Growing Pains: What Are The Problems Cali’s New Recreational Marijuana Businesses Are Facing?

Growing Pains: What Are The Problems Cali’s New Recreational Marijuana Businesses Are Facing?

Underneath the rejoicing from recreational marijuana consumers in California lies concern for the industry as a whole. In this budding new market of legal weed, how are investors, growers, and consumers adapting to the new laws and regulations? While statewide legal recreational marijuana is a huge step for federal legalization, it doesn’t come without its initial hiccups.

 

Is It Too Expensive?

After those waiting outside NYE 2017 purchased their first legal recreational gram, it didn’t take long for the sticker shock of it all to set in. Once all taxes and levies are considered, you are paying almost 40% more than what is listed on the price tag, making it some of the highest-taxed in the country. Legal marijuana dispensaries know they are not the only way consumers can get their marijuana, and they understand no one wants to pay 40% more than they could somewhere else.

Is it possible that California’s recreational marijuana program can be price-competitive with the black market? Or will the relative price increase be worth it to consumers to not buy illegally? This could be a particularly harmful scenario for dispensary investors, and growers of all sizes.

 

Will Big Business Hurt The Marijuana Business?

For many long-term marijuana consumers, the idea of Marijuana becoming “big business” is a worrisome feeling. Will the emergence of large growers push the smaller growers who have been producing for years out of business?

Some theorize that initially, the introduction of large marijuana players will drive prices and margins down in the beginning (despite the proposed 45% tax California will place on recreational marijuana), which will outproduce and outsell smaller growers and put them out of business. From there, without the presence of competition, prices will steadily rise again, hurting the consumer in the long run.

The numbers will likely not be in for a while, but the novelty of legal marijuana is likely to wear off quicker than a price decrease.

 

If You Can Afford It, Where Can You Smoke It?

After purchasing your strain of choice, while you’re still in the dispensary, consumption is not permitted. Then, you walk out onto the federally-funded sidewalk where consumption also is not permitted. So, you have a state-protected right to purchase your marijuana, but nowhere to actually consume it.

The easy solution is to take your marijuana home with you, but that raises the questions of whether or not there will ever be a place that would allow recreational users to congregate and consume together, much like you would drinking in a bar. (It also leaves out the possibility for marijuana tourists, as they essentially have no California home to take it back to.)  For almost five years, Colorado’s Prop. 64 allows cities to license consumption lounges, yet none of them have.

The bottom line is, you may have the state right to purchase marijuana, but take extra caution as to where you consume it.

 

Do you have a legal recreational marijuana dispensary in California? What concerns do your customers have? Let us know!

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