California Regulations

When Colorado and Washington passed legal marijuana they had to write the rules from scratch. This hadn’t been done since the end of alcohol prohibition, far beyond the memories of those writing the new de-prohibition rules. The first guesses and bad assumptions were quickly seen as errors, and corrections made fairly quickly.

Oregon and Alaska learned from the original states, and added their own twists and turns, mistakes and accidental pleasant discoveries. Nevada is doing the same, but with their unique brand superimposed on the entire culture.

But California is coming through as the mastodon in the west. They’ve learned from all the rules ever written, expanded them until seemingly every agency in the state has a hand in the action. From environmental protection to public health to law enforcement to agriculture, California represents the state-of-the-art in cannabis regulation. This achievement comes with a cost, though, and while the taxes won’t initially be unexpected, the fees and compliance costs will be high.

There are two problems I see with this strategy. The entire masterpiece of regulations that cover everything does not address the export of cannabis out of state, which account for about 75-80% of the industry’s output. The other problem is that guesses right now say costs for compliance will run about $500 a pound, on an agricultural product currently selling for $1000 a pound. If you could get your output to Chicago, you’d get $4000 a pound, but you’d be illegal; but you’d avoid the $500/lb for being legal.

The mastodon is loose….

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