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California’s Pot Fiasco Was Painfully Foreseeable

Mirriam-Webster’s online dictionary defines foreseeable as follows: “being such as may be reasonably anticipated.”

Make no mistake, the seven (7) straight quarters of fiscal loss and utter implosion of California’s legal cannabis industry was long anticipated by the state’s operators and advocates.

The whopping 18.8% fiscal loss in Q1 2023, the cascading major operator failures like Herbl and recently reported Grassdoor, the massive job losses, these were all not just foreseeable; industry operators threatened this exact result for years. While the industry pleaded for urgent substantive changes, government leaders busied themselves with refining the font size on package labeling and the like.

Truthfully, while the legal cannabis industry is failing, the illegal cannabis industry is not. Where do our legislators think all that lost fiscal revenue is going? Consumers are simply not willing to pay 150% more for goods that are regulated to enjoy the manufactured apparition of safety. However, 30% – 50% more, they very likely will.

Here’s the harsh truth for governments seeking to legalize cannabis: the cannabis industry doesn’t need government; it’s the other way around. Government lost the drug war; it’s losing the alternative solution if it doesn’t adjust strategy.

Gary Becker, a pioneering 20th century economist who famously extended economics theory to social problems, wrote in the late 1960s that he did not “sympathize with the assumption that criminals had radically different motivations than everyone else.” If not the operators of California’s quasi-legal medical marijuana movement, who did our politicians and regulators think would lead our state’s experiment with legal cannabis?

An entire industry was literally handed to Sacramento on a platter; all they had to do was encourage participation.