California cannabis businesses struggle to operate as 420 approaches
April 16, 2025
ARE STRUGGLING TO STAY OPEN. HIGH TAXES AND STIFF COMPETITION WITH THE ILLEGAL MARKET HAVE LED TO THE INDUSTRY LEADERS NOW CALLING ON THE STATE TO MAKE CHANGES. KCRA 3’S RYAN CURRY SPOKE WITH THE OWNERS OF SEVERAL STOREFRONTS WHO SAY IF NOTHING HAPPENS, MANY COULD GO OUT OF BUSINESS. A PUNGENT SMELL IN A WHITE CLOUD OF SMOKE, SYNONYMOUS WITH A CULTURE OF PEOPLE PASSIONATE ABOUT SOMETHING THAT USED TO BE A HEAVILY RESTRICTED DRUG. I FEEL LIKE CANNABIS IS LIKE A HEALING PLANT. GOD GAVE US THIS PLANT THIS WEEK IN SAN FRANCISCO. IS SPACEWALK A RESTAURANT WEEK LIKE EVENT? BUT FOR CANNABIS? THROUGHOUT THE WEEK, DIFFERENT DISPENSARIES ARE HOLDING EVENTS TRYING TO GET PEOPLE TO SUPPORT THEIR BUSINESS. IT’S A CHALLENGE TO MYSELF TO BE ABLE TO PROGRAM SEVEN OF THE BEST GROWERS IN THE STATE INTO SEVEN OF THE NICEST LOUNGES FOR SEVEN NIGHTS, AND IT REALLY JUST TOOK OFF. HOWEVER, THIS WEEK COMES AT A DIFFICULT TIME FOR THE INDUSTRY. THE EXCISE TAX ON CANNABIS IS SET TO JUMP TO 19% ON JULY 1ST. MANY BUSINESSES SAY THEY WILL HAVE TO CLOSE IN THE COMING YEARS IF CALIFORNIA DOESN’T LOWER THEIR TAXES. A LOT OF THEM SAY THEY’RE HAVING A HARD TIME KEEPING UP WITH THE ILLEGAL MARKET. TAXES ON LEGAL CANNABIS MAKE THE LEGAL MARKET MORE EXPENSIVE THAN THE ILLICIT MARKET. ELI MELROD IS THE CEO OF SOULFUL CANNABIS, WHICH HAS MULTIPLE LOCATIONS IN NORTHERN CALIFORNIA. WE’RE THE ONLY DISPENSARY IN CALIFORNIA THAT SOURCES 100% SUN GROWN EMERALD TRIANGLE CANNABIS. A LOT OF WORK FOR A BUSINESS BECOMING MORE DIFFICULT TO OPERATE. ACCORDING TO THE STATE’S DEPARTMENT OF CANNABIS CONTROL, 60% OF CANNABIS CONSUMED IS ILLEGAL. TAXES ARE ONE PROBLEM. WHERE THEY CAN SELL IS ANOTHER. MORE THAN HALF OF THE COUNTIES DON’T ALLOW ANY CANNABIS BUSINESSES. AND FOR THE ONES THAT DO, LIKE CONTRA COSTA, FOR EXAMPLE, MAJORITY OF THE CITY STILL BAN THEM. THE TAX ON A JOINT IS GOING TO BE TEN, 20, 50 TIMES HIGHER. THE BUSINESS TAXES AT THE LOCAL LEVEL MIGHT BE 100 OR 500 TIMES HIGHER THAN A GUN SHOP. ACCORDING TO THE SAN FRANCISCO CHRONICLE, MICHIGAN SELLS MORE LEGAL CANNABIS THAN CALIFORNIA. IF THE STATE DOES NOTHING AND THE TAXES GO UP COME JULY, WHAT WOULD THAT DO TO THE CANNABIS BUSINESS? I CAN SAY WITHOUT A DOUBT IT WILL. IT WILL RAISE THE PRICE OF LEGAL CANNABIS, WHICH HE AND OTHERS SAY COULD DRIVE MORE PEOPLE TO THE ILLICIT MARKET AND FORCE LEGAL STORES TO CLOSE. IN SAN FRANCISCO, RYAN CURRY KCRA THREE NEWS. SOME LAWMAKERS HAVE TRIED TO INTRODUCE LEGISLATION TO HELP CANNABIS BUSINESSES. SAN FRANCISCO ASSEMBLYMEMBER MATT HANEY PROPOSED A BILL AT THE END OF MARCH THAT WOULD FREEZE THAT JUL
California cannabis businesses struggle to operate as 420 approaches
Cannabis industry leaders are calling on lawmakers to lower the excise tax on cannabis. Currently, the tax is at 15% but is set to rise to 19% on July 1. Many fear if the taxes aren’t lowered, licensed storefronts and legal growers will have to close their doors.“The taxes on legal cannabis make the legal market more expensive than the illicit market,” said Eli Melrod, the CEO of Solful cannabis. “With inflation and rising prices, people are looking to cut costs. However, they are turning to a product that is not tested, not deemed safe, but is a lot cheaper.”Solful prides itself on obtaining cannabis from small farmers in Mendocino County. “We’re the only dispensary in California that sources 100% sun-grown emerald triangle cannabis,” Melrod said. “We really want to change the buying process and people’s perception of what cannabis is.”However, if his product costs more than something on the black market, he admits it is hard to compete. This week, San Francisco is hosting Space Walk, a restaurant week-like event, but for cannabis. The goal is to try and support different growers and dispensaries around the city. “I said I would challenge myself to program seven of the best growers in the state in seven of the nicest lounges into seven nights and it really just took off,” said David Downs, the organizer and founder of Space Walk. “We are in a platinum age of cannabis. It’s never been more flavorful, it has never been more potent. People are really doing tremendous things and we need to celebrate that.”It comes as many in the industry fear the situation will get a lot worse. If the state sticks to the plan and increases the tax in July, industry leaders say the prices of legal cannabis will only go up – driving more people to buy illegal sellers.”The consumers will have to absorb that cost,” Melrod said. “I can say without a doubt it will raise the price of legal cannabis.”According to the California Department of Cannabis Control, 60% of cannabis consumed in the state is illegal. The San Francisco Chronicle reports Michigan, which has a much lower population than California, sells more legal cannabis. The taxes are one problem, selling locations are another. 54% of cities and counties do not allow any type of cannabis business. “The tax on a joint is going to be 10 to 20 to 50 times higher,” Downs said. “The business taxes at a local level might be 500 times higher than a gun shop.”Assemblymember Matt Haney introduced a bill that would freeze the planned tax hike. That bill has not been brought to the floor yet. Cannabis industry leaders hope it does. “We need something to change,” Melrod said. “I think we would generate more legal sales and thus bringing in more tax revenue if the tax is lowered.”See more coverage of top California stories here | Download our app | Subscribe to our morning newsletter | Find us on YouTube here and subscribe to our channel
Cannabis industry leaders are calling on lawmakers to lower the excise tax on cannabis. Currently, the tax is at 15% but is set to rise to 19% on July 1. Many fear if the taxes aren’t lowered, licensed storefronts and legal growers will have to close their doors.
“The taxes on legal cannabis make the legal market more expensive than the illicit market,” said Eli Melrod, the CEO of Solful cannabis. “With inflation and rising prices, people are looking to cut costs. However, they are turning to a product that is not tested, not deemed safe, but is a lot cheaper.”
Solful prides itself on obtaining cannabis from small farmers in Mendocino County.
“We’re the only dispensary in California that sources 100% sun-grown emerald triangle cannabis,” Melrod said. “We really want to change the buying process and people’s perception of what cannabis is.”
However, if his product costs more than something on the black market, he admits it is hard to compete.
This week, San Francisco is hosting Space Walk, a restaurant week-like event, but for cannabis. The goal is to try and support different growers and dispensaries around the city.
“I said I would challenge myself to program seven of the best growers in the state in seven of the nicest lounges into seven nights and it really just took off,” said David Downs, the organizer and founder of Space Walk. “We are in a platinum age of cannabis. It’s never been more flavorful, it has never been more potent. People are really doing tremendous things and we need to celebrate that.”
It comes as many in the industry fear the situation will get a lot worse. If the state sticks to the plan and increases the tax in July, industry leaders say the prices of legal cannabis will only go up – driving more people to buy illegal sellers.
“The consumers will have to absorb that cost,” Melrod said. “I can say without a doubt it will raise the price of legal cannabis.”
According to the California Department of Cannabis Control, 60% of cannabis consumed in the state is illegal. The San Francisco Chronicle reports Michigan, which has a much lower population than California, sells more legal cannabis.
The taxes are one problem, selling locations are another. 54% of cities and counties do not allow any type of cannabis business.
“The tax on a joint is going to be 10 to 20 to 50 times higher,” Downs said. “The business taxes at a local level might be 500 times higher than a gun shop.”
Assemblymember Matt Haney introduced a bill that would freeze the planned tax hike. That bill has not been brought to the floor yet. Cannabis industry leaders hope it does.
“We need something to change,” Melrod said. “I think we would generate more legal sales and thus bringing in more tax revenue if the tax is lowered.”
See more coverage of top California stories here | Download our app | Subscribe to our morning newsletter | Find us on YouTube here and subscribe to our channel
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