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Writer's pictureHoward Paris

The California Cannabis Deregulation Debacle

Updated: Aug 8, 2022

In November 2016, California voters approved Proposition 64 with the intention of making recreational marijuana legal. Yet today, about 80-90% of the cannabis market operates underground which is to say most cannabis continues to be bought from sellers that don’t abide by the regulations.


Proposition 64 also gave municipalities the authority to ban cannabis stores, regardless of the medical or recreation needs of their citizens. Indeed, despite legalization, most counties and cities continue to forbid the sale of cannabis.


After the voters passed what they believed was legalization, Governor Newsom signed laws creating the Department of Cannabis Control (DCC). The government claimed that this agency would make cannabis purchases safe. However, the legislation also levied taxes on every step of the supply chain: cannabis growing, cannabis selling, and manufacturing of cannabis edibles. The DCC also claimed authority to license retailers, growers, distributors, delivery companies, testing labs and related microbusinesses.


To understand the injustice of this legalization, recall how cannabis came to be illegal. Going back to 1930, Harry Anslinger began a campaign to condemn the use of cannabis. Anslinger developed stories of dubious veracity that suggested that cannabis caused violence and other immoral acts. His stories often contained racist themes: “Reefer makes darkies think they're as good as white men.” In 1937, Congress passed the Marijuana Tax Act which criminalized cannabis.


Thus, those seeking to make cannabis illegal knew that giving Blacks and Hispanics felony records would remove them from the voting rolls. Millions of people ended up being locked up for decades, often for nothing more than possessing small amounts of cannabis. Such laws provide a classic example of the structural racism referred to by Critical Race Theory (CRT). To the extent that White society excluded non-Whites from participating in the legal economy, many non-Whites survived by selling whisky or cannabis. The sale of cannabis by the poor continues to the present day.


In 1996, California voters approved Prop 215 which legalized the medical use of cannabis by patients with a doctor's recommendation. Thus, cannabis moved from fully illegal, to being arguably legal. Police evaded the law by forming task forces with the Federal DEA (Drug Enforcement Administration). Also, police continued to disproportionately arrest non-Whites. Political backlash noted that the Whites that got arrested had more financial resources to fight the charges, and benefitted from sympathetic juries.


In 2011, a court ruled that a local government seeking to regulate weed could be viewed as being complicit in violating federal law. Some towns tried to shut down the dispensaries but saw that operators would simply regroup and start up somewhere else.

The regulations coming after 2016’s legalization set it up so that only companies with a lot of money could even consider setting up shop. Once again, nearly all those who had previously provided cannabis were made fully illegal once more.


Wealthy corporations set up massive growing operations. Four years later, the supply of cannabis has driven the price down from $1200 per pound to $300. Dispensaries pay both state and city taxes have trouble competing with the black market. On the other hand, the black market has also suffered having to evade police and seeing their margins grow thin.

The state receives only a fraction of what it had hoped to get from taxes and is faced with the cruel prospect of harassing the thousands of illegal sellers. Some state-licensed businesses operate both legally and illegally to make enough money.


A few cities sought to make “social justice” licenses available to the traditional sellers, but sellers regard those gestures as too little and too late. Why should they reveal themselves to a hostile government? The process of issuing licenses have seen several scandals where corrupt officials gave licenses to friends, and others where licenses provided cover for importing cannabis from Mexico.


After so-called legalization, the cannabis industry boomed, but for sellers, the price to operate legally was steep and often too complicated. Delays from cities issuing permits forced owners to pay many months of rent on empty shops. The state required operators to log EVERYTHING into a clumsy and useless system called METRC (Marijuana Enforcement Tracking Reporting & Compliance). Many who tried to go legal found the challenges to be overwhelming and went back into the illegal market.


Shops that seek to be legal could find themselves paying an effective tax rate of 70%, partly because cannabis remains illegal at the Federal level so shop owners cannot take tax deductions.


One group, owners of laboratories, undertook a massive lobbying effort in 2016. This campaign generated a slew of wholly absurd requirements for sellers. Under the banner of safety, each batch of cannabis is supposed to be tested for potency, metals, solvents, water, microbes, and pesticides. Never mind that cannabis batches come and go through shops in days while the tests usually take a week. Also never mind that virtually no evidence of ill health had come from people consuming supposedly tainted cannabis. Why? Solvents, pesticides, and metals are not toxic in amounts smoked. The microbes get combusted before they can be inhaled. Potency is irrelevant where people choose how much to consume. Testing should be done, but not at the level the regulations require. It’s just more baggage to exclude traditional sellers, but the lab owners make out.


Sampling cannabis provided another hoop that was readily abused and corrupted. Once flowers are trimmed, who knows what part of the plant they came from, or whether they represent the whole batch? Imagine if these regulations were applied at the same frequency to the wine industry?


Thus, five years after legalization, the cannabis industry is stuck in a hellhole of senseless policies contrived by corrupt state officials and enforced by racist police. It’s a disgusting mess that has been hopelessly mismanaged by Governor Newsom and his minions. The DCC took no notice of the history nor status of cannabis selling. It is likely that this fiasco can only be addressed by another voter proposition once people have had enough.


Cannabis continues to amass scientific proof of efficacy for a broad range of medical conditions. California could have leaned into doing research and producing medicines for the world. Instead, Israel and Canada have taken the lead. Scientists in other countries have proven that cannabis alone or with other drugs shows enormous promise in being able to stop many forms of cancer and to help with dozens of other illnesses. ///



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