MJBizMag August 2020 - 17

The price competition is becoming
harder and harder, " Kiloh said.
He added that there's a general lack
of follow-through by law enforcement
and said most of the penalties for
doing business without the required
state permits are essentially toothless,
and there's no meaningful deterrent for
anyone operating illegally.
But enforcement alone isn't the
solution, Kiloh and others agree,
because nobody in the industry wants
to restart the war on drugs and begin
throwing people into jail for dealing
cannabis without a license.
The issue is a systemic one, many
in the industry say, and even officials
such as Traverso recognize that
there's no silver bullet to end the
illegal competition.
Rather, the process will likely take
years and a multipronged approach
to eventually replace the illicit market
with a legal one.
" The only way to stop things like that
happening is to increase the number
of retail outlets, decrease the amount
of taxes and make access and price
competitive. That's really the only way, "
Delaplane said.
And all those goals will take a lot of
time to accomplish.
Moving to a Legal Market
The number of retail outlets is certain
to increase-there were only 677
state-licensed storefronts and 296
delivery operations in California as of
July 2020. Hundreds more business
licenses are in the pipeline in Los
Angeles alone, but when they'll be
operational is an open question.
Tax reduction will almost certainly
prove a more difficult goal, since bills
seeking to reduce cannabis taxes have
been introduced (and defeated) in
the state Legislature every year since
2018. But there has been progress at
the city and county levels, where some
local officials have been persuaded
that making legal cannabis cheaper
will actually increase sales and,
therefore, tax revenues.
There's also the possibility that
marijuana could become an economic
savior of sorts for a lot of California cities
and counties plunged into recession
by the coronavirus. If that happens,
it could result in a surge of business
opportunities, jobs and tax revenues.
Perhaps then, the legal industry will be
able to supplant the illicit market.
John Schroyer is senior reporter for
Marijuana Business Magazine. You can
reach him at johns@mjbizdaily.com.
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MJBizMag August 2020

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