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California's Legal Weed Is So Heavily Taxed and Regulated That the Black Market Might Survive

"The situation in the market is pretty dire," one major cannabis seller told us.

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Anyone over age 21 in California can now walk into a store and pick up some marijuana. After three months of legalized recreational cannabis sales, how is the industry doing?

To learn more, we tracked one product—the Kiva chocolate bar—up the supply chain, from seed to sale.

What we found was surprising: Cannabis entrepreneurs are anxious about the future of the legal market under California's highly regulated and highly taxed system. Under these conditions, some industry insiders expect the black market will continue to thrive.

"The situation in the market is pretty dire," says Kristi Knoblich Palmer, COO and co-founder of KIVA, which recently had to lay off employees for the first time in its history. "That has everything to do with the cost of cannabis to the end consumer."

Produced by Zach Weissmueller. Camera by Alex Manning and Weissmueller.

"kick, push" by Ryan Little is licensed under a Creative Commons Attribution-ShareAlike license (https://creativecommons.org/licenses/by/4.0/)
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"Soul High" by Ryan Little is licensed under a Creative Commons Attribution-ShareAlike license (https://creativecommons.org/licenses/by/4.0/)
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"Sand Castles" by Ryan Little is licensed under a Creative Commons Attribution-ShareAlike license (https://creativecommons.org/licenses/by/4.0/)
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"Get Up" by Ryan Little is licensed under a Creative Commons Attribution-ShareAlike license (https://creativecommons.org/licenses/by/4.0/)
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