they're much cheaper. E.g. thyme
is about $10 for 12 ounces, oregano is $13 for 5 ounces.

Weed obviously has higher taxes, more regulation and I presume a smaller
market (most people consume culinary herbs as part of their diet, not
everybody consumes weed). But I'd expect the price to come down once the
regulations disappear.

~~~
ficklepickle
First off, marijuana is a flower, not an herb.

Second off, much work goes into developing and stabilising a strain.

Thirdly, high quality MJ is grown indoors, with artificial lighting.

Fourthly, it requires a curing process.

~~~
MisterOctober
To clarify a few hort points : flowers are part of the herb and are treated /
sold as herbs in the herb trade. A few common examples : Chamomile, Calendula,
rose [R. gallica]

Generally, all herbs require curing [e.g., fan-driven air drying at a specific
temperature] if not sold fresh; in addition, the work of developing a cultivar
or strain is similar for a great many trade herbs that are farmed as opposed
to gathered in the wild [e.g., the numerous types of basil, F1 hybrids of
parsley, valerian cultivars of varying potency, etc etc]

~~~
pacaro
The canonical “most expensive” spice by weight is saffron, which seems to
retail at between $30 and $300 an ounce depending on quality.

FWIW saffron is the dried stigma of the saffron crocus _crocus sativa_ so only
a small part of the flower

------
Animats
The farming side is even funnier. The old-line potheads who are used to
hiding, high margins, and inefficient farming are being pushed out by Central
Valley farmers who look at it as just another cash crop.

~~~
MisterOctober
Fact. What used to be junkyards and chop shops in South Phoenix [AZ] is now
filled with state-of-the-art indoor horticultural installations producing this
stuff at an industrial scale.

------
Tsubasachan
One of the most hilariously stupid arguments against legalisation of drugs is
that it makes everyone into a junkie.

Fact is most people don't do drugs, even if you can buy it in the supermarket.

~~~
bdhess
I suppose you’re excluding alcohol from that pronouncement?

~~~
xoa
Your question really made me curious so I looked it up, the NIH keeps
extensive records about this sort of thing. This is America only of course,
which looks to be in the top third or so worldwide based on the WHO lists
("Western" countries or those with colonization history there and Russia seem
to be higher then southern Asian and African countries in general). But in
America while a majority use it, it's still lower then I actually expected
digging into the definitions. In the surveys apparently 56% of Americans
reported consuming alcohol, any whatsoever, in the previous month, 70% in the
previous year, and 86% tried it at some point in their lifetimes.

But it's hard to see "tried once in their life" or even "a few times a year"
as really falling in an equivalent "junkie" category, so I looked for "heavy
drinking" which they defined as "4-5 or more drinks in 2 hours" a few days in
a month, where a "drink" is a standardized measurement of ~14 grams of pure
alcohol, equivalent to a single 12 oz 5% beer = 5 oz of 12% wine = 1.5 oz of
40% spirits (etc, whatever the percentage is). Just 7% of Americans reported
heavy drinking in the previous month.

Alcohol is regulated and taxed, but even so beer & wine at least is pretty
trivial for adults to legally acquire in most of the country and relatively
cheap spirits (like very low quality vodka) as well. I don't at all want to
understate the harm of alcohol abuse, it's very real (and of course can extend
beyond drinkers themselves due to their actions). Even so it seems like "make
everyone into a junkie" would not be borne out by legalized alcohol. Based on
popular culture it's easy to assume drinking is more prevalent to a higher
degree then it is, at least personally I would not have guessed that heavy
drinking was only single digit percentages here.

It looks like, as in other areas, there is a strongly non-linear curve
function in the population where relatively small percentages form an
inordinate part of consumption. If that's the case for marijuana as well then
it'd suggest we could get far more efficient harm reduction by general
legalization focusing limited resources on that smaller slice?

------
justizin
California has had the world's leading cannabis industry for decades, we're
just now paying 38% tax.

~~~
Scoundreller
38% tax when sold legally in the local market. Black-market local sales and
exports still don’t raise much tax revenue.

~~~
phil248
The total tax amount in San Francisco is about 25%, nowhere close to 38%.
Where did you get that number?

~~~
Scoundreller
> Montes, who received his city and state licenses in January, says his
> business faces a 15% state excise tax, a 10% recreational marijuana tax by
> the city of Los Angeles and 9.5% in sales tax by the county and state — a
> markup of more than 34%.

------
RcouF1uZ4gsC
Another big issue might be the financial industry. Marijuana is still illegal
at the Federal level so banks might be reticent to get involved with providing
loans or services to these businesses. Without access to credit and banking
services, a lot of people who might otherwise go into business, won't.

~~~
chiph
A former coworker's brother-in-law ran into this. He was a finance officer and
got laid-off back during the Great Recession. He found a position as the CFO
of a dispensary, and one of the first problems he had to address was employees
doing cash pickups from the stores using their personal cars. So there were
people moving $20k+ daily in their Toyotas (not especially safe!)

So he called some of the armored car firms to inquire about hiring them, and
they all turned him down flat because they didn't want the chance of his cash
getting intermingled with that of Wells Fargo, etc. What he did was set up a
wholly-owned subsidiary to do the transport, buying a couple of armored cars
to move both the money and the product.

------
dclaw
Yeah, well that's what happens when you let local cities/counties shit all
over it, and have the laws/regulations written by the alcohol and tobacco
lobbies.

------
sonnyblarney
The market was already functioning - now with taxes, regulations, overhead ...
who wants to have to find a new supplier and pay for all of that?

There may be real competition between the black market and over the counter
market that will play out, particularly if the former networks are already
well established.

The regulations and controls on advertising are fairly strong here, for
'vaping' in Quebec for example, windows have to be covered, and there can
hardly be any wording on the signage. No advertising, no way to get the word
out.

Now - for a very heavily established industry, with a very addictive product
like smoking ... they can still thrive.

But for a relatively new and established industry, we'll be able to see just
how powerful advertising, branding, sponsorships really are in terms of
influencing behaviour.

------
m3kw9
It ain’t taking off because is still quite tabu to smoke that stuff. You won’t
really see that at a family party unlike alcohol. The main reason is because
that shit affects children when you puff it out and stink it up for people
that doesn’t want it.

------
purplezooey
Yet another thing the local, baby-boomer, middle aged home owning people bring
us. Voting down all development. Banning cannabis shops. Prop 13. They vote in
large percentages and have shaped the Bay area in a big way.

~~~
masonic
Nobody under the age of 58.5 can possibly have voted for Prop 13. Few below 70
would have had any incentive to.

------
simplecomplex
Marijuana policy is the epitome of broken American politics. Obsession with
money and morality, racism and ignorance driving policy, a tiny minority out-
of-touch with what they’re regulating writing the legislation, business
regulations that are designed for business not people, and on and on.

------
newnewpdro
My personal issue with how legal pot has played out is I have no interest in
becoming a patron of these lifestyle shops for a variety of reasons.

I also don't want my ID to be scanned for buying something still federally
illegal.

If I could occasionally buy marijuana products at the grocery store as part of
my normal shopping, no different than my occasional purchase of whiskey or
wine, then I would have at least bought legal weed a few times since it was
legalized here in CA. Even if it were relatively expensive.

Instead, today I'm far more likely to either not acquire any marijuana
products at all (it's been years already) or buy some from the guy on the
street who might also have shrooms.

~~~
swebs
You could just have a friend get it for you from the store. Who the hell knows
what's in the stuff off the street corner or who's blood had to be spilled to
get it to you.

------
johan_larson
I'm guessing investors are leery of funding expansion in an industry that is
still illegal under federal law. The businesses themselves also have all sorts
of trouble because banks don't want to deal with them.

------
DigiMortality
The government of California is extremely inefficient, no surprises. Glad I
left CA

I'm in Colorado now (I'm from NY originally)

CO did it right, but like someone said above - CO Springs was against it
(pretty conservative, military area)and are now suffering the consequences of
not doing so, worse roads, worse everything...

And hey, I'm pretty conservative myself and I live in Boulder. Boulder is
wrong about other things though, like thinking they can ban AR-15's

~~~
fetus8
I hate to break it to you, but Colorado Springs has been worse in most ways,
roads and otherwise, long before recreational/medical weed was legalized.
They've had issues with crime and meth, for a very long time as well.

~~~
FlyMoreRockets
From what I understand, Colorado Springs has tried to make an industry out of
churches. Unfortunately for the town, churches don't pay taxes for things like
roads.

------
mirimir
Well, for the most part, that's because "legal pot sales California" aren't
actually legal.

------
ryanmercer
Well, when you can't deposit your money into a bank without fear of it being
seized by the federal government.

Can't take credit cards.

Can't take debit cards.

Can get loans from financial institutions to expand your business.

Have trouble finding landlords willing to lease to you because they don't want
their doors breached by federal agents.

------
mlindner
Miraculously over-regulation causes supply shortages. I'm surprised this is
even news.

------
obilgic
Author, have you seen MedMen?

------
MisterBastahrd
Turns out that buying from your local dealer is cheaper than going to someone
who had to jump through regulatory hoops. who knew?

~~~
donarb
You mean the local dealer who doesn’t have any at the moment, doesn’t answer
his phone, can’t get the good shit like he had last time and this batch costs
more but weighs less?

Like 7-11, you’re paying for convenience and being able to get the exact same
potent batch for the same price every time.

------
DoofusOfDeath
Honest question: Why do newspapers, NPR, etc. often refer to pot possession /
sales as being legal in California and some other states, when they're clearly
illegal under federal law?

There are numerous other behaviors that IIUC are illegal under U.S. federal
law but are not proscribed by California law, including: aircraft hijacking,
carjacking, credit card fraud, and possession of destructive devices such as
missiles and poison-gas weapons.

And yet I don't hear those same news sources referring to carjacking, etc. as
being legal in California.

The cynic in my suspects that those news organizations are intentionally
choosing language to push their own agendas, but maybe I'm totally missing
something here.

~~~
fjp
Because California passed bills clearly delineating how, where, and in what
quantities pot growing and selling can be done. The state issues licenses.

In America, this is federalism at work. States can choose to do things that
the federal government explicitly does not allow, and states can choose to not
do things that the federal government explicitly tells it to do. When there is
enough of a conflict, it gets resolved by the courts. In this case, the
federal government has just chosen not to dedicate resources to cracking down
on California's pot industry. California still welcomes the DEA's efforts in
CA to crack down on other things, such as pot coming in from Mexico and harder
drugs being trafficked.

~~~
masonic

      States can choose to do things that the federal government explicitly does not allow
    

Not true at all. Take slavery, for one obvious example.

~~~
salawat
Parent post is correct. GP is incorrect. Constitutional Federal law trumps
State law. See the Supremacy Clause.

It's why actions at the Federal level normatively should be thought through
and constructed extremely well. It obliges everyone to play by those rules
once passed. In reality however, realpolitik tends to limit Federal reach.

~~~
fjp
Yeah, I meant Constitutional law trumps state law but states can also decide
to keep doing it, betting that the federal government won't bother to enforce.

