Some of California’s licensed cannabis cultivators must make ends meet by selling much of their product on the illicit markets, the Associated Press reported on Jan. 16.

And why are otherwise legal growers turning to illegal sales? Taxes, that’s why.

Back in 2016, California voters approved Proposition 64, the law that legalized adult-use weed statewide. Prop. 64’s supporters promised that legalization would end racial injustice, free up the courts, generate high tax revenues, create thousands of jobs, and stamp out organized crime. A few of those promises came true. Others did not.

“We basically subsidize our white market with our black market,” an anonymous licensed grower told the AP. And as the AP explained, said cultivator asked to remain anonymous so they wouldn’t go to jail for initially having faith in California’s insane rules.

According to the AP, “some legal farms move as much as 90% of their product into the illicit market.” This may sound ridiculous to the uninitiated. Why risk losing your license and going to prison by illegally selling weed after you got licensed to sell it legally?

Here’s why.

Under California’s tiered tax structure for weed, cultivators pay about 50 percent in taxes on wholesale bud. A few years ago, a pound of primo sold for $1,000. Today, that same pound sells for $300. Factor in the 50-percent tax, and the grower only makes $150 off that pound. Then, factor in the cost of licenses, water, electricity, nutrients, property, labor, and an attorney on retainer, and suddenly $150 per pound sounds like a scam. 

How bad is this weed tax problem? Last December, several licensed cultivators wrote a letter to the California government requesting they be exempt from state taxes for three years. The press described it as a “Boston Tea Party-style revolt,” though we still haven’t seen anyone half naked dumping boxes of bud into the Bay Area.

However, the city of San Francisco has exempted its local pot businesses from city taxes. But that only happened after a wave of robberies threatened to bankrupt the city’s weed industry. 

Now, let’s consider for a moment that Gov. Newsom walks that talk he’s always talking, and he actually listens to California’s legacy growers. Let’s say California stops taxing its weed businesses, even for just a few years. Wouldn’t that cause the state’s budget to implode, sink the West Coast into the Pacific, and bring financial doom to America’s wealthiest state? 

Not even a little.

Let’s look at the numbers. And let’s pretend California’s entire pot industry stopped paying taxes, not just its cultivators. In fiscal year 2020-2021, California raked in $817 million from pot taxes. To the average joe, that’s a lot of money. But not for the state of California, which is wealthier than some countries.

That same fiscal year, California’s total tax revenue was $98 billion. Not million, but billion. 

Put another way, California’s entire legal pot industry only accounts for 0.84% of the state’s total tax revenue. That’s not even one full fucking percent. 

If only cultivators didn’t pay taxes, that missed revenue figure becomes a fraction of the entire industry’s. And no, I didn’t look up those figures. I’m making an educated guess. Some other blogger nerd can punch those numbers. 

Next to the state government, agriculture is California’s largest industry. So, how about the government takes a step back, gives the growers some breathing room, and shows some genuine love for an industry that helped cement California’s status as a legendary, glamorous state?