California Wants To Throw $100 Million at Its Mismanaged Retail Marijuana Sector

Lawmakers want to pay cities to help cannabis businesses navigate the state’s oppressive bureaucracy.


California's nascent legal recreational marijuana industry is so heavily taxed and regulated that the black market still dominates. It's so burdensome to try to get conventional permission to grow and sell marijuana the "legal" way that thousands of dispensaries operate without proper licenses. Government officials have been attempting to crack down on the problem and force them to close their doors.

On Monday California lawmakers attempted to address this problem in a very California way: Assembly members authorized a $100 million subsidy to help potential marijuana vendors get properly licensed.

As the Los Angeles Times explains, the subsidy isn't going to the dispensaries or growers themselves—not that it should. The $100 million is instead going to local government agencies and cities so they can "hire experts and staff to assist businesses in completing the environmental studies and transitioning the licenses."

California's environmental regulations, most specifically the California Environmental Quality Act (CEQA), make it extremely expensive (and sometimes even impossible) to build anything new or improve anything in the state. CEQA requires businesses, entrepreneurs, and developers to pay for extensive environmental impact studies. It also permits pretty much anybody to file suit to try to stop construction using any sort of claim of potential environmental harm, no matter how tenuous. It is being used by opponents of marijuana operations (typically neighbors who don't want them around) to try to block cannabis operations.

In order to give marijuana dispensaries and growers time to arrange these complicated studies, the state launched a provisional licensing system after recreational marijuana was made legal in California in 2016. Five years later, 82 percent of marijuana dispensaries in the state are still operating with just the provisional licenses, according to the governor's office.

Rather than confront the regulations that make it impossible for cannabis entrepreneurs to comply with state law, lawmakers are essentially rewarding bad governance. Jerred Kiloh, president of the United Cannabis Business Association tells the Times that even that might not be enough, because cities have been slow to organize their own local cannabis policies. That's exactly what happened in Los Angeles, where one of the major reasons the city had so many unlicensed dispensaries was because the city's own bureaucracy could not get its act together. Two years after marijuana legalization, the city still had not been able to actually roll out business licenses to new dispensaries.

Los Angeles will get $22 million of this new state funding, essentially a financial reward for its bureaucratic failures.

Gov. Gavin Newsom also wants to add a six-month extension to the compliance deadlines for full licensing. This is being resisted by a coalition of environmental organizations, including the Sierra Club.

Environmentalists have been complaining about the potential impact of large marijuana grow operations, particularly in matters like pollution and water and energy consumption. The resistance here is comically misguided. A piece from the Sierra Club from 2017 notes the massive scope and impacts of illegal grow operations and drug cartel operations on public lands as part of a call for tight regulations of the legal industry.

But those massive illegal grow operations are still happening because of how difficult California and CEQA make it to operate a legal cannabis business. This is much, much worse for the environment than the prospect of the state being more flexible on environmental regulations for the benefit of those who are actually trying to follow the rules. After all, the drug cartels don't care about restrictions on pesticide use.

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  1. If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it.

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    1. Wait a sec — what happened to “paint it”?

  2. The cure for government mismanagement is always more government.

  3. California weed operators are making money, mostly. By ignoring regulations and exporting what they can. The big winners are the compliance software companies and associated consultants, and no one else.

    1. The big winners are the compliance software companies and associated consultants, and no one else.

      I thought the big winner were the number of young, healthy men who no longer had a mysterious sharp rise in glaucoma after it was ‘de-medicalized’.

      1. Californians have not had to do that since the early 00’s. When I had to get a California medical card to be on site to consult for a cannabis processor, I used an app which arranged a 30 second video call with a doctor, who then emailed me my medical card. All done in about 15 minutes and some insignificant cost. I think I said I had trouble sleeping occasionally. Good enough!

        1. Weren’t you the one crying about not getting a PPP loan just last year.

          1. So? You are the one who was claiming PPP was awesome because it was Trump’s idea, and when I said what a pile of shit the process was, you accused me of parroting a vox headline. Lol.

            I eventually got my PPP grant. Thanks for asking.

  4. The California government can fuck up having a profitable legal pot industry, classic.

  5. “Five years later, 82 percent of marijuana dispensaries in the state are still operating with just the provisional licenses”

    Not surprising Cali can’t do anything right except throw more money at the problem. Democrats are corrupt assholes.

    1. I agree with you, but allow me to add some perspective.

      If it wasn’t for democrats, people would still be going to jail for weed.

      1. Really? Didn’t the weed laws take off during FDR’s reign?

        1. Pot was made illegal through the marihuana tax act, but enforcement was spotty and weed wasn’t very popular with the mainstream yet. Nixon’s administration is most frequently cited as the beginning of the war on drugs. Also blue states have, by far and away, led the push for medical/recreational pot at the state levels.

          1. Prior to the Nixon administration the general opinion was the feds could not “ban” anything. So they would require a tax stamp like liquor, then never have any stamps so it was all untaxed contraband.

        2. From

          Increased restrictions and labeling of cannabis as a poison began in many states from 1906 onward, and outright prohibitions began in the 1920s. By the mid-1930s cannabis was regulated as a drug in every state, including 35 states that adopted the Uniform State Narcotic Drug Act. The first national regulation was the Marihuana Tax Act of 1937.

          I’m not going to investigate every single state and when they made it illegal and who made up the legislature and who was governor. But see that “mid-1930s” and “1937”. Democrats, buddy boy, Democrats.

          1. Facts aren’t his strong suit. I would link him a map of legalization, but he’d ignore that as well.

          2. So what? Bringing up 100 year old history to try to own the libs? Marijuana was opposed by politicians of both parties. The drug war began in earnest by Nixon. Now democrats are undoing the drug war. If you want to get a “both sides” out of this, then ok, I’ll grant you one. But the point remains, without democrats, weed would still be illegal.

            Fact is, the democrats are the ones taking steps to end the drug war. Republicans are just now starting to follow along.

  6. This is a good example of how government creates the problem, then tries to be the solution.

  7. $100m buys a lot of wholesale weed.

  8. Most people I know in CA who smoke still buy from a dealer. Why screw with a relationship you’ve had for years.

    1. I don’t know anyone who buys from a store. All friends with friends. Hard to even call them dealers.

  9. Oh just do whatever you want already. Been doing it anyway.

    I can’t even if I wanted to because of work but go ahead.

    This idea that you could have medical, then legal taxed, stamped, approved by all local, state, and federal authorities, lab tested, environmentally sound and regulated is not working. And the resulting revenue will go to fund the schools. Wait, so getting stoned is going to benefit the children? Things sure have changed since I was in college.

    Just have no laws about it at all.

  10. Another $100 Million bucks? Seems like those laws are working out just as they’d hoped. More please.

  11. California is beyond parody at this point.

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