Legal Marijuana Industry Shrinks Rapidly in California

In this March 22, 2019 file photo, shows marijuana buds being sorted into a prescription jar at Compassionate Care Foundation's medical marijuana dispensary in Egg Harbor Township, N.J. Voters in four states could embrace broad legal marijuana sales on Election Day, setting the stage for a watershed year for the …
AP Photo/Julio Cortez

Heavy regulations, high taxes, and oversupply are causing the legal marijuana industry in California to contract rapidly, with the state reportedly losing nearly a quarter of its legal cultivation “canopy” since the start of 2022. recently reported (links included):

The state has lost 1,766 cultivation licenses since the beginning of last year, according to data reported by the California Department of Cannabis Control and the Cannabis Business TimesLow wholesale prices and high taxes have made it almost impossible for operators to run a profitable small business, pot industry insiders say.

The fleeing farms are reducing the total amount of space licensed to produce cannabis in California. The state has lost 23% of its total legal canopy — the combined size of all legal cannabis grows — since the beginning of 2022, according to Aaron Edelheit, a cannabis investor who analyzes California’s market. That’s over 19 million square feet of cannabis farming that has disappeared over the past year.

[Cannabis investor Aaron] Edelheit, who invests in California cannabis companies and writes about the industry in his Mindset Value newsletter, agreed that the reduction in farms is a correction after too many small farmers entered the industry.

California was the first state to legalize the medicinal use of marijuana. It later joined several other states in legalizing recreational use — a move that, proponents said, would generate economic growth and tax revenue.

But the industry has struggled to find its feet. Earlier this year, a marijuana company started by the family of the late Grateful Dead icon Jerry Garcia left California due to high taxes and competition from illegal grows.

Federal laws against marijuana have also kept the legal portion of the industry from growing, as marijuana companies find it difficult to obtain banking services and other basic necessities for operating a business.

Joel B. Pollak is Senior Editor-at-Large at Breitbart News and the host of Breitbart News Sunday on Sirius XM Patriot on Sunday evenings from 7 p.m. to 10 p.m. ET (4 p.m. to 7 p.m. PT). He is the author of the new biography, Rhoda: ‘Comrade Kadalie, You Are Out of Order’. He is also the author of the recent e-book, Neither Free nor Fair: The 2020 U.S. Presidential Election. He is a winner of the 2018 Robert Novak Journalism Alumni Fellowship. Follow him on Twitter at @joelpollak.


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